Final Chpt - 1

? OKLAHOMA GENERAL LAWS


?COMMISSIONER OF INSURANCE

The Insurance Commissioner enforces the insurance laws of Oklahoma.
The Commissioner may:

� Examine any insurance company operating in the State
� Conduct investigations and hold hearings whenever there is cause to believe of violation of insurance laws
� Issue subpoenas and administer oaths
� Make annual reports to the Governor of Oklahoma on the activities of the Insurance Department
� Educate consumers and make recommendations regarding the subject of insurance in this State
 Examination of Records

The Insurance Commissioner can conduct a financial examination of any insurance company as often as deemed appropriate. At the very least, admitted insurers shall be examined once every5 years.

Notice and Hearing

The Commissioner may call and hold hearings for any purpose deemed necessary. The hearing will be
held within 45 days and at least 15 days notice will be given to all persons affected by the hearing.

Penalties

� After the hearing, if the Commissioner determines that those involved are responsible for
violating an insurance statute, a fine can be given up to $1,000 for each violation, not to exceed
$10,000 for all violations.

� If the violation was committed flagrantly, the penalty can be up to $5,000 per violation not to
exceed $100,000 total.

Cease and Desist Order

The Commissioner may issue a cease-and-desist order to any person found to have committed an unfair
or deceptive act. The person in violation may pay a fine up to $1,000 for each act or $5,000 if the action was intentional
Temporary

A temporary license may be issued in cases where a producer has become disabled or dies, requiring a
replacement to service the producer�s business. People eligible for a temporary license include the
producer�s surviving spouse, court-appointed personal representative, or the business
owner/partner/employee. A temporary license is valid for a maximum of 180 days.

Nonresident Producers

A producer who holds a resident license in a different state may apply for a nonresident license in
Oklahoma, as long as both states have a reciprocal agreement.To apply, nonresidents must submit an
application form, proof of resident license in good standing, and fees. Nonresident producer applicants
do not have to take the Oklahoma state licensing exam, but must not have committed any act for which
the license could be denied, suspended, or revoked.

New Residents

Licensed agents moving to Oklahoma from another state have 90 days within cancelling their previous
license to apply for a resident license here. After 90 days, the applicant must complete pre-license
education and pass the state exam in Oklahoma.

Consultant
No person shall act as an insurance consultant until a license as an insurance consultant has been issued.
Excluded in this include: attorneys, insurance producers or brokers, trust officers of a bank, actuaries, or CPA's.

Limited lines

A limited lines producer may receive qualification for a license in one or more of the following categories:

� Prepaid legal liability insurance
� Crop
� Car rental
� Credit
� Surety
� Travel

Customer service representative

Any person licensed and appointed as an insurance producer, broker, or managing general agent may appoint and employ as a customer service representative any person who holds or has qualified for a customer service representative�s license. The following activities are performed by a customer service representative:

� Giving quotes
� Interpreting policies
� Explaining procedures
� Giving insurance advice
� Soliciting new customers at the office or by telephone

Continuing Education

Producers must complete 24 hours of continuing education every 2 years to keep their license active. 3
of those hours must be in ethics and 2 of those hours must be in legislative updates.

Reinstatement and Renewal

A producer who allows his or her license to lapse may, within 12 months from the renewal date,
reinstate the license without retaking the state licensing exam. However, a penalty of double the unpaid
renewal fee will be required.

