NSAR SALESPERSON LICENSING TEST
PAPER QUESTIONS AND SOLUTIONS
EXPERT VERIFIED STUDY CONTENT
●● What is a principal?
Answer: Party for whom action is taken (insurance company)
●● What is an agency agreement?
Answer: Legal agreement that establishes the relationship between the
principal and agent; outlines powers and responsibilities of agents.
●● What is Express authority?
Answer: Powers given to agent as part of agency agreement(written)
●● What is implied authority?
Answer: Powers not given by the agency agreement, but necessary to
complete the functions allowed in the agency agreement
●● What is apparent authority?
Answer: Powers not given by the agency agreement, but that a
reasonable person would presume the agent has (between you and
consumer)
,●● What are producer responsibilities?
Answer: 1. Have a fiduciary (trust) responsibility to the insurer. Means
the producer must always protect insurer's interests and follow any
lawful instructions from the insurer
2. Must also uphold high standards of commercial honor when dealing
w/applicant. Must act fairly and honestly, and disclose all info needed by
the applicant to make well-informed buying decision.
●● What is the McCarran-Ferguson Act?
Answer: Individual states, not federal gov, responsible for regulating
insurance industry.
●● Who oversee the MN insurance industry?
Answer: Department of Commerce
●● Who direct the dept of commerce?
Answer: Headed by commissioner of commerce who is appointed by the
governor
●● What does the Dept of Commerce do?
Answer: -Enforces all MN insurance laws
-Establishes rules & procedures to ensure the consistent enforcement of
the laws
-Conduct investigations and hold hearings
,-Examine books, records, documents of any person or entity engaged in
regulated activities at anytime w/no court order
-Publish info collected from investigations, hearings, and examinations
-Require reports of all sales/transactions that are regulated
●● How frequently are insurance companies audited?
Answer: Once every 5 years
●● How much notice does an insurance company get of an audit?
Answer: 30 days notice identifying scope of investigation.
●● What happens if insurance company fails to obtain a license to sell
insurance?
Answer: Company's policies remain valid, but company faces severe
penalties.
●● What is a certificate of authority?
Answer: An admitted or authorized carrier must obtain a cert of
authority to transact business.
●● What is a company appointment?
Answer: Used to grant producers authority to solicit insurance business
for admitted carriers
, ●● What is a non-admitted carrier?
Answer: Companies w/o cert of auth (unlicensed)
●● What are surplus lines companies?
Answer: May sell insurance in MN w/o a cert of authority, but may only
transact business through a licensed surplus agent.
●● Who is required to have an insurance license?
Answer: Anyone who solicits, or appoints others to solicit insurance on
behalf of insurance company.
●● What is a resident producer?
Answer: Issued to a person who resides in MN or maintains person's
principal place of business in MN.
●● What is a non-resident producer?
Answer: Issued to a person if that person is already a licensed resident
producer in good standing in the person's home state.
●● What is a managing general agent?
Answer: Hires producers, supervises a territory, manages producer
activities. Must be licensed as an insurance producer.
PAPER QUESTIONS AND SOLUTIONS
EXPERT VERIFIED STUDY CONTENT
●● What is a principal?
Answer: Party for whom action is taken (insurance company)
●● What is an agency agreement?
Answer: Legal agreement that establishes the relationship between the
principal and agent; outlines powers and responsibilities of agents.
●● What is Express authority?
Answer: Powers given to agent as part of agency agreement(written)
●● What is implied authority?
Answer: Powers not given by the agency agreement, but necessary to
complete the functions allowed in the agency agreement
●● What is apparent authority?
Answer: Powers not given by the agency agreement, but that a
reasonable person would presume the agent has (between you and
consumer)
,●● What are producer responsibilities?
Answer: 1. Have a fiduciary (trust) responsibility to the insurer. Means
the producer must always protect insurer's interests and follow any
lawful instructions from the insurer
2. Must also uphold high standards of commercial honor when dealing
w/applicant. Must act fairly and honestly, and disclose all info needed by
the applicant to make well-informed buying decision.
●● What is the McCarran-Ferguson Act?
Answer: Individual states, not federal gov, responsible for regulating
insurance industry.
●● Who oversee the MN insurance industry?
Answer: Department of Commerce
●● Who direct the dept of commerce?
Answer: Headed by commissioner of commerce who is appointed by the
governor
●● What does the Dept of Commerce do?
Answer: -Enforces all MN insurance laws
-Establishes rules & procedures to ensure the consistent enforcement of
the laws
-Conduct investigations and hold hearings
,-Examine books, records, documents of any person or entity engaged in
regulated activities at anytime w/no court order
-Publish info collected from investigations, hearings, and examinations
-Require reports of all sales/transactions that are regulated
●● How frequently are insurance companies audited?
Answer: Once every 5 years
●● How much notice does an insurance company get of an audit?
Answer: 30 days notice identifying scope of investigation.
●● What happens if insurance company fails to obtain a license to sell
insurance?
Answer: Company's policies remain valid, but company faces severe
penalties.
●● What is a certificate of authority?
Answer: An admitted or authorized carrier must obtain a cert of
authority to transact business.
●● What is a company appointment?
Answer: Used to grant producers authority to solicit insurance business
for admitted carriers
, ●● What is a non-admitted carrier?
Answer: Companies w/o cert of auth (unlicensed)
●● What are surplus lines companies?
Answer: May sell insurance in MN w/o a cert of authority, but may only
transact business through a licensed surplus agent.
●● Who is required to have an insurance license?
Answer: Anyone who solicits, or appoints others to solicit insurance on
behalf of insurance company.
●● What is a resident producer?
Answer: Issued to a person who resides in MN or maintains person's
principal place of business in MN.
●● What is a non-resident producer?
Answer: Issued to a person if that person is already a licensed resident
producer in good standing in the person's home state.
●● What is a managing general agent?
Answer: Hires producers, supervises a territory, manages producer
activities. Must be licensed as an insurance producer.
