Regulatory Compliance & Law Flashcards
7 cards from real ACE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Regulatory Compliance & Law flashcards as text
The NAIC's Insurance Data Security Model Law is primarily designed to address:
Answer: Cybersecurity requirements for insurance licensees
The NAIC Insurance Data Security Model Law establishes standards for data security programs and breach notification for insurance licensees.
Which cancellation reason typically requires the longest advance notice to the insured under state statutes?
Answer: Mid-term nonrenewal of a personal auto policy
Nonrenewal notices generally require longer advance notice (often 30–60 days) than mid-term cancellations for nonpayment, which may only require 10 days.
In ACORD XML transactions, what does the term 'schema validation' ensure?
Answer: That the data conforms to the agreed-upon structure and data types
Schema validation checks that XML transaction data conforms to the ACORD-defined structure, required elements, and data types.
What is the primary purpose of a 'Market Conduct Examination' conducted by a state insurance department?
Answer: To evaluate insurer practices in sales, underwriting, and claims handling
Market conduct examinations review an insurer's business practices—such as sales, underwriting, and claims—to ensure compliance with state laws protecting consumers.
Under the NAIC Producer Licensing Model Act, a producer who moves to a new state may obtain a nonresident license through:
Answer: Reciprocal licensing based on their home state license
Reciprocal licensing allows producers licensed in their home state to obtain nonresident licenses in other states without retaking exams, provided those states have reciprocity agreements.
Which practice is specifically prohibited by most state 'twisting' statutes?
Answer: Inducing a policyholder to lapse or replace a policy through misrepresentation
Twisting is the illegal act of inducing a policyholder to replace existing coverage through misrepresentation or incomplete comparison of policy terms.
When ACORD forms reference 'Additional Insured' status, the legal significance under compliance law is that:
Answer: The additional insured gains limited coverage under the named insured's policy
Additional insured status extends certain coverage protections from the named insured's policy to a third party, subject to the policy's terms and endorsements.