Study guide
18.3 Privacy, Fraud, and Consumer Protection
Alaska Property & Casualty Insurance State
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1 Standalone Coverage Map
Standalone Coverage Map
2 Introduction: Alaska Property & Casualty Insurance Exam Overview
Alaska Property & Casualty Exam Overview
3 National Portion: Insurance Fundamentals
1.1 Risk, Hazards, Perils, and the Law of Large Numbers 1.2 Insurable Interest, Indemnity, and Other Insurance Principles 1.3 Insurance Contract Law and Elements 1.4 Policy Structure: Declarations, Insuring Agreement, Conditions, Exclusions 1.5 Parties, Agents vs. Brokers, and Authority
4 National Portion: Property Insurance Concepts
2.1 Causes of Loss / Named-Peril vs. Open-Peril 2.2 Valuation: ACV, Replacement Cost, and Functional Value 2.3 Coinsurance and the Coinsurance Formula 2.4 Deductibles, Limits, and Loss Settlement 2.5 Common Property Policy Conditions and Clauses
5 National Portion: Dwelling Policies (DP)
3.1 Dwelling Policy Forms DP-1, DP-2, DP-3 3.2 Dwelling Coverages A-E and Other Coverages 3.3 Dwelling Perils, Conditions, and Endorsements 3.4 Mobile Home and Specialized Dwelling Coverage
6 National Portion: Homeowners Policies - Forms & Section I
Homeowners Forms HO-2 through HO-8 and Eligibility Section I Coverages A-D and Additional Coverages Section I Perils Insured Against and Exclusions Replacement Cost vs. ACV and Loss Settlement in Homeowners
7 National Portion: Homeowners Policies - Section II & Endorsements
Section II Coverages E (Liability) and F (Medical Payments) Homeowners Conditions and Duties After Loss Common Homeowners Endorsements
8 National Portion: Personal Auto Policy - Liability & Injury
6.1 Personal Auto Policy Structure and Eligibility 6.2 Part A Liability and Supplementary Payments 6.3 Part B Medical Payments 6.4 Part C Uninsured/Underinsured Motorists
9 National Portion: Personal Auto Policy - Physical Damage & Duties
7.1 Part D Coverage for Damage to Your Auto 7.2 Exclusions and Part E Duties After an Accident 7.3 Part F General Provisions, Endorsements, and No-Fault Concepts
10 National Portion: Liability Insurance Concepts
8.1 Negligence, Torts, and Legal Liability 8.2 Defenses, Damages, and Vicarious Liability 8.3 Occurrence vs. Claims-Made Triggers 8.4 Bodily Injury, Property Damage, and Personal/Advertising Injury
11 National Portion: Commercial Property Insurance
9.1 Commercial Package Policy Structure and Common Policy Conditions 9.2 Building and Personal Property Coverage Form (BPP) 9.3 Causes of Loss Forms (Basic, Broad, Special) 9.4 Business Income and Extra Expense 9.5 Commercial Property Endorsements and the BOP
12 National Portion: Commercial General Liability - Coverages
10.1 CGL Coverage A: Bodily Injury and Property Damage Liability 10.2 CGL Coverage B: Personal and Advertising Injury, Coverage C: Medical Payments 10.3 Who Is an Insured and Supplementary Payments
13 National Portion: Commercial General Liability - Limits, Triggers & Exclusions
11.1 CGL Limits of Insurance and Aggregates 11.2 Occurrence vs. Claims-Made CGL and Retroactive Dates 11.3 Key CGL Exclusions and Endorsements
14 National Portion: Commercial Auto Insurance
12.1 Business Auto Coverage Form and Covered Auto Symbols 12.2 Commercial Auto Liability and Physical Damage 12.3 Motor Carrier / Trucking and MCS-90 12.4 Garage Coverage Form and Garagekeepers 12.5 Commercial Auto Endorsements
15 National Portion: Workers Compensation
