AZ State Laws

If an individual wants to transact business as an insurance producer, he/she must apply for a license within _______ of passing the licensing exam.

1 year

In order for a business entity to obtain a producer license, it must ensure:

That all employees acting as producers are licensed as producers

Before granting a license, the Director may ask for:

Criminal background information

Within what timeframe must a nonresident producer apply for a resident producer license upon moving to Arizona?

90 Days

The Director will not allow an individual to take an examination administered for any line of license authority more than ____ times within a _____ month period.

4

12

A resident licensee must have a:

Residence or principal place of business in this state

To obtain a nonresident license, an examination (is/isn't) required as long as the resident state is:

Isn't

Reciprocal

What does an adjustor do?

This is any person who, for compensation, adjusts, investigates, or negotiates the settlement of claims on behalf of either the insurer or the insured.

Life Settlement Broker:

A producer that is licensed with a life line of authority is deemed to meet the licensing requirements to operate as a life settlement broker.

Surplus Lines Brokers:

Write Surplus Lines Insurance

Managing General Agent (MGA)

Any person, firm, association, or corporation that manages all or part of the insurance business of an insurer, including the management of a separate division, department or underwriting office.

Temporary License:

The Director of Insurance may issue a temporary insurance producer license for a period not exceeding 180 days, without requiring an examination if it is necessary to service insurance contracts

When would a temporary license be issued?

To someone of similar statute upon the death, disability, or entering of the armed forces of a producer to provide time for licensing a new agent.

How may a producer request to used an assumed name?

An insurance producer doing business under any name other than their legal name is required to notify the Director prior to using the assumed name. The Director may turn down the use of the assumed name.

Assumed Trade Name:

The Director will not issue any license in a trade name, except to a business entity if the trade name is legally registered.

Once issued, any license other than a temporary license continues in force until:

It expires or the Director suspends, revokes, or terminates the license.

Licenses expire or renew every:

4 years

A person may renew a license within:

12 months

Licensees are required to inform the Director in writing of any change of:

Address, designated producer, or name. Notification must be submitted within 30 days

A producer must report, within ___ days, any _______________ _______ or _____________ __________ that occurs in any jurisdiction or by another governmental agency in this state.

30

Administrative Action

Criminal Prosecution

For licenses last renewed on or after January 1, 2014, a licensee must complete at least ____ hours of continuing education, including ____ hours of Ethics, offered by an approved provider.

48 hours

6 hours

The Director may suspend, revoke, or refuse renewal of a producer license for up to 12 months for:

Untrue information of licensing application

Violate insurance law

Misrepresenting a policy

Convicted of felony

Fraudulent practice

Fraudulent license

License used for own benefit

Instead of, or in addition to, suspending, revoking, or refusing to renew a producer license, the Director may:

For each unintentional act, impose a civil penalty up to $250 with a maximum penalty of $2,500

For each intentional act, impose a civil penalty up to $2,500 with a maximum penalty of $15,000

Order restitution to any party injured by the licensee

Certificate of Authority:

This is issued by the director to an insurer is evidence of its authority to transact the kind of insurance specified in the certificate.

Transact - Includes any of the following:

Solicitation and inducement

Preliminary negotiations

Effectuation of a contract of insurance

Transaction of matters subsequent to effectuation of the contract and arising out of it

Insurance producers are required to keep insurance records at the producer's principal place of business for ___ _____ following each transaction

3 years

Misrepresentation involves making false or misleading statements during the sale of insurance and is considered a ________ felony under Arizona law.

Class-5

Twisting:

This occurs when an insurance agent replaces an existing life policy with a new one using misleading tactics.

When may an insurance company discriminate based on blindness?

Never

A producer may share commissions with another producer:

Only if they are both licensed in the same line of insurance

It is a prohibited practice for any person to knowingly offer or pay a __________ __________ as an incentive to offer or sell any insurance policy.

Premium Rebate

It is a prohibited practice for an insurer, insurance producer, or other person to provide, promise, or offer any of the following to an insured or prospective insured as an inducement to purchase insurance:

Employment

Shares of stock or securities

Advisory board contract or similar contract, agreement, or understanding that provides for or promises special profits

Prizes, goods, merchandise, or tangible property valued in excess of $25

Providing merchandise or prizes valued in excess of ___ is prohibited.

$25

An insurer or producer may charge fees for services not customarily provided if they file the fee with the Director and meet the following conditions:

The services are in addition to those normally performed for insureds

The specific services and their related charges are disclosed in writing to the insured

The service charges are reasonable with respect to the cost of the service performed

If a first party claim is not paid within __ days after the receipt of adequate proof of loss, the insurer must pay ___________ from the date the claim is received.

30

Interest

The following fraudulent practices are unlawful:

Presenting untrue statements or omissions of material fact

Soliciting or accepting insurance risks by or for an insolvent insurer

Concealing records at or removing records from the home office of any insurer

Diverting the monies of an insurer

An insurer or producer must provide a notice of information practices to all applicants or policyholders upon application, and at the time of policy delivery:

At least once a year after a policy renews

Upon reinstatement or change in benefits

An insurer must provide _______ privacy protection disclosures

Written

What are the general penalties of violating the Violent Crime Control and Law Enforcement Act?

Violations will be punished by a fine established under law, imprisonment up to 10 years, or both

If the damages affected the soundness of the insurer, imprisonment can be up to 15 years

Exception: if the amount of illegally obtained funds is no more than $5,000, the term of imprisonment can be no more than 1 year

Sellers and telemarketers are required to keep the following records for __ months from the date the record is produced.

24

Telephone solicitation calls under the Telemarketing Sales Rules can be made:

Between 8 am and 9 pm in the time zone of the customer

CAN-SPAM Act of 2003:

This established rules for unsolicited email (known as spam) that often generates unwanted costs to recipients, may contain content that is unwanted or pornographic, and may mislead the recipient about its content or purpose.

Federal rules require the following for commercial email:

Identification - The email must be clearly identified as a solicitation or advertisement for products or services.

Opt-Out - The email must provide easily-accessible, legitimate and free ways for you to reject future messages from that sender.

Return Address - The email must contain legitimate return email addresses, as well as the sender's postal address.

Penalties for violation of the CAN-SPAM Act include actual damages or fines of up to ____ per violation (each separate email). The fines cannot exceed _________.

$250

$2 million

Gramm-Leach-Bliley Act:

This established to require financial institutions to protect consumers' personal information from unauthorized or public sharing

In order to sell variable contracts in Arizona, the person must have all of the following qualifications

Life producer license

FINRA (Financial Industry Regulatory Authority) registration

Variable contract license

Life and Disability Insurance Guaranty Fund:

This is to protect the public in the case of insolvency of a life or disability insurer.

The Life and Disability Insurance Guaranty Fund must maintain 3 accounts:

Disability, life insurance, and annuities

The benefit that the Life and Disability Insurance Guaranty Fund may be obligated to cover will not exceed:

$300,000 in life insurance death benefits

No more than $100,000 cash surrender value