State RegulationsOH specificDifficulty 2/5
A producer is appointed only by Insurer X. He sells an Insurer Y policy before Y appoints him. Under Ohio law, Insurer Y:
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
ORC 3905.18 prohibits paying a commission or other compensation for the sale of insurance to a person who is not appointed by the insurer for the product sold. An insurer files its notice of appointment for a producer under ORC 3905.20 and OAC 3901-5-09(K), and until the producer is properly appointed by Insurer Y, compensation for Y business cannot flow. The rule protects the appointment system that links each producer to each insurer the producer represents.
Why the other options are wrong
- A) Backfilling the commission after a later filing does not fit the statute; compensation for the sale may not be paid to an unappointed producer.
- B) The statute addresses compensation to the unappointed producer; it does not operate by forcing a refund of the premium to the policyholder.
- C) Passing a company product exam is not a substitute for the required appointment; without the appointment the commission is prohibited.
Memory hook
No appointment, no commission — even if the policy got sold.