13.1 Workers Compensation Statutory Background and Benefits 13.2 Part One (Workers Comp) and Part Two (Employers Liability) 13.3 Premium Basis, Experience Modification, and Classification 13.4 Other States, USL&H, and Federal Acts 13.5 Workers Comp Exclusions and Endorsements
16 National Portion: Other Commercial Lines - BOP, Crime & Marine
14.1 Businessowners Policy (BOP) in Depth 14.2 Crime and Fidelity Coverage 14.3 Inland Marine and Nationwide Marine Definition 14.4 Ocean Marine Coverages (Hull, Cargo, Freight, P&I)
17 National Portion: Other Commercial Lines - Specialty & Professional
15.1 Farm and Agricultural Coverage 15.2 Commercial Umbrella and Excess Liability 15.3 Professional Liability and Errors & Omissions 15.4 Directors & Officers and Employment Practices Liability
18 National Portion: Other Commercial Lines - Surety, Flood & Specialty
16.1 Surety and Fidelity Bonds 16.2 National Flood Insurance Program (NFIP) 16.3 Cyber, Aviation, and Other Specialty Lines
19 National Portion: Insurance Regulation & Market Conduct
17.1 State Regulation, Licensing, and the McCarran-Ferguson Act 17.2 Rates, Forms, Solvency, and Guaranty Associations 17.3 Producer Authority, Fiduciary Duty, and Company Operations
20 National Portion: Ethics & Unfair Trade Practices
18.1 Unfair Trade Practices and Unfair Claims Settlement 18.2 Producer Ethics, Errors & Omissions Exposure, and Fiduciary Conduct 18.3 Privacy, Fraud, and Consumer Protection
21 Chapter 1: Alaska P&C Insurance Regulation & Licensing
1.1 Alaska Division of Insurance 1.2 Alaska P&C Producer Licensing Requirements 1.3 Alaska Producer Duties and Responsibilities
22 Chapter 2: Alaska Property Insurance
2.1 Alaska Homeowners Insurance 2.2 Alaska Property Insurance Policy Provisions
23 Chapter 3: Alaska Auto & Casualty Insurance
3.1 Alaska Auto Insurance Requirements 3.2 Alaska Commercial Liability Insurance
24 Chapter 4: Alaska Ethics & Professional Conduct
4.1 Alaska Ethical Standards for Insurance Producers 4.2 Alaska Privacy Laws and Regulatory Compliance
18.3 Privacy, Fraud, and Consumer Protection
Key Takeaways Explain This Topic AI
GLBA requires privacy notices and an opt-out for sharing nonpublic personal financial information; health information is generally opt-in.
FCRA requires an adverse-action notice naming the reporting agency when a consumer report causes denial or higher rates.
Insurance fraud is a knowing misrepresentation of a material fact; materiality means it would have changed the decision.
Under 18 U.S.C. 1033, a dishonesty/breach-of-trust felony bars insurance employment without written regulatory consent.
Free-look periods, replacement notices, and complaint/market-conduct exams are core consumer-protection tools.
Last updated: June 2026
The Privacy Framework
Two federal/model layers are tested. The Gramm-Leach-Bliley Act (GLBA) requires financial institutions, including insurers and agencies, to deliver privacy notices describing information-sharing and to give consumers an opt-out of certain sharing with nonaffiliated third parties. The NAIC built on this with privacy model regulations.
Distinguish two categories the exam loves:
Nonpublic personal financial information (NPI) — opt-OUT applies; the consumer is sharing-eligible unless they opt out.
Nonpublic personal health information — generally opt-IN; the insurer needs authorization before disclosure.
A privacy notice must go out at the time the relationship is established and annually thereafter, with limited modern exceptions when sharing practices have not changed and the consumer has not opted out.
