Laws, Regulations, and Ethics Flashcards

The McCarran-Ferguson Act of 1945 established that insurance regulation is primarily the responsibility of:

Answer: Individual states

McCarran-Ferguson granted states the authority to regulate the insurance industry, preempting most federal regulation.

An adjuster who accepts gifts or entertainment from a contractor in exchange for directing claims work may be committing:

Answer: Kickback fraud

Accepting compensation for directing business to a vendor constitutes a kickback, which is illegal and a serious ethical violation.

Which document establishes the terms, conditions, and coverage limits that govern how a claim must be handled?

Answer: The insurance policy contract

The insurance policy is the binding contract whose terms define the scope, conditions, and limits of coverage for any claim.

Under the principle of indemnity, an insured should receive:

Answer: Exactly enough to restore the insured to their pre-loss financial position

The principle of indemnity prevents unjust enrichment by limiting recovery to the actual financial loss suffered.

A claimant submits a claim for a theft that allegedly occurred, but investigation reveals no forced entry and conflicting statements. The adjuster should:

Answer: Document inconsistencies and conduct a thorough investigation before deciding

Suspicious circumstances require thorough investigation and documentation before any coverage decision is made.

The concept of 'waiver' in claims handling means:

Answer: The insurer intentionally relinquishes a known right under the policy

Waiver occurs when an insurer voluntarily gives up a policy defense or right it could have enforced, such as a coverage exclusion.

Which of the following is an example of 'estoppel' in insurance claims?

Answer: An insurer prevented from denying coverage after leading the insured to believe coverage existed

Estoppel prevents an insurer from asserting a position that contradicts prior conduct on which the insured reasonably relied.