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Exam 8: Government Regulation of Insurance

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Question 21

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The principal methods of ensuring insurer solvency include all of the following EXCEPT

A) Security and Exchange Commission oversight of investments.
B) risk-based capital standards.
C) field examinations.
D) review of required annual financial statements.

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Question 22

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Advantages cited by proponents of state regulation of insurance include all of the following EXCEPT

A) uniformity of laws by the NAIC.
B) greater opportunity for innovation.
C) greater responsiveness to local needs.
D) centralization of political power.

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Question 23

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The regulation of insurers in areas that affect consumers,which include claims handling,underwriting,complaints,advertising,sales practices,and other trade practices is called

In which of the following did the Court decide that insurance was interstate commerce when conducted across state lines,and therefore was subject to federal regulation?

An insurance company chartered in another country has been licensed to operate in your state.In your state,the insurer would be considered a(n)

Which of the following statements concerning the proposed optional federal charter for life insurers is (are) true? I.Large insurers operating in many states would more likely prefer a state charter while smaller,regional,insurers would more likely choose a federal charter. II.Proponents of the federal charter argue that it would speed the development and approval of new products.

All of the following are methods helping to insure the solvency of insurers EXCEPT

XYZ Mutual Insurance Company has total assets of $10 million.The policyholders' surplus is $2 million.What are XYZ Mutual's total liabilities?

State X's premium tax rate is 2 percent.State Y's premium tax rate is 3 percent.State X insurers are required to pay the 3 percent rate on business written in State Y.State X requires insurers from State Y to pay a 3 percent premium tax on business written in State X,even though the premium tax rate is only 2 percent in State X.This practice is known as a

Which of the following is an argument for repealing the McCarran-Ferguson Act?

Which of the following statements about the licensing of insurance companies is (are) true? I.A new capital stock insurer must meet minimum capital and surplus requirements,which vary by state and line of insurance. II.The licensing requirements for insurance companies are less stringent than those imposed on most other types of firms.

The policyholders' surplus of an insurer is defined as the difference between its

Which of the following statements about state insurance guaranty funds is (are) true? I.They limit the amount that policyowners can collect if an insurer becomes insolvent. II.They are usually funded by general revenues of the states.

Which of the following statements about the regulation of life insurance companies is (are) true? I.The percentage of assets a life insurance company may invest in a specific type of asset (e.g. ,stocks or bonds) is generally limited by law. II.The purpose of limiting the accumulation of surplus is to prevent an insurer from increasing its surplus at the expense of policyowner dividends.

Under one type of rating law,insurers are free to change rates and to use modified rates immediately.However,the new rate must be filed with regulators within a specified period,such as 60 days after the modified rate is employed.This type of rating law is called

By misrepresenting the true facts,Gretchen was able to convince a client to drop a life insurance policy with another company and to purchase a policy from the company that Gretchen represents.Gretchen has engaged in an illegal sales practice called

A life insurance company based in Canada was licensed to operate in Massachusetts.When operating in Massachusetts,the Canadian insurer would be considered a(n)

Which of the following statements about the regulation of insurance company investments is (are) true? I.The purpose of regulating insurance company investments is to prevent insurers from making unsound investments which could threaten their solvency. II.Life insurers can invest an unlimited amount of their assets in common stocks.

All of the following statements about the methods of regulating insurance are true EXCEPT

The right of the states to regulate the business of insurance was first established by