Regulation Flashcards
7 cards from real Actuary Certification practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Regulation flashcards as text
Under NAIC model regulations, what is the primary purpose of risk-based capital (RBC) requirements for insurers?
Answer: To ensure insurers hold sufficient capital relative to their risk profile
RBC requirements ensure insurers maintain capital levels commensurate with the risks they underwrite, protecting policyholders from insolvency.
Which regulatory body oversees the financial examination of life insurance companies in the United States?
Answer: State insurance departments
Insurance regulation in the US is primarily state-based, with state insurance departments conducting financial examinations of insurers.
Under the Actuarial Standards of Practice (ASOPs), what does the term 'materiality' refer to in actuarial work?
Answer: The significance of an item such that its omission or misstatement could influence the intended user's decisions
Materiality refers to whether an item is significant enough that its absence or misrepresentation would affect decisions made by those relying on the actuarial work.
The Dodd-Frank Wall Street Reform and Consumer Protection Act created which oversight council relevant to systemic risk in the insurance sector?
Answer: FSOC (Financial Stability Oversight Council)
FSOC was created by Dodd-Frank to identify and respond to systemic risks, including designating certain large insurers as systemically important financial institutions (SIFIs).
In the context of insurance regulation, what is an 'admitted' insurer?
Answer: An insurer licensed and authorized to conduct business in a specific state
An admitted insurer is one that has received a license from the state insurance department and is authorized to sell insurance products in that state.
Which ASOP specifically addresses the actuary's responsibilities regarding communications of actuarial findings?
Answer: ASOP No. 41
ASOP No. 41, Actuarial Communications, outlines the requirements and standards for how actuaries must communicate their work and findings.
What is the purpose of the Insurance Regulatory Information System (IRIS) ratios used by the NAIC?
Answer: To identify insurance companies that may warrant regulatory attention due to financial concerns
IRIS ratios are financial ratios used by state regulators to screen insurers and identify those that may need closer regulatory scrutiny due to potential financial difficulties.