CAS Regulatory Framework and Compliance 2

Question 1

Under the NAIC model law, which entity has primary authority to regulate insurance companies in the United States?

Accepted Answer

Individual state insurance departments

Answer

Insurance regulation in the US is primarily state-based, with each state's insurance department having regulatory authority over insurers operating within its borders.

Question 2

What is the primary purpose of the NAIC's Financial Regulation Standards and Accreditation Program?

Accepted Answer

To ensure state insurance departments meet minimum regulatory standards

Answer

The NAIC accreditation program certifies that state insurance departments maintain adequate financial regulatory standards, enabling efficient cross-state regulation.

Question 3

Which of the following best describes a 'prior approval' rate regulation system?

Accepted Answer

Regulators must approve rates before insurers can use them

Answer

Under prior approval, an insurer must receive explicit regulatory approval before implementing new rates, providing the strictest form of rate oversight.

Question 4

The Annual Statement filed by insurers with state regulators follows which accounting standard?

Accepted Answer

Statutory Accounting Principles (SAP)

Answer

Statutory Accounting Principles (SAP) are used for insurance regulatory filings because they are more conservative than GAAP and focus on solvency protection.

Question 5

Under state insurance regulation, what is the 'admitted assets' concept critical for?

Accepted Answer

Measuring the assets that count toward solvency requirements

Answer

Admitted assets are those recognized by state regulators for solvency purposes; non-admitted assets cannot be counted toward satisfying statutory liabilities.

(CAS) Casualty Actuarial Society Practice Test

(CAS) Casualty Actuarial Society Practice Test

CAS Regulatory Framework and Compliance 2