Illinois Property & Casualty Insurance License Exam — All Questions
3 questions
Which government body licenses resident property and casualty insurance producers in Illinois?
- a.Illinois Secretary of State
- b.Illinois Department of Financial and Professional Regulation
- c.Illinois Insurance Commission
- d.Illinois Department of Insurance✓
In Illinois, insurance is regulated by the Illinois Department of Insurance, which licenses producers, reviews insurers, handles consumer complaints, and enforces the state insurance code. The motor-vehicle agency and banking regulators do not license insurance producers.
Under Illinois insurance law, a producer offering a client cash or a gift not stated in the policy as an inducement to buy is:
- a.It is always permitted as a marketing discount.
- b.It is required on every personal-lines sale.
- c.It is regulated only for commercial policies.
- d.It is a prohibited unfair trade practice (illegal rebating).✓
Rebating - giving something of value not specified in the policy to induce a sale - is a prohibited unfair trade practice under the Illinois insurance code. The state's unfair-trade-practices provisions also bar misrepresentation, false advertising, unfair discrimination between like risks, coercion, and unfair claim settlement. The Illinois Department of Insurance can fine, suspend, or revoke a license for violations.
Premiums a Illinois producer collects from clients on behalf of an insurer are treated how?
- a.They are fiduciary (trust) funds that must not be commingled with the producer's personal funds or converted.✓
- b.They become the producer's personal income once collected.
- c.They may be freely used for office expenses until remitted.
- d.They belong to the state guaranty association.
Premium funds a producer collects are held in a fiduciary capacity for the insurer and the insured. Under Illinois law they may not be commingled with personal funds or converted to personal use; misappropriation is grounds for Illinois Department of Insurance discipline and possible criminal liability.