CAS Regulatory Framework and Compliance 3

Question 1

What is the Risk-Based Capital (RBC) ratio threshold below which regulators may take mandatory control of a property-casualty insurer?

Accepted Answer

Below 70% of Authorized Control Level RBC

Answer

When an insurer's RBC ratio falls below 70% of the Authorized Control Level, the regulator is mandated to take control of the company.

Question 2

Under the NAIC's Uniform Certificate of Authority Application (UCAA) process, what does a 'primary state' designation mean?

Accepted Answer

The state of domicile that leads the insurer's financial examination

Answer

The primary state in the UCAA process is the state of domicile, which takes the lead role in coordinating financial regulation and examinations for that insurer.

Question 3

Which actuarial standard of practice (ASOP) most directly governs an actuary's responsibilities when signing an insurance company's Statement of Actuarial Opinion?

Accepted Answer

ASOP No. 36 — Statements of Actuarial Opinion Regarding Property/Casualty Loss and LAE Reserves

Answer

ASOP No. 36 provides guidance specifically for actuaries opining on property/casualty loss reserves in the Annual Statement, establishing standards for scope, procedures, and disclosures.

Question 4

What is the primary distinction between an 'admitted' and a 'non-admitted' (surplus lines) insurer?

Accepted Answer

Admitted insurers are licensed and subject to rate/form regulation; non-admitted have more flexibility but less guaranty fund protection

Answer

Admitted carriers are licensed by the state and subject to rate/form regulation plus guaranty fund coverage, while surplus lines carriers have more pricing flexibility but policyholders lack guaranty fund protection.

Question 5

Which of the following is a key requirement under the Nonadmitted and Reinsurance Reform Act (NRRA) of 2010 for surplus lines transactions?

Accepted Answer

Only the home state of the insured has regulatory authority for surplus lines transactions

Answer

The NRRA established that only the insured's home state has regulatory jurisdiction and the right to collect premium taxes on surplus lines transactions, simplifying multi-state regulation.

(CAS) Casualty Actuarial Society Practice Test

(CAS) Casualty Actuarial Society Practice Test

CAS Regulatory Framework and Compliance 3