Probation, Suspension, Revocation, Refusal to Issue or Renew of Licenses

The Insurance Commissioner may place on probation, suspend, revoke, refuse to renew, or deny a license to any person who has:

� Provided incorrect, misleading, incomplete, or untrue information in the license application

� Violated any insurance laws, regulations, subpoena, or orders from the Insurance Commissioner

� Attempted to obtain a license through fraud or misrepresentation

� Intentionally misrepresented the terms of an insurance contract

� Been convicted of a felony

� Committed any insurance unfair trade practice

� Used fraudulent, coercive, or dishonest practices or demonstrated incompetence, untrustworthiness, or financial irresponsibility in this or any other state

� Had an insurance license denied, suspended, or revoked by another state

� Forged a name to an insurance document or application

� Cheated on an insurance license examination

� Knowingly accepted insurance business from an unlicensed individual

� Failed to comply with a court order imposing child support

� Failed to pay state income tax

� Misappropriation of premium funds

Penalties

� The Commissioner may assess a fine of up to $1,000 to a producer who commits any of the above acts

� Any person performing insurance transactions without a producer�s license or under a license that has been suspended or revoked can be penalized up to $5,000 and charged with a felony. This person can also be imprisoned for 1-5 years.

?REGULATIONS

Address/Name Change

Producers must report a change in address or name to the Insurance Department within 30 days of the change.

Reporting of Actions

Producers must report any bankruptcy, felony conviction, or any other administrative action that occurs in Oklahoma or another jurisdiction to the Insurance Department within 30 days.

Agent/Producer Appointments

A producer cannot act as an agent for an insurer unless he or she is appointed to work for that insurer. Insurers are responsible for submitting an appointment notice to the Insurance Commissioner within 15 days of an agent�s appointment or submission of first insurance application. The insurer is also responsible for paying the agent�s appointment renewal fee. The Insurance Commissioner will verify within 30 days if a producer is eligible for
appointment.

Termination of Producer Appointment

An insurer that terminates a producer appointment must notify the Commissioner within 15 days of the date of termination. Within 15 days of such notice, the insurer must mail a copy of the notice to the terminated agent, after which the agent will have 30 days to submit written comments to the Commissioner.

Producer Records

An insurance producer is required to maintain the usual and customary records pertaining to authorized transactions for 3 years.

Commissions

No person shall pay or accept commissions to/from an unlicensed individual for the purpose of selling or negotiating insurance business.

Solicitation and Sales Presentations

Producers must provide applicants and prospects with the approved NAIC Buyer�s Guide.
Producers must also provide a Policy Summary to applicants.

Advertisements

� Advertisements shall be truthful and not misleading in fact or by implication. The form and content of an advertisement of a policy shall be sufficiently complete and clear as to avoid deception.

� Advertisements will not imply that the payment of non-guaranteed policy elements is guaranteed

� Testimonials used in advertisements must be genuine and represent the current opinion of the author. It must
also be accurately reproduced with sufficient completeness to avoid misleading prospective insureds.

� The name of the insurer will be clearly identified in all advertisements.

� The envelope in which insurance solicitation material is contained may be addressed to the
parents of students. The address may not include any combination of words which imply that
the correspondence is from a school.

Policy Summary

The policy summary contains specific information on the provisions, benefits, and coverage of the policy applied for.

Buyer's guide

The buyer�s guide enables applicants to compare different life insurance policies and help them choose
which policy is best for their needs.

Controlled Business

Controlled business can be defined as policies written on people that the licensed producer has direct
influence over: including family, employers, and/or any company to which the producer has stock
control. Obtaining a license for the primary purpose of writing controlled business is prohibited.

� A license will be considered to have been used to write controlled business if more than 25% of a producer�s total commissions earned over a 12-month period is written on controlled business

Minors

A minor age 15 or older may take out an insurance policy on his own life for his own benefit or for the
benefit of his parents, spouse, child, siblings, or grandparents.

Fraternal benefit societies

A fraternal benefit society exists solely for the benefit of its members and not for profit. They operate under a lodge system with a representative form of government, which provides benefits in accordance to its chapter.

Medical Examinations and Lab Tests Including HIV

For underwriting an individual policy, insurers may require proposed insureds to undergo an HIV test,
but only in conjunction with other medical tests. The basis for requiring an HIV test cannot be the
proposed insured�s sexual orientation. The insurer must obtain written consent from the
proposed insured in order to conduct the HIV test.

