P&C Insurance Regulation and Ethics 2

Question 1

Which federal law requires insurers to notify consumers about their privacy practices and limits sharing of nonpublic personal information?

Accepted Answer

The Gramm-Leach-Bliley Act (GLB Act)

Answer

The Sherman Antitrust Act

Answer

The McCarran-Ferguson Act

Answer

The Fair Credit Reporting Act

Question 2

Insurance is primarily regulated at the state level because of:

Accepted Answer

The McCarran-Ferguson Act of 1945

Answer

The Sherman Antitrust Act

Answer

The Employee Retirement Income Security Act

Answer

Federal Executive Order 12612

Question 3

An insurance producer who places a client in a policy primarily to earn a higher commission rather than to meet the client's needs is engaging in:

Accepted Answer

Churning

Answer

Twisting

Answer

Rebating

Answer

Churning or twisting, depending on whether an existing policy is replaced

Question 4

The concept of 'fiduciary duty' requires a producer to:

Accepted Answer

Act in the best interest of the client when handling premium funds and placing coverage

Answer

Share client information with competing producers

Answer

Maximize the insurer's premium revenue above all else

Answer

Disclose all commission rates to the public

Question 5

Which of the following acts is an example of 'unfair claims settlement practices'?

Accepted Answer

Failing to promptly investigate or pay undisputed claims

Answer

Acknowledging a claim within 10 business days

Answer

Denying a claim with a written explanation citing the relevant policy provision

Answer

Requesting a sworn proof of loss from the insured

Question 6

A producer who accepts a check from a client, endorses it to themselves, and uses the money for personal expenses is committing:

Accepted Answer

Misappropriation of funds (conversion)

Answer

Rebating

Answer

Defamation

Answer

Twisting