Minnesota State Insurance Licensing Exam UPDATED
ACTUAL Questions and CORRECT Answers
What is an agent? Someone who acts on behalf of another (producer)
What is a principal? Party for whom action is taken (insurance company)
What is an agency agreement? Legal agreement that establishes the relationship between the principal and
agent; outlines powers and responsibilities of agents.
What is Express authority? Powers given to agent as part of agency agreement(written)
What is implied authority? Powers not given by the agency agreement, but necessary to complete the
functions allowed in the agency agreement
What is apparent authority? Powers not given by the agency agreement, but that a reasonable person would
presume the agent has (between you and consumer)
What are producer responsibilities? 1. Have a fiduciary (trust) responsibility to the insurer. Means the producer must
always protect insurer's interests and follow any lawful instructions from the
insurer
2. Must also uphold high standards of commercial honor when dealing
w/applicant. Must act fairly and honestly, and disclose all info needed by the
applicant to make well-informed buying decision.
What is the McCarran-Ferguson Act? Individual states, not federal gov, responsible for regulating insurance industry.
Who oversee the MN insurance industry? Department of Commerce
Who direct the dept of commerce? Headed by commissioner of commerce who is appointed by the governor
What does the Dept of Commerce do? -Enforces all MN insurance laws
-Establishes rules & procedures to ensure the consistent enforcement of the laws
-Conduct investigations and hold hearings
-Examine books, records, documents of any person or entity engaged in
regulated activities at anytime w/no court order
-Publish info collected from investigations, hearings, and examinations
-Require reports of all sales/transactions that are regulated
, How frequently are insurance companies audited? Once every 5 years
How much notice does an insurance company get of an 30 days notice identifying scope of investigation.
audit?
What happens if insurance company fails to obtain a Company's policies remain valid, but company faces severe penalties.
license to sell insurance?
What is a certificate of authority? An admitted or authorized carrier must obtain a cert of authority to transact
business.
What is a company appointment? Used to grant producers authority to solicit insurance business for admitted
carriers
What is a non-admitted carrier? Companies w/o cert of auth (unlicensed)
What are surplus lines companies? May sell insurance in MN w/o a cert of authority, but may only transact business
through a licensed surplus agent.
Who is required to have an insurance license? Anyone who solicits, or appoints others to solicit insurance on behalf of insurance
company.
What is a resident producer? Issued to a person who resides in MN or maintains person's principal place of
business in MN.
What is a non-resident producer? Issued to a person if that person is already a licensed resident producer in good
standing in the person's home state.
What is a managing general agent? Hires producers, supervises a territory, manages producer activities. Must be
licensed as an insurance producer.
ACTUAL Questions and CORRECT Answers
What is an agent? Someone who acts on behalf of another (producer)
What is a principal? Party for whom action is taken (insurance company)
What is an agency agreement? Legal agreement that establishes the relationship between the principal and
agent; outlines powers and responsibilities of agents.
What is Express authority? Powers given to agent as part of agency agreement(written)
What is implied authority? Powers not given by the agency agreement, but necessary to complete the
functions allowed in the agency agreement
What is apparent authority? Powers not given by the agency agreement, but that a reasonable person would
presume the agent has (between you and consumer)
What are producer responsibilities? 1. Have a fiduciary (trust) responsibility to the insurer. Means the producer must
always protect insurer's interests and follow any lawful instructions from the
insurer
2. Must also uphold high standards of commercial honor when dealing
w/applicant. Must act fairly and honestly, and disclose all info needed by the
applicant to make well-informed buying decision.
What is the McCarran-Ferguson Act? Individual states, not federal gov, responsible for regulating insurance industry.
Who oversee the MN insurance industry? Department of Commerce
Who direct the dept of commerce? Headed by commissioner of commerce who is appointed by the governor
What does the Dept of Commerce do? -Enforces all MN insurance laws
-Establishes rules & procedures to ensure the consistent enforcement of the laws
-Conduct investigations and hold hearings
-Examine books, records, documents of any person or entity engaged in
regulated activities at anytime w/no court order
-Publish info collected from investigations, hearings, and examinations
-Require reports of all sales/transactions that are regulated
, How frequently are insurance companies audited? Once every 5 years
How much notice does an insurance company get of an 30 days notice identifying scope of investigation.
audit?
What happens if insurance company fails to obtain a Company's policies remain valid, but company faces severe penalties.
license to sell insurance?
What is a certificate of authority? An admitted or authorized carrier must obtain a cert of authority to transact
business.
What is a company appointment? Used to grant producers authority to solicit insurance business for admitted
carriers
What is a non-admitted carrier? Companies w/o cert of auth (unlicensed)
What are surplus lines companies? May sell insurance in MN w/o a cert of authority, but may only transact business
through a licensed surplus agent.
Who is required to have an insurance license? Anyone who solicits, or appoints others to solicit insurance on behalf of insurance
company.
What is a resident producer? Issued to a person who resides in MN or maintains person's principal place of
business in MN.
What is a non-resident producer? Issued to a person if that person is already a licensed resident producer in good
standing in the person's home state.
What is a managing general agent? Hires producers, supervises a territory, manages producer activities. Must be
licensed as an insurance producer.
