SC Insurance Brokers Exam questions with 100% correct answers

Resident Licensing Requirements 1. Be licensed as a resident property and casualty insurance producer. 2. Pass the SC broker licensing examination with 70% or better. 3. Pay a biennial fee of $200 4. File surety bond in favor of SC in amount of $10,000. Nonresident Licensing Requirements 1. File application on form prescribed by the director. 2. File affidavit stating insurance on a risk in this state will only be placed with licensed agents of insurers licensed to operate in SC. 3. File an affidavit stating he is a licensed broker in another state. 4. Pay a biennial fee of $200. Brainpower Read More Previous Play Next Rewind 10 seconds Move forward 10 seconds Unmute 0:00 / 0:15 Full screen What is the term of a brokers license? Brokers licenses are indefinite unless suspended or revoked as long as licensing fees are paid. Can municipalities impose license fees? Yes. What disciplinary actions may the SCDOI Director take? After an investigation and upon 10 days notice, the director may (a) impose fines up to $2500 ($5000 for willful acts) and/or (b) suspend or revoke the license of the person. These actions do not preclude civil or criminal penalties. What is the SC P&C Insurance Guaranty Association? Assoc created to help detect and prevent insurance company insolvencies and protect policy holders and claimants in the case of insolvencies. The assoc will pay 'covered claims' as defined by act. Only applies to P&C, not LA&H. The Guaranty Association is divided into what four accounts? 1. Workers compensation 2. Auto 3. Homeowners and Farmowners 4. All other applicable types of insurance Insurer Certificate of Authority may be suspended or revoked for what criteria? 1. Insurer is in an unsound condition. 2. Insurer has not complied with the law or provisions of its carter. 3. Insurer's condition renders its proceedings hazardous to the public or its policyholders. 4. True value of insurer's assets (if life insurer) less than its liabilities exclusive of its capital. 5. Officers or agents of insurer refuse to submit to examination or perform legal obligation relative to examination. 6. Insurer has not complied with lawful order of director or his designee. Insurance rates must not be: Excessive, inadequate, or unfairly discriminatory Property & Casualty rates... must be filed and may be used if not disapproved by DOI within 30 days. P&C rate increases or decreases of greater than 7% require prior approval. All policy forms require approval of the Director. Forms may be disapproved or withdrawn if: 1. Do not meet the requirements of law 2. Contain any unfair, deceptive, ambiguous, misleading, or unfairly discriminatory provisions Is solicited by means of advertising, communicating, or dissemination of information which is deceptive or misleading. TRUE/FALSE: Every insurance broker who sells an insurance policy written or issued by an insurer not licensed to do business in this State is personally liable for the limits of the coverage provided for in the policy if the broker fails to comply with the provisions of this title relating to policies issued by insurers not licensed to do business in this state. TRUE Surplus Lines Coverage (SLC) Licensed brokers may find coverage for their customers in what lines? Property, Casualty, Inland Marine, and Transportation Surplus Lines Coverage is normally limited to insurance that is: difficult to place or is not available from an admitted insurer Binder temporary agreement issued by agent or insurer providing temporary coverage until policy can be issued. Usually written but can be oral. TRUE/FALSE: all losses occuring under policies placed through an insurance broker must be adjusted by a licensed SC adjuster. TRUE Who may a licensed broker divide commissions with? Agents or brokers in other states or with an agent licensed in this state for an insurer doing the particular class of insurance to be placed through the broker. Errors and Omissions Professional liability coverage is needed by individuals who provide professional services for a fee. It protects the agent against legal liability that may result from negligence, errors and omissions, and the rendering or failure to render professional service. What actions may be taken against insurers or agents who participate in unfair trade practices? After a hearing, the Director may: 1. Issue an order requiring the person to cease and desist from engaging in the method of competition, act, or practice; 2. Issue an order imposing penalties for violation of insurance laws. The act of issuing, publishing, or circulating any illustration or sales material that is false, misleading or deceptive as to policy benefits or terms is know as what? Misrepresentation. If this action includes advertising of any type, it is known as False Advertising. False Advertising includes: 1. Misrepresenting the terms, benefits, conditions, or advantages of any insurance policy; 2. Misrepresenting any dividends to be received from the policy, or previously paid out; 3. Misrepresenting the financial condition of any person or the insurance company; 4. Using names or titles that have tendency to misrepresent the true nature of a policy; 5. Misrepresenting the true purpose of an assignment or loan against a policy; and 6. Misrepresenting an insurance policy as a share of stock. TRUE/FALSE: Discrimination in rates, premiums, policy benefits, etc. for persons WITHIN the same class or with the same life expectancy is illegal. TRUE. Additionally, discrimination made for a business purpose is NOT illegal. (i.e. classifying people by age, gender, or marital status for insurance rating purposes.) Any inducement offered in the sale of insurance products that is not specified in the policy is Rebating. This includes money, reductions in commissions, stock, bonds, special favors and so on. TRUE/FALSE: It is legal to accept a rebate. FALSE. Both the offer and acceptance of a rebate are illegal. (Exception: since 3/1/99, producers have been allowed to give a portion of their commission on auto insurance to insureds) A producer/broker may give an insured or prospective insureds, and others an article of merchandise with a printed advertisement on it up to what value? $25. Additionally, a producer may provide refreshments during a sales presentation not to exceed $10. Prohibited Inducements for taking insurance: 1. Offering any paid employment; 2. Offering contracts for any services; 3. Promising returns, profits, stocks, bonds or others securities; 4. Offering any advisory board contract Unfair Claim Practices 1. Knowingly providing misleading info about policy coverage; 2. Failure to