?INSURANCE TRANSACTIONS

�Insurance Transaction� includes any of the following:

� Solicitation or inducement to purchase insurance
� Negotiations toward the sale of insurance
� Executing a contract of insurance
� Advising on coverages and claims

A licensee may not transact insurance business in Oklahoma until the licensee is appointed
by an insurer.

?DOMESTIC, FOREIGN, AND ALIEN COMPANIES

Insurance companies are classified according to the location of its corporation. Regardless of where the
insurance company is incorporated, it still has to get a Certificate of Authority issued by the Insurance
Department before transacting insurance within a state.

The following definitions apply:

Domestic insurance company: A company that resides and is incorporated under the laws of the state
in which its home office is located.

A company chartered in Oklahoma would be a domestic company in Oklahoma

Foreign insurance company: A company whose home office is located in another state. It is considered
to be a foreign company in all states except for its home office.

A company chartered in Texas would be a foreign company in Oklahoma

Alien insurance company: A company that is chartered and organized in any country other than the
United States. It is considered an alien company in all states.

A company chartered in Canada would be an alien company in Oklahoma

?AUTHORIZED AND UNAUTHORIZED INSURERS

Authorized insurer: An insurance company that has qualified and received a Certificate of Authority
from the Insurance Department to sell insurance in this state.

� Also called an admitted insurance company

Unauthorized insurer: An insurance company that has been denied or not yet applied for a Certificate
of Authority and may not sell insurance in this state.

� Also called a non-admitted insurance company

?STOCK AND MUTUAL COMPANY

Stock Insurance Company: An insurance company that is owned and controlled by stockholders. The
stockholders provide the capital and share in profits or losses.

� Stock insurance companies are considered nonparticipating because the policyowners do not
share in the profits of the company

� The objective is to produce profits for the owners, the stockholders

� Stock insurance companies that issues both participating and nonparticipating policies are
referred to as a company doing business on a mixed plan.

Mutual life insurance companies: An insurance company owned and controlled by its policyowners.
These policyholders elect a board of trustees or directors to manage the firm. The profits of a mutual
insurance company are returned to the policyowners in the form of dividends or retained as surplus to
meet future obligations.

� Mutual insurance companies are considered participating because the policyowners do share in
the profits of the company

Inducement

It is illegal to induce anyone involved in an insurance transaction by offering:

� Employment
� Shares of stock or securities
� Any contract or agreement promising special profits
� Any prizes, goods, merchandise, or tangible property worth more than a total of $100
� Any special favor

?UNFAIR CLAIM METHODS

The following acts, omissions, or practices are defined as unfair and deceptive claim settlement
practices when knowingly committed or performed with such frequency as to indicate a general
business practice, and are prohibited:

� Misrepresenting to an insured pertinent facts or policy provisions relating to coverage at issue

� Failing to acknowledge and act reasonably promptly upon communications with respect to an
insurance claim

� Failing to adopt and implement reasonable standards for prompt investigation and processing of
insured�s claims

� Failing to affirm or deny coverage of claims within a reasonable time after proof of loss
statements are completed and submitted by insured�s

� Not attempting in good faith to effect prompt, fair and equitable settlements of claims on which
liability has become reasonably clear; Refusing or delaying a settlement solely because there is
other insurance available to partially or entirely satisfy the claim loss; the claimant who has a
right to recover from more than one insurer has the right to choose the coverage from which to
recover and the order in which payment is to be made

� Compelling insured�s to initiate suits to recover amounts due under an insurance policy by
offering substantially less than the amount ultimately recovered in those suits

Penalties

For any violation of the Unfair Claims Settlement Practices Act, the Insurance Commissioner may
subject an insurer to a civil penalty of not less than $100 and not more than $5,000.
� The objective is to provide insurance to its owners, the policyowners, at the lowest net cost

?UNFAIR TRADE PRACTICES

Defamation of insurer

It is an illegal practice to make any public statement or advertisement that contains false information or unsubstantiated criticisms about an insurance company.

