Insurance Regulations Quiz

What is prohibited under § 27-405?

• False advertising

• Impersonation as an insurer or licensee

• Unfair discrimination

• Larceny

Answer explanation

Under § 27-405, impersonation as an insurer or licensee is prohibited. This means that misrepresenting oneself in such a capacity is illegal, distinguishing it from other options like false advertising or unfair discrimination.

Which section requires insurers to maintain required surplus and reserves?

• § 4-113; 15-140

• COMAR 31.15.12

• § 27-405

• § 12-106

Answer explanation

The correct choice, § 4-113; 15-140, specifies the requirements for insurers to maintain necessary surplus and reserves, ensuring financial stability and compliance with regulatory standards.

What is an example of an unfair claims settlement practice?

• Denying a claim without investigation

• Offering educational materials as inducements

• Maintaining required surplus and reserves

• Submitting a commuter auto rate schedule

Answer explanation

Denying a claim without investigation is an unfair practice as it bypasses the necessary assessment of the claim's validity, potentially harming the claimant's rights.

What is banned under § 27-203?

• Unfair discrimination

• Larceny

• Impersonation

• False advertising

Answer explanation

Under § 27-203, false advertising is specifically banned, as it misleads consumers. The other options, while unethical, are not the focus of this particular statute.

What is required for sharing personal data beyond permitted disclosures?

• No consent needed

• Verbal consent

• Written consent

• Third-party approval

Answer explanation

Written consent is required for sharing personal data beyond permitted disclosures to ensure that individuals have explicitly agreed to the use of their information, protecting their privacy and rights.

What is the maximum duration for which a temporary coverage contract (binder) is valid?

• 60 days

• 45 days

• 90 days

• 30 days

Answer explanation

A temporary coverage contract, also known as a binder, is valid for a maximum of 45 days. This duration allows for coverage while the formal policy is being processed.

What must be filed and approved by the Commissioner before use according to COMAR 31.15.12?

• Insurance fraud reports

• Surplus and reserves

• Insurance binders

• Property/casualty rates and policy forms

Answer explanation

According to COMAR 31.15.12, property/casualty rates and policy forms must be filed and approved by the Commissioner before use, ensuring compliance with regulatory standards.

What constitutes felony larceny under Maryland law?

• Misappropriating premiums or insurer funds by a producer

• Filing false financial statements

• Offering illegal rebates

• Failing to maintain complaint records

Answer explanation

Under Maryland law, felony larceny includes misappropriating premiums or insurer funds by a producer, as it involves theft of property with intent to permanently deprive the owner.

What is prohibited under § 27-202?

• Failure to maintain complaint records

• Offering illegal rebates

• Unlicensed compensation

• False or misleading statements about policy terms

Answer explanation

Under § 27-202, making false or misleading statements about policy terms is prohibited, as it can mislead consumers and undermine trust in insurance practices.

Which of the following is an example of twisting?

• Offering concert tickets as a premium inducement

• Submitting an inflated surplus report

• Switching a client’s policy for a lower premium despite reduced coverage

• Using a fake agency ID to solicit insurance

Answer explanation

Twisting occurs when an agent persuades a client to switch policies for a lower premium while reducing coverage. This misleads the client about the value of their insurance, making it the correct example of twisting.