Chapter 14 TX Life & Health State Laws
Prep Exam Questions And Correct
Answers.
Commissioner of Insurance - Answer The Commissioner is the Chief Executive and Administrative
Officer of the Texas Department of Insurance (TDI) and is appointed by the governor, with the advice and
consent of the senate, for a two-year term.
Qualifications of appointment require the Commissioner to be a competent and experienced
administrator, be well informed and qualified in the field of insurance regulation, and have at least 5
years experience in the administration of business or government, which may include former
employment with the TDI.
The Commissioner is empowered to make reasonable rules and regulations to enforce existing laws,
conduct investigations of violations of the insurance code, hold hearings, issue subpoenas, administer
oaths, take testimony, issue cease and desist orders, and assess penalties.
What are the qualifications for the Commissioner? - Answer -competent and experienced
-well informed and qualified in the field of insurance regulation
-At least 5 years experience in the administration of business and government
Who appoints the Commissioner (Chief Executive and Administrative Officer of the Texas Department of
Insurance)? - Answer Appointed by the governor with advice and consent from the senate
How many terms does the Commissioner have? - Answer Two-year term
General Powers and Duties (Commissioner) - Answer The Commissioner's powers and duties are
granted by the Department and state legislature.
In addition to administering insurance regulations in Texas, the powers and duties include:
-Regulating the business of insurance in this state
,-Executes and enforces, but does not establish, the state's insurance code and other insurance laws
-Ensuring fair competition within the insurance industry to foster competition
-Protecting and ensuring the fair treatment of consumers and handling insurance-related consumer
complaints
-Issuing producer licenses and approving, disapproving, or denying applications for a certificate of
authority to act as an insurer
-Examining the records of an insurer to determine financial condition and solvency
Which of the following is not a duty of the Commissioner?
A. Make state insurance laws
B. Handle insurance-related consumer complaints
C. Issue an insurance license for a producer
D. Enforce state insurance laws - Answer A. Make state insurance laws
The Commissioner must enforce state insurance laws, not establish them.
Examination of Records - Answer The Commissioner has a duty to examine each insurance carrier that
is organized under the laws of Texas and each carrier that is authorized to engage in business in this
state.
The Commissioner may visit the insurance carrier's principal office for the purpose of investigating the
affairs and condition.
The Commissioner or appointed examiner must examine the financial condition of an insurer, including
its ability to meet its financial obligations and liabilities, as well as its compliance with state law.
---The primary purpose of an examination is to determine solvency of the insurer.
An insurer may be examined whenever it is deemed necessary, but domestic and licensed insurers must
be examined by the Commissioner or appointed examiner no less frequently than once every 5 years.
---The insurer or agent may be required to provide free access to all books and papers that relate to the
insurer or agent's business affairs.
,The Commissioner may summon and examine under oath any of the insurer's officers, agents, and
employees in relation to the insurer's affairs and condition.
---Failing to comply with a request of examination or to provide requested information by the
department or appointed examiner will subject the insurer or insurer's agent to disciplinary action.
Can an insurer be examined whenever? - Answer An insurer may be examined whenever it is deemed
necessary, but domestic and licensed insurers must be examined by the Commissioner or appointed
examiner no less frequently than once every 5 years.
Who must examine the financial condition of an insurer? - Answer The Commissioner or appointed
examiner must examine the financial condition of an insurer, including its ability to meet its financial
obligations and liabilities, as well as its compliance with state law.
What is the primary purpose of an examination? - Answer The primary purpose of an examination is to
determine solvency of the insurer.
The Commissioner may examine the records of an insurance company for the purpose of:
A. Setting rates
B. Determining solvency
C. Approving claims
D. Approving coverages - Answer B. Determining solvency
The primary purpose of examining the records of an insurance company is to review the financial
condition of an insurer and determine solvency.
Investigation and Notice of Hearings - Answer If the Commissioner determines, upon review and
examination of records, that the financial condition of an insurer indicates a condition that might make
the insurer's continued operation hazardous to policyholders, creditors, or the public, the Commissioner
may, after notice of a hearing, order the insurer to take action to remedy the condition.
The impairment of the surplus of an insurance company is prohibited.
---The Commissioner will order an insurer to correct the impairment by bringing the surplus to an
acceptable level specified by the Commissioner or to cease doing business in this state.
, ---After issuing the order, the Commissioner will immediately institute any preceding necessary to
determine any further action.
What must the Commissioner do if there is an impairment to the surplus? - Answer The Commissioner
will order an insurer to correct the impairment by bringing the surplus to an acceptable level specified by
the Commissioner or to cease doing business in this state.
---After issuing the order, the Commissioner will immediately institute any preceding necessary to
determine any further action.
Why might the Commissioner conduct an investigation and hearing? - Answer To find out if the
financial condition of an insurer indicates a condition that might make the insurer's continued operation
hazardous to policyholders, creditors, or the public
---the Commissioner may, after notice of a hearing, order the insurer to take action to remedy the
condition.
Consumer Complaints - Answer If a consumer files a written complaint with the Department, the
Department must keep records of all related information on file.
---The Department must notify each party to an active complaint of its status at least quarterly until
disposition, unless the notice would compromise an undercover investigation.
Inquiries - Answer The Department may address a reasonable inquiry made to any insurer, agent, or
holder of any type of authority to transact business in this state if it pertains to any of the following:
---That person's business condition
---Any matter concerning that person's transactions that the Department deems necessary for the public
good
Any person receiving such an inquiry must respond to it in writing no later than 15 days after receipt
unless the person submits a written notice to the Department requesting additional time to respond.
---A record of all inquiries made by the department must be maintained by the department.
How many days does a person have to respond to an inquiry? Any exceptions? - Answer Must respond
to it in writing no later than 15 days after receipt
---unless person submits for additional time to respond
