Which statement correctly describes the reach of the general prohibition in Kentucky's insurance trade practices act?

It covers practices the act defines as unfair and practices determined under the act to be unfair

A health insurer charges two applicants different premiums for the same policy. Both are in the same class and present essentially the same hazards, and the difference rests on no factor relating to the risk, the plan of insurance, or expense. Under Kentucky law, this practice is:

Prohibited as unfair discrimination between individuals of the same class in health insurance

A Kentucky auto insurer has accepted that its insured caused a crash. The claimant's vehicle damage is undisputed, but the insurer, as a regular business practice, withholds payment for it until the claimant agrees to a low figure on the injury claim under the same policy. Which listed unfair claims settlement practice best describes this conduct?

Failing to settle promptly under one part of the coverage, where liability is apparent, to influence settlement under another part

To close the sale of a health policy, an insurer's salaried sales representative promises the prospect a seat on an advisory board that will pay the prospect special returns out of the insurer's profits. Under Kentucky law, this offer is:

A prohibited inducement, regardless of whether an insurer or a producer makes it

For purposes of administration and assessment, how many accounts does the Kentucky Life and Health Insurance Guaranty Association maintain, and what are they?

Three accounts: health, life insurance, and annuity

A department employee telephones a licensee to say the commissioner has decided to take action against the licensee's license. Under Kentucky law, when can an order of the commissioner take effect?

Only when it is in writing and signed by the commissioner or by the commissioner's authority

An agent hands out a printed flyer for a limited hospital indemnity policy, calling it the 'Complete Major Medical Plan' even though the policy pays only a fixed daily amount during a hospital stay. Under Kentucky's general advertising statute, how is this flyer treated?

It is prohibited, because the name given to the policy misrepresents what the policy really is

A member health insurer becomes insolvent. One of its insureds held an individual policy with a right to convert coverage, and the guaranty association offers her an alternative policy as substitute coverage. Which statement about that alternative policy is correct under Kentucky law?

It may not add a waiting period or exclusion that the terminated policy would not have applied

Kentucky law requires an individual insurance policy to specify all of the following EXCEPT:

