Maryland Life and Health Insurance License Practice Exam

Which of the following is NOT a valid reason for the Commissioner to deny or refuse a producer license application?

1. Unintentional misrepresentation of a material fact

2. Criminal history in the past five years

3. Failure to pass the licensing examination

4. Previous insurance-related fraud

The correct answer is: Unintentional misrepresentation of a material fact

The correct answer is that unintentional misrepresentation of a material fact is not a valid reason for the Commissioner to deny or refuse a producer license application. This is because the intent behind the misrepresentation is a key factor; if the misrepresentation was unintentional, it typically does not reflect a willful disregard for the truth or integrity, which is often a critical consideration in licensing decisions. In other words, the Commissioner assesses the character and integrity of the applicant. While a material misrepresentation can be significant, the unintentional aspect suggests that the applicant did not intentionally deceive or mislead, which likely lessens the impact on their eligibility. On the other hand, criminal history within the past five years, failure to pass the licensing examination, and previous insurance-related fraud are considered serious issues that reflect negatively on an applicant's qualifications or integrity. Criminal history can demonstrate a lack of trustworthiness, while failing the licensing examination indicates a lack of necessary knowledge or competency. Previous insurance-related fraud shows a pattern of dishonesty that the Commissioner would take into account during the licensing process. Therefore, these reasons are valid grounds for denial of a producer license application.