Examkin

Question

Difficulty: Very hardLicensing Requirements and Types

Cameron is a salaried underwriter at a regional insurance carrier who occasionally negotiates final policy terms directly with prospective commercial clients. He does not receive any commissions for these transactions. On March 1, Cameron was issued a temporary producer license to manage the agency of his sister, a licensed resident producer who was recently incapacitated by a severe medical event. Acting under this temporary license, Cameron successfully solicits and binds a new commercial liability policy for a local business on May 15. Furthermore, Cameron permanently moved his primary residence to a neighboring state on August 5, but he did not notify his home state's Department of Insurance of the relocation until September 20.

Based on the statutory guidelines governing producer authority and licensing, which statement accurately evaluates the legality of Cameron's actions?

  1. A
    He is compliant in his underwriting role because non-commissioned salaried employees are exempt from licensing, but he violated regulations by soliciting new business under a temporary license and failing to report his address change within 30 days.
  2. He violated regulations in all three instances: negotiating contracts requires a standard producer license regardless of compensation, temporary licenses do not authorize the solicitation of new business, and he exceeded the 30-day statutory deadline to report an address change.Answer
  3. C
    His sale of the liability policy is compliant because a temporary license grants full producer authority for up to 180 days, but his unlicensed negotiation of contracts and delayed address change notification are regulatory violations.
  4. D
    He violated licensing requirements by negotiating contracts and soliciting new business under a temporary license, but his September 20 address update remains compliant because producers are granted up to 60 days to report a change of primary residence.

Answer

Cameron committed regulatory violations in all three scenarios described in the prompt.
The correct answer accurately synthesizes the three regulatory standards: negotiating insurance always requires a license even without commission compensation, temporary licenses are strictly limited to servicing existing accounts rather than generating new business, and address changes must be reported within a 30-day window.

Step-by-Step Solution

1
Evaluate if Cameron's corporate underwriting role requires a license.
He requires a standard producer license.
Although he receives no commission, his direct negotiation of policy terms with prospective clients voids the salaried employee exemption, which only applies to indirect or clerical activities.
2
Evaluate the legal authority granted by the temporary producer license.
He is not authorized to sell new commercial liability policies.
Temporary licenses, issued due to death or incapacity, allow the designee to service the existing book of business and ensure a smooth transition, but they expressly forbid the solicitation or binding of new policies.
3
Calculate the time elapsed for the address change notification and compare it to statutory requirements.
He waited 46 days (August 5 to September 20), which violates the deadline.
Standard model regulations require licensed individuals to notify the Department of Insurance of an address change within 30 days.

Key Concept

Producer Licensing Exemptions, Temporary License Limitations, and Maintenance Deadlines
Rate this question

Topics

Licensing Requirements and Types

More questions from this topic