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CA L&H Chap 3

The Insurance Marketplace

Producer The agent
Principal Insurance Provider (Insurer)
Independent Agent Has contracts with more than one insurance provider. They provide clients with a wide range of product options
What is an ethical challenge facing the independent agent? Moving clients to earn new or higher commissions
Exclusive or captive, or career agent Has a contract with one insurance company
Direct Response The necessity of the potential client to take the initiative and respond to the advertisement through a telephone or mail contact with the insurer as directed in the ad.
Agent(s) A person licensed to solicit, negotiate, or sell insurance contracts on behalf of the principal
Law of Agency The acts of the agent or producer within the scope of authority deemed to be the acts of the insurer
Does the agent represent the provider or the insured? Insurance Provider
Fiduciary An individual in a position of trust
What are the three agent authority types? Express, Implied, and Apparent
Express Authority The authority that is written into the contract
Implied Authority Authority that is not expressed or written into the contract but which the producer is assumed to have to conduct business for the principal
Apparent Authority or Perceived Authority The assumption or appearance of authority based on the principal's words, actions, or deeds or due to circumstances the principal created
Example of Implied Authority Collecting and remitting premium payments
Example of Apparent Authority The use of the insurance provider's stationery when soliciting coverage
Consequence of "transacting insurance" without a license Misdemeanor that carries a max fine of $50k or imprisonment in a county jail for one year or both
1033 Waiver
Section 1034: Civil Penalties and Injunctions Attorney General can bring civil action in the appropriate US district court against any individual who engages in conduct constituting an offense under Section 1033
Types of Licensees Property and casualty broker-agent; Life-only agent; Accident and health or sickness agent; Life and accident and health or sickness agent; Personal lines agent; Surplus lines broker
Agents vs Brokers Agents legally represent the insurer. Brokers legally represent their clients
Insurance Agents A person authorized to transact all classes of insurance on behalf of an admitted insurance provider other than life, health, or disability insurance
Insurance Brokers Licensees who, for compensation and on behalf of an individual other than an insurance company, transact insurance other than life, accident and health or sickness, or disability
What can life-only agents transact in CA? Insurance on human lives, including: Annuities; endowments; Death or dismemberment by accident; and Disability income
Life Settlement Contract Establishes the terms under which the life settlement provider will compensate the policy owner in return for the absolute assignment, transfer, sale, or release of any portion of the policy
Errors and Omissions Coverage to protect against financial losses that could happen because of the agent's negligent acts or actions
Losses not covered by E&O insurance liabilities caused by a person's criminal acts (unfair trade practices, fiduciary crimes, or material misrepresentations)
Continuing Education Requirements 24 hrs of CE, 3 hrs of ethics, per each 2-yr license renewal term
CA Insurance Code (CIC) The main body of laws set up by the state legislature, which regulates the insurance industry in CA
CA Code of Regulations (CCR) The set of regulations issued by the Dept of Insurance that identifies the standards for the Insurance Code, and how it is to be administered
Rebating Any inducement offered to the insured during the sale of insurance products not specified in the policy. The offer and the acceptance of a rebate are illegal.
Twisting A misrepresentation
Authorized or Admitted Insurers who meet the state's financial requirements and are approved to do business in the state
Domestic vs Foreign vs Alien home office is charter or incorporated in = Domestic - same state / Foreign - different state / Alien - different country
Gramm-Leach Bliley Act (GLBA)
CA Financial Information Privacy Act
Insurance Information and Privacy Protection Act
CA Life and Health Insurance Guarantee Association (CLHIGA) pays the claims of insureds or beneficiaries when an insurer is impaired of insolvent
Examples of Unfair Trade Practices false advertising, misrepresentation, rebating, twisting, unfair discrimination, defamation, boycott/coercion/intimidation, and fraud
Fair Claims Settlement Upon receiving a claim, insurers must accept or deny w/in 40 calendar days, cannot try to settle a claim by making a low settlement offer
Created by: jo710al
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