Property & Casualty Insurance License Test Insurance Regulation and Ethics Questions and Answers

Question 1

A producer offers a potential client a $100 gift card to purchase an auto insurance policy. This is an illegal practice known as:

Accepted Answer

Rebating

Answer

Misrepresentation

Answer

Twisting

Answer

Coercion

Question 2

What is the primary function of a state's Property and Casualty Insurance Guaranty Association?

Accepted Answer

To pay the covered claims of insolvent member insurers.

Answer

To set the premium rates for all property and casualty insurers in the state.

Answer

To provide reinsurance for high-risk policies underwritten by member insurers.

Answer

To prosecute producers who engage in fraudulent activities.

Question 3

Which of the following would be considered an Unfair Claims Settlement Practice?

Accepted Answer

Failing to promptly acknowledge and act upon communications regarding a claim.

Answer

Investigating a complex claim for 45 days before making a determination.

Answer

Requesting a claimant to submit a proof of loss form.

Answer

Denying a claim after conducting a reasonable investigation that shows the loss is not covered.

Question 4

The Gramm-Leach-Bliley Act (GLBA) requires financial institutions, including insurers, to take what primary action regarding customer information?

Accepted Answer

Explain their information-sharing practices to their customers and safeguard sensitive data.

Answer

Report all transactions to the federal government.

Answer

Share customer data with affiliated companies to offer a wider range of products.

Answer

Destroy all customer records after a policy is terminated.

Question 5

An insurance producer has a fiduciary responsibility to act in the best interests of the:

Accepted Answer

Insurer and the client

Answer

State Insurance Department

Answer

General public

Answer

Producer's agency

Question 6

A producer makes a false statement during a sales presentation, claiming that a competitor's policies have hidden exclusions that do not actually exist. This is an example of:

Accepted Answer

Defamation

Answer

Adverse selection

Answer

Subrogation

Answer

Reasonable expectation