Life and Health Insurance Exam

1868 Paul v. Virgina/1944 U.S v SEUA/ 1945 McCarran-Ferguson Act

States continue to regulate insurance (in publics best interest)

Federal antitrust laws apply where state law doesn’t

Penalty: Up to $10,000 fine or 1 year imprisonment

1958- FTC (Federeal Trade Commission) Intervention

The Supreme Court ruled that under the McCarran-Ferguson Act, the FTC cannot regulate insurance practices when those practices are regulated by state insurance law. (States have final say over insurance regulation)

1959 SEC (Securities and Exchange Commission) Intervention

Variable life insurance is also regulated by the SEC

1970 Fair Credit Reporting Act

Requires fair/accurate consumer info reporting. Insurers must notify applicants of investigations.

Penalty: Up to $5,000 fine, 1 year imprisonment for false pretenses

1994 USC Section 1033 and 1034

Must obtain ‘letter of written consent’ from state regulatory authority

Violations: False info, embezzlement, misuse of premiums, threatening letters

Penalty: Up to $50,000 fine, 15 years imprisonment, license revocation

1999- Gramm-Leach-Biley Act (GLBA)

A federal law that protects consumers' nonpublic personal financial information by requiring financial institutions to provide privacy notices, safeguard information, and allow consumers to opt out of certain information sharing.

2001 USA PATRIOT Act

Amended the Bank Secrecy Act after 9/11 to help prevent, detect, and deter terrorism and money laundering.

2003 - Do not call Implementation Act

Consumers register to avoid telemarketing calls

Exemptions: Charities, political organization, surveys

2003 CAN-SPAM Act

Sets rules for commercial email

Must have: accurate headers, truthful subject lines, identity as an ad, physical address, opt-out option

Must honor opt-outs within 10 business days

2010- Patient Protection and Affordable Care Act (ACA)

One of the most comprehensive health insurance reforms in U.S. history. Expanded access to coverage and established consumer protections, including protections for people with pre-existing conditions.

Guaranty Associations

Protects consumers if insurer becomes insolvent

Covers unpaid claims up to a specified limit

Funded by assessments on insurance companies

CRITICAL: Producers CANNOT use guaranty association info in sales presentations!!

NACI (National Association of Insurance Commissioners) Four Main Objectives Are…

1. Encourage uniformity in state insurance laws

2. Promotes efficiency in regulation

3. Protect consumers

4. Preserve state regulation

Moral Hazard

INTENTIONAL dishonesty/fraud. Deliberate, knowingly involved in wrongdoing. Ex; leaving car door unlocked hoping fro theft.

Morale Hazard

UNINTENTIONAL carelessness due to having insurance. Lack of concern (not malicious) stems from personal attitude/mindset.

What are the 4 Essential Elements of a Valid Contract?

1. Offer and Acceptance (An Application without a premium = invitation, NOT a complete offer)

2. Consideration (applicant’s consideration= premium payments + representations on application)—> (insurer's consideration = promise to pay valid claim during policy period)

3. Legal Purpose (contract must serve a lawful purpose)

4. Competent Parties