Arkansas Property & Casualty Insurance License Exam — All Questions
AllGeneral Insurance PrinciplesProperty Insurance FundamentalsDwelling Policy (DP)Homeowners Policy (HO)Personal Auto PolicyCasualty & Liability InsuranceCommercial LinesWorkers CompensationPolicy Structure & ProvisionsArkansas P&C Law & Coverage RequirementsArkansas Licensing & CEArkansas Market Conduct & Ethics
2 questions
Arkansas Market Conduct & Ethics
A Arkansas producer offers a prospect part of the producer's own commission in cash to induce the purchase of a policy. This practice is:
- a.Permitted for personal auto policies only
- b.Permitted if the producer discloses it to the insurer
- c.Required to be reported but otherwise lawful
- d.Prohibited as unlawful rebating under the state's unfair trade practices law✓
Rebating — giving any part of the premium or commission, or other valuable consideration, to induce a purchase — is prohibited under Arkansas's unfair trade practices law because it can create unfair discrimination between similar policyholders.
Arkansas Market Conduct & Ethics
Premiums a Arkansas producer collects from clients before remitting them to the insurer are:
- a.Exempt from any trust-accounting requirement
- b.Automatically forfeited to the state guaranty association
- c.Held in a fiduciary capacity and must not be commingled or converted for personal use✓
- d.The producer's personal income as soon as they are received
Arkansas, like other states, treats collected premiums as fiduciary funds belonging to the insurer or the insured. Commingling or converting them is grounds for license discipline and can be a crime; accurate trust accounting is required.