Twisting

Twisting involves the inducing a policyowner to lapse, forfeit, or surrender a life insurance policy for the purpose of taking out another a policy with another company.

Rebating

It is illegal to offer a premium rebate or a special advantage of any kind to consumers as an inducement to purchase a contract of insurance.

?OKLAHOMA LIFE AND HEALTH GUARANTY ASSOCIATION

The Life and Health Guaranty Association is used to rehabilitate insolvent (financially incapacitated)
insurers. Producers are prohibited from using the existence of the Oklahoma Guaranty Association for
selling, soliciting, or inducing purchase of an insurance policy. For any one person, the Guaranty
Association will provide:

� $300,000 in life insurance death benefits

� $300,000 for health insurance benefits, including long-term care insurance

� $100,000 in cash values

� $300,000 in present value annuity benefits and/or

The Life and Health Guaranty Association is funded by insurance companies through assessments.

?FAIR CREDIT REPORTING ACT

The Fair Credit Reporting Act (FCRA) is a federal law that regulates the use and disclosure of consumer
credit information.The primary purpose of the Fair Credit and Reporting Act is to protect consumers
with guidelines regarding credit reporting and distribution. Credit reporting agencies, such as Experian,
Equifax, and TransUnion, are regulated by the FCRA. They are required by law to provide information
about a consumer stored in the agency�s files. Adverse information that has been removed from a consumer�s file cannot be reinstated without notifying the customer within five days. Furthermore,
agencies cannot store adverse information about a consumer for longer than a set period of time. For
example, information about late payments and final judgments can only stay on a credit report for up to
seven years, bankruptcies � 10 years, and tax liens � 7 years from the date paid.

Insurance companies are also subject to the FCRA because they use consumer credit reports during
underwriting and risk selection. Insurers must notify consumers when an adverse underwriting decision
has been made based on a credit report, and include the name of the credit reporting agency they used
as the basis for the decision.

?FRAUD AND FALSE STATEMENT INCLUDING 1033 WAIVER

The Fraud and False Statements federal law makes it illegal to lie, falsify, or conceal information (orally
or in writing) from a federal official. As it applies to insurance, any person engaged in interstate
insurance business whoengages in intentional unfair or deceptive insurance practices, or overvalues
an insurance product in a financial report or document presented to a regulatory official, will be in
violation of federal law. Other violations include, but are not limited to: embezzling money from an
insurance company, misappropriating insurance premiums, and writing threatening letters to insurance offices.

� The punishment for violation is a fine up to $50,000, imprisonment up to 15 years, and/or
license revocation

� An individual convicted of a felony involving dishonesty may engage in the business of insurance
ONLY after receiving written consent from the state insurance regulatory agency and a 1033 waiver

Policy Loan Interest Rate

The maximum fixed interest rate charged by insurers is 8% in Oklahoma. The maximum variable
interest rate is also 8%.

Backdating

Policies cannot be backdated more than 6 months from the date of issue.

Interest on Insurance Proceeds

Interest on benefits of a life insurance policy shall begin to accrue 20 days from the date of receipt of
proof of death by the insurer.

Right to examine (Free Look)

Life insurance policies must provide a minimum free-look period of 10 days upon policy delivery. This
allows the policyowner time to decide whether or not to keep it. If the policyowner decides not to keep
the policy within the 10 days allowed, a full refund will be given.

Grace Period

The time, usually 30 days, during which a policy remains in force after the premium is due but not paid.
The policy lapses as of the day the premium was originally due unless the premium is paid before the
end of the 30 days or the insured dies during the grace period.

 Entire Contract

A provision that the policy and the application shall constitute the entire contract between the parties.

Incontestability Period

A provision that the policy terms shall be incontestable after it has been in force for a period of 2 years
from its date of issue (unless the purpose for taking out the coverage was fraud).

