CALA Laws, Regulations & Licensing Compliance 2 — Questions and Answers
Question 1: Under most state insurance codes, a public adjuster must disclose their fee arrangement to the insured within how many days of signing a contract?
- 3 business days (Correct answer)
- 5 business days
- 10 business days
- 30 calendar days
Correct answer: 3 business days
Most states require public adjusters to disclose fee arrangements within 3 business days of executing the contract with the insured.
Question 2: Which federal law primarily governs the privacy of non-public personal financial information held by insurance companies?
- HIPAA
- Gramm-Leach-Bliley Act (Correct answer)
- Fair Credit Reporting Act
- Dodd-Frank Act
Correct answer: Gramm-Leach-Bliley Act
The Gramm-Leach-Bliley Act (GLBA) requires insurers to protect consumers' non-public personal financial information and provide privacy notices.
Question 3: A surplus lines insurer may be used when the required coverage cannot be obtained from how many authorized insurers under typical state law?
- At least one
- At least two
- At least three (Correct answer)
- At least five
Correct answer: At least three
Most states require a diligent search showing that at least three authorized insurers have declined the risk before placing coverage in the surplus lines market.
Question 4: Which entity primarily enforces the Unfair Claims Settlement Practices Act at the state level?
- The NAIC
- The state Department of Insurance (Correct answer)
- The Federal Insurance Office
- The Consumer Financial Protection Bureau
Correct answer: The state Department of Insurance
The state Department of Insurance enforces the Unfair Claims Settlement Practices Act, which is adopted by each state individually.
Question 5: Under the principle of indemnity, an insured who has collected benefits from two insurers for the same loss has likely violated which doctrine?
- Subrogation
- Contribution (Correct answer)
- Estoppel
- Waiver
Correct answer: Contribution
The contribution doctrine prevents an insured from collecting more than the actual loss by requiring insurers covering the same risk to share payments proportionally.
Question 6: A claims adjuster who settles a claim without authority from the insurer may expose the insurer to liability under which legal theory?
- Express authority
- Apparent authority (Correct answer)
- Implied authority
- Vicarious liability
Correct answer: Apparent authority
Apparent authority arises when the insurer's conduct leads a third party to reasonably believe the adjuster had authority to settle, binding the insurer.
Question 7: Which state regulatory action is triggered when an insurer is found to have engaged in a systematic pattern of unfair claims practices?
- License suspension
- Market conduct examination (Correct answer)
- Receivership
- Rehabilitation
Correct answer: Market conduct examination
A market conduct examination is the regulatory tool used to investigate and address systematic patterns of unfair claims or business practices by insurers.
CALA Laws, Regulations & Licensing Compliance 2
Under most state insurance codes, a public adjuster must disclose their fee arrangement to the insured within how many days of signing a contract?