Regulatory Compliance & Risk Management Flashcards

Under the Gramm-Leach-Bliley Act, an insurer handling claims must generally provide consumers with:

Answer: A privacy notice describing its information-sharing practices

GLBA requires financial institutions, including insurers, to give privacy notices and allow opt-out of certain sharing with nonaffiliated third parties.

Which of the following would most likely be considered an unfair claims practice under state law?

Answer: Compelling insureds to litigate by offering substantially less than amounts ultimately recovered

Lowball offers that force litigation to recover amounts due are expressly listed as unfair practices in the NAIC model act.

A workers' compensation claims unit reviews loss runs to find the most frequent injury types and recommends ergonomic changes to the employer. This activity is primarily:

Answer: Loss prevention and reduction

Analyzing loss data to reduce the frequency or severity of future losses is loss control.

Many states based their insurer cybersecurity requirements on the NAIC Insurance Data Security Model Law. A key requirement is that licensees must:

Answer: Maintain a written information security program based on a risk assessment

The model law requires a risk-based written information security program, oversight of third-party providers, and notice of cybersecurity events.

An adjuster licensed only in Ohio is sent to handle claims after a hurricane in Florida. Florida most likely allows this through:

Answer: An emergency adjuster license or temporary authority

Many catastrophe-prone states issue emergency or temporary adjuster licenses during declared disasters.

A claim representative notices that the same chiropractor appears on numerous minor auto claims with nearly identical treatment plans. The proper first step is to:

Answer: Refer the pattern to the Special Investigations Unit

Fraud indicators should be referred to the SIU, which investigates and, if warranted, reports to the state fraud bureau.

Which statement about first-party bad faith is most accurate?

Answer: It arises from an insurer's unreasonable denial or delay of benefits owed to its own insured

First-party bad faith concerns the insurer's unreasonable handling of its own insured's claim, such as a denial without a reasonable basis.