MINNESOTA STATE INSURANCE LICENSING EXAM
QUESTIONS AND CORRECT DETAILED ANSWERS
UPDATE ALREADY A GRADED|NEW!!
What is an agent? - (ANSWER)Someone who acts on behalf of another (producer)
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.
What is a temp license? - (ANSWER)A temp 180-day license may be used by
commissioner for:
-To surviving spouse, next of kin, admin/executor of the estate, employee, legal
guardian, court-appointed personal rep of deceased, disabled license producer
-To the designee of a licensed producer entering active service in armed forces of
US
-To an employee of a business entity (agency license) licensed as a producer,
upon the death or disability of the indiv designated on the license
-Any other circumstance that serves the public interest
-Can transition to a permanent or just use for transaction to sell policies
What are the requirements for licensing a producer? - (ANSWER)-18 years old
-Complete ed requirements- 20 hours of ed per major line of authorization
-Pass licensing exam
-Complete license application online w/Sircon
-Pay applicable license fee- $50 per line and added tech fee of up to $40
-Apply for perm insurance license within 3 years of passing exam
-License lasts 2 years
QUESTIONS AND CORRECT DETAILED ANSWERS
UPDATE ALREADY A GRADED|NEW!!
What is an agent? - (ANSWER)Someone who acts on behalf of another (producer)
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.
What is a temp license? - (ANSWER)A temp 180-day license may be used by
commissioner for:
-To surviving spouse, next of kin, admin/executor of the estate, employee, legal
guardian, court-appointed personal rep of deceased, disabled license producer
-To the designee of a licensed producer entering active service in armed forces of
US
-To an employee of a business entity (agency license) licensed as a producer,
upon the death or disability of the indiv designated on the license
-Any other circumstance that serves the public interest
-Can transition to a permanent or just use for transaction to sell policies
What are the requirements for licensing a producer? - (ANSWER)-18 years old
-Complete ed requirements- 20 hours of ed per major line of authorization
-Pass licensing exam
-Complete license application online w/Sircon
-Pay applicable license fee- $50 per line and added tech fee of up to $40
-Apply for perm insurance license within 3 years of passing exam
-License lasts 2 years