The name of the agent who sold the policy

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1.Which statement correctly describes the reach of the general prohibition in Kentucky's insurance trade practices act?
Answer: B. It covers practices the act defines as unfair and practices determined under the act to be unfair
The general prohibition bars any person from engaging, in Kentucky, in a trade practice that the act defines as unfair competition or an unfair or deceptive insurance practice, or that is found under the act to be one. Because it reaches practices determined under the act as well as those it defines, it is wrong to say only listed practices are covered. It applies to any person, not only insurers. Nothing in the prohibition requires a prior court finding or a financial loss to a policyholder.
Source
Ky. Rev. Stat. Ann. Sec. 304.12-010 (Unfair competition -- Unfair, deceptive practices prohibited)
Choose an answer to see the explanation.
2.A health insurer charges two applicants different premiums for the same policy. Both are in the same class and present essentially the same hazards, and the difference rests on no factor relating to the risk, the plan of insurance, or expense. Under Kentucky law, this practice is:
Answer: B. Prohibited as unfair discrimination between individuals of the same class in health insurance
Subsection (3) of KRS 304.12-080 bars any insurer from unfairly discriminating between individuals of the same class involving essentially the same hazards in the premium or rates charged for health insurance. A class may take account of the nature of the risk, the plan of insurance, expense, or another relevant factor, but the stem rules all of those out. Subsection (1) does exclude life and health insurers, but subsection (3) separately reaches health insurers, so that exclusion does not permit the practice. The section contains no exception for telling the applicant about the difference, and it is not limited to life insurance.
Source
Ky. Rev. Stat. Ann. Sec. 304.12-080(3) (Unfair discrimination prohibited; effective June 18, 1970)
Choose an answer to see the explanation.
3.A licensed Kentucky producer moves to a new residential address. How soon after the move must the producer inform the commissioner of the new address?
Answer: B. Within 30 days
Kentucky requires a licensee who changes an address to notify the commissioner within 30 days of the change, in writing. The statute sets 30 days, so both 10 days and 60 days misstate the deadline. Waiting for the next renewal is wrong because the deadline runs from the change itself, not from the renewal cycle.
Source
Ky. Rev. Stat. Ann. Sec. 304.9-200(2) (Contents of license -- Change of address)
Choose an answer to see the explanation.
4.A Kentucky auto insurer has accepted that its insured caused a crash. The claimant's vehicle damage is undisputed, but the insurer, as a regular business practice, withholds payment for it until the claimant agrees to a low figure on the injury claim under the same policy. Which listed unfair claims settlement practice best describes this conduct?
Answer: D. Failing to settle promptly under one part of the coverage, where liability is apparent, to influence settlement under another part
The unfair claims settlement practices list includes holding up a prompt settlement under one portion of the coverage, once liability is apparent, in order to influence settlement under other portions. Here the property damage portion is clear and is being used as leverage on the injury portion. Requiring a preliminary report followed by a formal proof of loss carrying substantially the same information is a different listed practice, and nothing here involves duplicate paperwork. Lowball offers that force insureds to litigate and advertising a habit of appealing arbitration awards are also separate listed practices, and neither is present.
Source
Ky. Rev. Stat. Ann. Sec. 304.12-230(13) (Unfair claims settlement practices)
Choose an answer to see the explanation.
5.To close the sale of a health policy, an insurer's salaried sales representative promises the prospect a seat on an advisory board that will pay the prospect special returns out of the insurer's profits. Under Kentucky law, this offer is:
Answer: C. A prohibited inducement, regardless of whether an insurer or a producer makes it
KRS 304.12-110 bars an insurer, an insurance producer, or any other person from offering, as an inducement to insurance, an advisory board contract or similar arrangement that promises profits, special returns, or special dividends. Employment and securities are also on the list, but the list is not limited to them. The section has no exception for written disclosure. Because it reaches insurers and other persons as well as producers, an insurer's employee making the offer is covered.
Source
Ky. Rev. Stat. Ann. Sec. 304.12-110(3) (Illegal inducements prohibited; effective July 14, 2022)
Choose an answer to see the explanation.
6.For purposes of administration and assessment, how many accounts does the Kentucky Life and Health Insurance Guaranty Association maintain, and what are they?
Answer: D. Three accounts: health, life insurance, and annuity
KRS 304.42-060(1) creates the Kentucky Life and Health Insurance Guaranty Association as a nonprofit legal entity and directs it to keep three accounts for administration and assessment: a health account, a life insurance account, and an annuity account. Property and casualty is not among them, and the statute lists neither a separate HMO account nor a combined life and health account. The same subsection requires member insurers to be and remain members as a condition of their authority to do business in Kentucky.
Source
Ky. Rev. Stat. Ann. Sec. 304.42-060(1) (Creation of association; effective June 27, 2019)
Choose an answer to see the explanation.
7.A department employee telephones a licensee to say the commissioner has decided to take action against the licensee's license. Under Kentucky law, when can an order of the commissioner take effect?
Answer: B. Only when it is in writing and signed by the commissioner or by the commissioner's authority
KRS 304.2-120(2) makes orders and notices of the commissioner effective only when they are written and signed by the commissioner or under the commissioner's authority. A phone call, a licensee's acknowledgment of an oral message, and an unsigned website posting each fail that requirement. Subsection (3) adds that every order must state its effective date and concisely state its purpose, its grounds, and the code provisions under which action is taken.
Source
Ky. Rev. Stat. Ann. Sec. 304.2-120(2) (Orders and notices in general; effective July 15, 2010)
Choose an answer to see the explanation.
8.An agent hands out a printed flyer for a limited hospital indemnity policy, calling it the 'Complete Major Medical Plan' even though the policy pays only a fixed daily amount during a hospital stay. Under Kentucky's general advertising statute, how is this flyer treated?
Answer: A. It is prohibited, because the name given to the policy misrepresents what the policy really is
KRS 304.12-020 bars any person from making or spreading an advertisement, whether spoken or in any other form, that uses a name or title for a policy which misrepresents the policy's true nature. Calling a limited daily-indemnity policy a complete major medical plan does exactly that. The statute is not limited to dividends: misstatements about dividends and surplus are only one of the four listed categories. The section contains no exception for advertising the insurer has approved. And because it reaches advertising made orally or in other manner, a printed flyer is covered without any oral repetition.
Source
Ky. Rev. Stat. Ann. Sec. 304.12-020(2) (Advertisements in general; effective June 18, 1970)
Choose an answer to see the explanation.
9.A member health insurer becomes insolvent. One of its insureds held an individual policy with a right to convert coverage, and the guaranty association offers her an alternative policy as substitute coverage. Which statement about that alternative policy is correct under Kentucky law?
Answer: B. It may not add a waiting period or exclusion that the terminated policy would not have applied
When the association provides substitute coverage under KRS 304.42-080(2)(b), subparagraph 4 lets it either reissue the terminated coverage or issue an alternative policy at actuarially justified rates. Either way, the policy must be offered without requiring evidence of insurability and may not impose a waiting period or exclusion that the terminated policy would not have applied. Subparagraph 5.b bars the premium from reflecting changes in the insured's health after the original policy was last underwritten. Because an alternative policy is expressly allowed, the association is not limited to reproducing the original form.
Source
Ky. Rev. Stat. Ann. Sec. 304.42-080(2)(b)4.b (Powers and duties of association; effective June 27, 2019)
Choose an answer to see the explanation.
10.Kentucky law requires an individual insurance policy to specify all of the following EXCEPT:
Answer: D. The name of the agent who sold the policy
KRS 304.14-150(1) lists what every policy must specify: the names of the parties, the subject of the insurance, the risks insured against, when coverage takes effect and how long it continues, the premium, the conditions of the insurance, and the benefits payable. The parties, the risks and the premium are all on that list; the name of the selling agent is not. Subsection (3) removes surety contracts, group policies and title policies from these requirements, which is why the question refers to an individual policy.
Source
Ky. Rev. Stat. Ann. Sec. 304.14-150(1) (Contents of policies in general; effective June 18, 1970)
Choose an answer to see the explanation.

