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This section begins with an overview of marketing distribution systems. It then focuses on producers, describing in detail their licensing and education requirements, duties and authorities, and code of ethics. This section also explores the different types and qualifications of insurers. Finally, you will read about market conduct regulations for underwriting, sales, ratemaking, and claims handling. Pay close attention to regulations regarding unfair trade practices and fair claims settlement practices.
| Term | Definition |
|---|---|
| Appointment | The authorization a licensee receives from an insurer to act as its agent, filed with the Commissioner |
| Cease and desist | An order from the Commissioner requiring a person to stop an act or practice found to be in violation of the Insurance Code |
| Coercion | Compelling someone to act, or refrain from acting, through pressure or intimidation |
| Commission | Compensation paid to a producer, typically a percentage of premium, for selling and servicing an insurance policy |
| Commissioner | The elected official who heads the California Department of Insurance and regulates the insurance industry in the state |
| Exempt | Free from a requirement or obligation that otherwise applies |
| Inducement | Something offered to persuade a person to purchase insurance, often prohibited when it constitutes an unfair rebate |
| Injunction | A court order requiring a person to do, or refrain from doing, a specific act |
| Insolvent | The financial condition of an insurer whose liabilities exceed its assets, or which cannot meet its obligations as they come due |
| Restitution | Compensation paid to restore a person to the financial position they held before a loss caused by another's wrongdoing |
| Surplus lines insurance | Insurance placed with a nonadmitted insurer because coverage is unavailable from admitted insurers |
Terms to Know