Insurable Interest

Employers have insurable interest in the lives of their employees. An employer may insure the life of an
employee as long as the proposed insured provides prior written consent. The employer must disclose
that it may keep the policy in force after the employee retires and during the period he or she receives
employer-sponsored retirement benefits.

A married person has insurable interest in the life of his or her spouse. As such, a person may purchase
and be designated as beneficiary under a life policy issued on his or her spouse.

Illustrations

Illustrations are charts, graphs, and numerical data that depict the non-guaranteed elements of a policy
over time. Non-guaranteed elements are premiums, benefits, values, credits, or charges under a policy
of life insurance that are not guaranteed or not determined when the policy is issued.

Payment of Claims

Insurers will either submit a written offer of settlement or rejection of claim within 90 days after receipt
of a proof of loss.

Cash Surrender

The maximum length of time an insurer can defer payment of a cash surrender value of a life insurance
policy or annuity is 6 months.

Nonforfeiture Law

Upon surrender of an ordinary life policy, which has been in force for AT LEAST 3 full years, and within
60 days after the date the premium payment is due and unpaid, the insurer will pay a cash surrender value.
Group Life Insurance

In the event of employment termination, a person covered by a group policy also has the right to convert such coverage to an individual policy within the conversion period (31 days) without proving insurability. If this right is exercised, the employee is responsible for the payment of premium.

Fraternal benefit societies

A fraternal benefit society exists solely for the benefit of its members and not for profit. They operate under a lodge system with a representative form of government, which provides benefits in accordance to its chapter.

Accelerated benefits

Proceeds payable under a life insurance contract to a policyowner in anticipation of death or upon the occurrence of specified life-threatening conditions as defined by the policy are called accelerated benefits.

Replacement

Notice of Replacement: Under New Hampshire law, the replacement of life insurance contracts with a
new contract requires the producer to give the applicant a written comparison and summary statement
at the request of the policyholder and to follow instructions regarding replacement as obtained from the
appointing insurer.

Replacement: Any transaction in which new life insurance or a new annuity is purchased and, as a result,
the existing life insurance or annuities will be any of the following:

� Lapsed, forfeited, surrendered, or otherwise terminated

� Reissued with any reduction in cash value

� Converted to reduced paid-up insurance, continued as extended term insurance or otherwise
reduced in value by the use of nonforfeiture benefits or other policy values

� Amended so as to affect either a reduction in benefits or in the term for which coverage would
otherwise remain in force or for which benefits would be paid

� Reissued with a reduction in cash value

� Used in a financed purchase

Duties of the Producer

� Present to the applicant a Notice Regarding Replacement that is signed by both the applicant
and the producer. A copy must be left with the applicant.

� Obtain a list of all existing life insurance and/or annuity policies to be replaced including policy
numbers and the names of all companies being replaced.

� Leave the applicant with the original or a copy of written or printed communications used for presentation to the applicant.

� Submit to the replacing insurance company a copy of the Replacement Notice with the application.

Duties of the Replacing Insurance Company

� Require from the producer a list of the applicant's life insurance or annuity contracts to be
replaced and a copy of the replacement notice provided to the applicant.

� Send each existing insurance company a written communication advising of the proposed
replacement within a specified period of time of the date that the application is received in the
replacing insurance company's home or regional office. A policy summary or ledger statement
containing policy data on the proposed life insurance or annuity must be included.


Replacement Policy Free Look Period

If a new policy is replacing an existing one, the insured is given the right to return for a full refund of
at least 20 days after policy delivery.
?OKLAHOMA HEALTH LAWS

?REQUIRED PROVISIONS

Entire Contract

A provision that the policy, application, and all attachments shall constitute the entire contract
between the parties.

Time Limit On Certain Defenses (Incontestable Period)

A health or disability policy is incontestable after it has been in force for a period of 2 years. Only
fraudulent misstatements in the application may be used to void the policy or deny any claim at this point.