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1.Which statement correctly describes the reach of the general prohibition in Kentucky's insurance trade practices act?

2.A health insurer charges two applicants different premiums for the same policy. Both are in the same class and present essentially the same hazards, and the difference rests on no factor relating to the risk, the plan of insurance, or expense. Under Kentucky law, this practice is:

3.A licensed Kentucky producer moves to a new residential address. How soon after the move must the producer inform the commissioner of the new address?

5.To close the sale of a health policy, an insurer's salaried sales representative promises the prospect a seat on an advisory board that will pay the prospect special returns out of the insurer's profits. Under Kentucky law, this offer is:

6.For purposes of administration and assessment, how many accounts does the Kentucky Life and Health Insurance Guaranty Association maintain, and what are they?

7.A department employee telephones a licensee to say the commissioner has decided to take action against the licensee's license. Under Kentucky law, when can an order of the commissioner take effect?

8.An agent hands out a printed flyer for a limited hospital indemnity policy, calling it the 'Complete Major Medical Plan' even though the policy pays only a fixed daily amount during a hospital stay. Under Kentucky's general advertising statute, how is this flyer treated?

9.A member health insurer becomes insolvent. One of its insureds held an individual policy with a right to convert coverage, and the guaranty association offers her an alternative policy as substitute coverage. Which statement about that alternative policy is correct under Kentucky law?

10.Kentucky law requires an individual insurance policy to specify all of the following EXCEPT:

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