Florida Statutes, Rules, and
Regulations Exam Questions and
Answers
Office of Financial Regulation - ANSWER-regulates the banking, finance and
securities industries in Florida.
Investigation - ANSWER-Process through which an insurance company or examiner
obtains necessary information to evaluate a claim.
Insurance Contract - ANSWER-An insurance contract is a "contract under which one
party (the insurer) accepts significant insurance risk from another party (the
policyholder) by agreeing to compensate the policyholder if a specified uncertain
future event (the insured event) adversely affects the policyholder."
Insurance Transaction - ANSWER-Means solicitation, negotiation, and putting into
effect of insurance policies.
It also includes actions after the policy goes into effect, such as issuing
endorsements.
Insurer - ANSWER-a person or company that underwrites an insurance risk; the
party in an insurance contract undertaking to pay compensation.
Reinsurance - ANSWER-is insurance that is purchased by an insurance company
(the "ceding company" or "cedent" or "cedant" under the arrangement) from one or
more other insurance companies (the "reinsurer") directly or through a broker as a
means of risk management, sometimes in practice including tax mitigation and other
reasons described below.
Domestic Company - ANSWER-Domiciled in FL
Foreign Company - ANSWER-Domiciled in another state or US territory (not a
foreign country).
Alien Company - ANSWER-Domiciled in another country
Fraternals - ANSWER-insurance issued by a fraternal order or association to its
members, formerly meeting its obligations by assessments upon members at the
time obligations arose but now generally by a legal reserve.
Stock Company - ANSWER-One that issues shares of stock to shareholders.
Its purpose is to make a profit for the shareholders.
Mutual Company - ANSWER-Owned by policyholders. Rather than pay dividends to
stockholders, it pays excess profits back to policyholders.
, Risk Retention Group - ANSWER-is an alternative risk transfer entity created by the
federal Liability Risk Retention Act (LRRA). RRGs must form as liability insurance
companies under the laws of at least one state—its charter state or domicile.
Unlicensed Entities - ANSWER-In addition to the information on unauthorized
entities discussed in the Health chapter, it is important to read FS 626.901, which is
printed in the study manual. You can always find out if a company is authorized to do
business in Florida by checking with the DFS. And you should do so form time to
time, as a company's authority to do business in Florida can be revoked.
Certificate of Authority - ANSWER-A "license" is authority granted by the
commissioner pursuant to this code authorizing the licensee to engage in a business
or operation of insurance in this state other than as an insurer, and the certificate by
which such authority is evidenced.
Licensing - ANSWER-Anyone who solicits or advises on insurance in Florida must
be licensed. See FS 624.425 (specifying that companies can not sell except through
a Florida agent) and 626.112 (specifying that individuals may only solicit insurance if
they are licensed and appointed by a company).
Purpose - ANSWER-
License Types - ANSWER-Commercial Lines
Personal Lines
General Lines
Limited Lines
Life-Only
Fire and Casualty
Accident and Health
Agent - ANSWER-a person employed to sell insurance policies.
Adjuster - ANSWER-an insurance agent who assesses the amount of compensation
that should be paid after a person has made a claim on their insurance policy.
Appointments - ANSWER-Agents are appointed by insurance carriers, which is to
say they are authorized by a carrier to write insurance policies "on company paper."
Agents who have binding authority and do not need approval from a company
employee to secure coverage are said to "have the pen" with that company. That is,
their signature binds the company to a contract.
Customer Representatives - people with the 4-40 license - are only allowed to
transact insurance inside the office, supervised by a 2-20 General Lines Agent. A
Genral Lines Agent or a Surplus Lines Agent must appoint and supervise the
Customer Representative. Paying a commission or a performance incentive/bonus to
a 4-40 can result in license suspensions, fines, and/or loss of agency license. It has
been a common problem in the industry and should be treated with care.