Reinstatement

If a health policy is reinstated after it had lapsed for nonpayment, there is a waiting period of 10 days
before a claim covering sickness will be covered. Injuries sustained from an accident, however, will be
covered immediately.

Notice of Claim

Written notice of a claim must be given within 20 days after a covered loss starts or as soon as
reasonably possible.
Claim Forms

An insurance company will send forms for filing proof of loss to a claimant within 15 days after company
receives notice of a claim.

Proof of loss

Written proof for any loss must be given to the insurance company within 90 days.

Right to Examine (Free-Look)

Health insurance policies must provide a minimum free-look period of 10 days upon policy delivery.
This allows the policyowner time to decide whether or not to keep it. If the policyowner decides not to
keep the policy within the 10 days allowed, a full refund will be given.

Legal Actions

No legal action can be initiated within 60 days after proof of loss has been submitted to the insurance company.

Continuation of Coverage

Upon the death or divorce of an insured, the remaining covered family members can continue or
convert the coverage so long as premiums are continued to be paid. The insurance company needs to be
contacted and paid the appropriate premium within 31 days following the termination of the current policy.
Physical Exams and Autopsies

The insurer has the right to examine the insured during the claim process and to make an autopsy when
death is involved and where it is not forbidden by law.

?PRE-EXISTING CONDITIONS

Individual Health Insurance

For individual health insurance: pre-existing conditions (conditions for which medical advice, diagnosis,
care or treatment was recommended or received in the 12 months prior to the effective date of
enrollment) may be excluded for a maximum of 12 months from the date of enrollment.

Group Health Insurance

For group health insurance: Pre-existing conditions (conditions for which medical advice, diagnosis, care
or treatment was recommended or received in the 6 months prior to the effective date of enrollment)
may be excluded for a maximum of 12 months from the date of enrollment (18 months for late
enrollees).Creditable coverage will be used to reduce the exclusion period, unless the individual has a
coverage gap of 63 days prior to enrollment in the group plan.
Continuation of Group Health Insurance
A group health insurance policy must be continued for an employee or member at least 6 months after
the insurance has been cancelled for any reason other than nonpayment.

Replacement Health Insurance
When a person covered by a health insurance plan moves to another plan, any credit toward fulfilling
the preexisting requirement on the prior plan will be transferred to the new plan.

Pre-existing Conditions, Replacement Policies

When replacing an individual health policy in Oklahoma, the required replacement notice to the
applicant must include notice that pre-existing conditions may not be covered.

An individual�s waiting period for pre-existing conditions is reduced when he o r she has �creditable
coverage.� Creditable coverage is previous coverage under another group or individual health
plan when there has not been a break in coverage of 63 days. The 63-day period begins when the
individual�s previous coverage ended. It ends when coverage under your plan begins, or, if earlier, when
your group�s waiting period for eligibility begins.

?OKLAHOMA ELIGIBILITY REQUIREMENTS AND OFFERS

Dependent Child Age Limit

All health plans which cover the insured�s dependents must allow children to continue coverage under a
parent�s health plan until age 26.

Child Enrollment; Non-Custodial Parents

Insurers are required to permit a child to enroll under a non-custodial parent�s health insurance if
mandated by court-ordered health care coverage. Restrictions for seasonal enrollment will not apply. If
the non-custodial parent fails to enroll the child, other coverage will be obtained through the other
parent or Medicaid.

Physically or Mentally Handicapped Dependents

Handicapped children are not subject to an age limitation and may remain covered under the parent�s
health plan.

Newborn Child Coverage

All health plans that provide coverage to family members of the insured, must provide coverage for the
insured�s newborn child from the moment of birth, and for a period of 31 days. If a premium is
required to continue the newborn�s coverage, it must be paid within the 31-day period. Coverage
includes injury and sickness, including medical care for diagnosed congenital defects and birth abnormalities.

Minimum Maternity Benefits

Any individual and group policy that provide