CCP Legal Compliance & Regulatory Standards 3 — Questions and Answers
Question 1: The National Association of Insurance Commissioners (NAIC) best serves which function in the U.S. regulatory framework?
- Enforces federal insurance laws through binding regulations
- Provides model laws and coordinates regulatory activities among state commissioners (Correct answer)
- Licenses all insurance adjusters on a national basis
- Operates as the primary appellate body for insurance disputes
Correct answer: Provides model laws and coordinates regulatory activities among state commissioners
The NAIC develops model laws and coordinates regulatory efforts among state insurance commissioners, but lacks direct enforcement authority.
Question 2: Under HIPAA, a covered entity may disclose a claimant's protected health information (PHI) to an insurer's claims adjuster:
- Only with written authorization from the claimant in all circumstances
- For treatment, payment, and healthcare operations without authorization (Correct answer)
- Only after de-identifying all personal identifiers
- When required by the NAIC model regulations
Correct answer: For treatment, payment, and healthcare operations without authorization
HIPAA permits disclosure of PHI for payment purposes, which includes processing insurance claims, without patient authorization.
Question 3: Which concept describes an insurer's obligation to place the policyholder's interests above its own when handling claims?
- Subrogation
- Utmost good faith (uberrimae fidei) (Correct answer)
- Indemnification
- Estoppel
Correct answer: Utmost good faith (uberrimae fidei)
The doctrine of utmost good faith requires both parties, but especially the insurer, to deal honestly and prioritize the insured's legitimate interests.
Question 4: A state's Unfair Trade Practices Act typically applies to insurance claims when a violation occurs:
- As a single isolated incident
- With such frequency as to indicate a general business practice (Correct answer)
- Only if the insurer is licensed in more than five states
- Exclusively in commercial lines claims
Correct answer: With such frequency as to indicate a general business practice
Unfair Trade Practices Acts typically require that violations occur with a frequency indicating a general business practice to trigger regulatory action.
Question 5: The Americans with Disabilities Act (ADA) requires that insurance companies:
- Provide identical coverage for all physical and mental conditions
- Not discriminate against individuals with disabilities in places of public accommodation (Correct answer)
- Waive deductibles for claimants with documented disabilities
- Cover all disability-related claims without policy exclusions
Correct answer: Not discriminate against individuals with disabilities in places of public accommodation
The ADA prohibits discrimination against individuals with disabilities in places of public accommodation, which can include insurance offices and services.
Question 6: In a workers' compensation claim, the adjuster's obligation regarding benefit payments is primarily governed by:
- Federal OSHA regulations
- State workers' compensation statutes (Correct answer)
- ERISA Section 4 provisions
- The NAIC Workers' Comp Model Act
Correct answer: State workers' compensation statutes
Workers' compensation is state-regulated, and each state's workers' compensation statute dictates benefit amounts, payment schedules, and adjuster obligations.
Question 7: When an insurer uses a credit-based insurance score to investigate a claim, they must comply with requirements under:
- HIPAA Privacy Rule
- The Fair Credit Reporting Act (FCRA) (Correct answer)
- ERISA Section 502
- The Dodd-Frank Act
Correct answer: The Fair Credit Reporting Act (FCRA)
The FCRA governs the use of consumer reports, including credit-based insurance scores, and requires adverse action notices when such information is used unfavorably.
CCP Legal Compliance & Regulatory Standards 3
The National Association of Insurance Commissioners (NAIC) best serves which function in the U.S. regulatory framework?