License Requirements - ANSWER-All licensed agents are required to take a certain
amount of Continuing Education each 2-year period. These amounts are subject to
Regulations Exam Questions and
Answers
Office of Financial Regulation - ANSWER-regulates the banking, finance and
securities industries in Florida.
Investigation - ANSWER-Process through which an insurance company or examiner
obtains necessary information to evaluate a claim.
Insurance Contract - ANSWER-An insurance contract is a "contract under which one
party (the insurer) accepts significant insurance risk from another party (the
policyholder) by agreeing to compensate the policyholder if a specified uncertain
future event (the insured event) adversely affects the policyholder."
Insurance Transaction - ANSWER-Means solicitation, negotiation, and putting into
effect of insurance policies.
It also includes actions after the policy goes into effect, such as issuing
endorsements.
Insurer - ANSWER-a person or company that underwrites an insurance risk; the
party in an insurance contract undertaking to pay compensation.
Reinsurance - ANSWER-is insurance that is purchased by an insurance company
(the "ceding company" or "cedent" or "cedant" under the arrangement) from one or
more other insurance companies (the "reinsurer") directly or through a broker as a
means of risk management, sometimes in practice including tax mitigation and other
reasons described below.
Domestic Company - ANSWER-Domiciled in FL
Foreign Company - ANSWER-Domiciled in another state or US territory (not a
foreign country).
Alien Company - ANSWER-Domiciled in another country
Fraternals - ANSWER-insurance issued by a fraternal order or association to its
members, formerly meeting its obligations by assessments upon members at the
time obligations arose but now generally by a legal reserve.
Stock Company - ANSWER-One that issues shares of stock to shareholders.
Its purpose is to make a profit for the shareholders.
Mutual Company - ANSWER-Owned by policyholders. Rather than pay dividends to
stockholders, it pays excess profits back to policyholders.
, Risk Retention Group - ANSWER-is an alternative risk transfer entity created by the
federal Liability Risk Retention Act (LRRA). RRGs must form as liability insurance
companies under the laws of at least one state—its charter state or domicile.
Unlicensed Entities - ANSWER-In addition to the information on unauthorized
entities discussed in the Health chapter, it is important to read FS 626.901, which is
printed in the study manual. You can always find out if a company is authorized to do
business in Florida by checking with the DFS. And you should do so form time to
time, as a company's authority to do business in Florida can be revoked.
Certificate of Authority - ANSWER-A "license" is authority granted by the
commissioner pursuant to this code authorizing the licensee to engage in a business
or operation of insurance in this state other than as an insurer, and the certificate by
which such authority is evidenced.
Licensing - ANSWER-Anyone who solicits or advises on insurance in Florida must
be licensed. See FS 624.425 (specifying that companies can not sell except through
a Florida agent) and 626.112 (specifying that individuals may only solicit insurance if
they are licensed and appointed by a company).
Purpose - ANSWER-
License Types - ANSWER-Commercial Lines
Personal Lines
General Lines
Limited Lines
Life-Only
Fire and Casualty
Accident and Health
Agent - ANSWER-a person employed to sell insurance policies.
Adjuster - ANSWER-an insurance agent who assesses the amount of compensation
that should be paid after a person has made a claim on their insurance policy.
Appointments - ANSWER-Agents are appointed by insurance carriers, which is to
say they are authorized by a carrier to write insurance policies "on company paper."
Agents who have binding authority and do not need approval from a company
employee to secure coverage are said to "have the pen" with that company. That is,
their signature binds the company to a contract.
Customer Representatives - people with the 4-40 license - are only allowed to
transact insurance inside the office, supervised by a 2-20 General Lines Agent. A
Genral Lines Agent or a Surplus Lines Agent must appoint and supervise the
Customer Representative. Paying a commission or a performance incentive/bonus to
a 4-40 can result in license suspensions, fines, and/or loss of agency license. It has
been a common problem in the industry and should be treated with care.
License Requirements - ANSWER-All licensed agents are required to take a certain
amount of Continuing Education each 2-year period. These amounts are subject to