Watch the consumer-versus-customer distinction. A consumer has a one-time interaction (an applicant who does not buy); a customer has an ongoing relationship and is owed the initial and annual notices. Both get the opt-out right before NPI is shared with nonaffiliated third parties, except where an exception (servicing, joint marketing under contract, legally required disclosures) removes the opt-out entirely.
Other Consumer-Information Statutes
Law What it governs Producer/insurer duty
Fair Credit Reporting Act (FCRA) Consumer/credit reports used in underwriting Give an adverse action notice and name the reporting agency when a report causes denial or higher rates
- GLBA Financial privacy Privacy notice + opt-out of NPI sharing
- HIPAA / NAIC health privacy Health information Authorization (opt-in) before disclosure
Adverse action trap: if an insurer raises a premium or declines coverage based even in part on a consumer report (including a credit-based insurance score where permitted), it must notify the applicant and disclose the source so the consumer can dispute errors.
Insurance Fraud and Anti-Fraud Statutes
Fraud is a knowing misrepresentation of a material fact to obtain a benefit or payment. It runs both directions:
Claimant/insured fraud — staged losses, inflated claims, false applications.
Producer/insurer fraud — fictitious policies, premium theft, fake claims, fronting unlicensed entities.
Key federal exposure: under 18 U.S.C. 1033/1034 , it is a federal crime for anyone convicted of a felony involving dishonesty or breach of trust to work in the business of insurance without written 1033 consent from the state regulator. The exam frequently tests that a prior dishonesty felony bars insurance employment absent that waiver. Materiality is the lynchpin: a misstatement that would have changed the underwriting or claim decision is material; a trivial inaccuracy generally is not.
Consumer Protection: Disclosures, Free-Look, and Replacement
Consumer-protection rules cluster around transparency and time to reconsider:
Buyer's guides and disclosure statements must be delivered for certain products so consumers can compare.
Replacement regulations require notices and, often, a side-by-side comparison so a consumer is not churned/twisted into an inferior policy.
Free-look / right-to-examine periods (commonly 10-30 days, product-dependent) let a buyer return a policy for a full refund.
Complaint records and market-conduct exams let regulators detect patterns; a high complaint ratio invites a market-conduct examination.
The through-line with 18.1: privacy, FCRA adverse-action, and fraud rules all exist to protect the consumer's information and the integrity of the transaction, and violations feed into the same disciplinary machinery as unfair trade practices.
Worked Example: Complaint Ratio Triggers an Exam
Market-conduct oversight is data-driven. Suppose an insurer wrote 20,000 policies in a state and the department logged 80 justified complaints for the year. The complaint ratio is 80 / 20,000 = 0.4% , or 4 complaints per 1,000 policies. If the statewide norm for that line is roughly 1 per 1,000, this carrier is running about four times the expected rate.
That outlier ratio is exactly what triggers a market-conduct examination , where the regulator samples claim files and sales records looking for a general business practice (tying back to 18.1). A single complaint proves little; a sustained, above-norm ratio signals a pattern. Producers should know that their own complaint history rolls up into these numbers and that responsiveness to complaints is itself a regulated behavior.
Anti-Fraud Programs and Reporting Duties
Most states require insurers to maintain a special investigations unit (SIU) or anti-fraud plan and to place a fraud warning on applications and claim forms (the statement that knowingly providing false information is a crime). Producers and adjusters who suspect fraud generally have a duty to report it to the state fraud bureau , and these reports usually carry immunity from civil liability when made in good faith, so the producer is protected for reporting a suspected staged loss.
Distinguish the two consequences of a false statement. On an application , a material misrepresentation can let the insurer rescind the policy (treat it as void from inception) within the contestable framework. On a claim , the concealment or fraud condition lets the insurer void coverage for that loss. A homeowner who inflates a genuine $8,000 theft claim to $20,000 risks losing the entire claim, not just the padded portion, under the fraud condition.
Materiality remains the hinge: would the truth have changed the underwriting or the claim decision? If yes, it is material; if it is trivial, the remedy generally does not reach rescission or voiding.