The McCarran-Ferguson Act is a Federal law signed in 1945 in which Congress declared that insurance would be regulated at the state level. While insurance regulation is relatively uniform in all 50 states, there are state specific questions on the exam. **THIS SECTION IS SPECIFIC TO THE STATE OF ARIZONA**

The participation in any boycott or activity involving coercion and intimidation for the sole purpose of retaining business or that results in the monopoly of insurance business is prohibited. Any Arizona licensed producer who makes false statements containing any information that involves inaccurate material facts or false statements on an application for insurance is in violation of regulation. It is prohibited to use insurance or induce the purchase of insurance by offering anything with a monetary value in excess of $10.

It is also prohibited to accept anything with a monetary value in excess of $10 from a client. Any producer participating in this activity will be subject to suspension of his/her license and a monetary fine. Discriminating on the basis of class, race, marital status or sexual preference is a violation of regulation. Any practice intended to directly or indirectly favor an applicant or insured is prohibited. Denying insurance coverage based on the blindness or partial blindness of an individual is considered discrimination and is a violation of regulation.

Rebating Arizona licensed producers are prohibited from directly or indirectly giving any refund, discount, favor, or credit to reduce premiums to induce the purchase of insurance. Licensed individuals are also prohibited from receiving any payment for the solicitation of insurance outside of commissions and/or salary. Twisting Providing false information or expressing derogatory ideas about the financial conditions of a competitor company with the intent to lapse or surrender an existing policy is a violation of law.

Any written or oral statements used to induce the lapse, termination, exchange, or surrender of an insurance contract based on inaccurate information is prohibited. Sharing Commission The splitting or sharing of commissions with a licensed producer is allowed. Both parties must be licensed in Arizona in the line of business in which the proposed commission is to be split. Note: The term solicitor implies that the person is licensed. It is acceptable to share commissions with a solicitor.

Unfair Marketing Practices The Director is responsible for establishing minimum standards for the full and fair disclosure of policy content. The Director also requires the standardization and simplification of the terms used to describe insurance coverage. Advertising may not involve the following: • Any implication that policies are approved or that the financial condition of a company is endorsed by any government agency. • Any advertising statements that are false or untrue in reference to the time frame in which claims are paid.

Privacy Act of 1974 This regulation was established to provide a system for the collection, use, and dissemination of information gathered during the underwriting process. When an applicant for insurance signs the application (notice regarding insurance information practices), they give the insurer the right to check driving records, MIB, and consumer investigative reports. A signed application authorizes the insurer to collect information for 30 months. If they have not done so by then a new authorization must be obtained.

Fair Credit Reporting Act of 1971 If an applicant is denied insurance, employment or credit due to information collected, this regulation grants access to the information and reasons for the denial. After receiving notice that an adverse underwriting decision has been made (which must be communicated within 3 days), an individual has 90 business days within which to request a copy of the report. The Director requires all insurance companies provide a current copy of a buyer's guide to all prospective applicants and issue a policy summary before the collection of any premium.

Life Insurance Guarantee Association The Life and Disability Insurance Guarantee Association is made up of authorized insurers. Joining the association is part of the authorization process that admits insurance companies to conduct business in Arizona. All authorized insurers must contribute to the Guarantee Fund. The Guarantee Fund is intended to indemnify an insured whose insurer has become insolvent. Note: Surplus lines and reinsurers are unauthorized insurers, and therefore do not contribute to the Guarantee Fund.

One of the duties of the Life and Disability Insurance Guarantee Association is to indemnify policy owners of insurance companies that have become insolvent, up to $100,000 cash and $300,000 total benefits. It is unlawful for a producer to mention the Guarantee Fund in a sales situation unless the applicant inquires about it.

Telemarketing The DO NOT CALL registry is a list of telephone numbers, and the DO NOT CALL registry is intended to prevent calls from telemarketers. Unsolicited sales calls must be made in accordance with the following provisions: • No call may be placed outside of the hours of 8 a.m. to 9 p.m. local time where the call is received. • The sales nature of the call and the nature of the product being offered must be disclosed. • The caller must identify themselves and the insurer they represent. • If a prize is being offered, the prize cannot be contingent on purchase.