CIA Legal & Regulatory Compliance in Insurance 2

Question 1

Under the McCarran-Ferguson Act, which level of government has primary authority to regulate the business of insurance?

Accepted Answer

State governments

Answer

The McCarran-Ferguson Act of 1945 grants states the primary authority to regulate the business of insurance, unless federal law specifically relates to insurance.

Question 2

An insurer that operates without a certificate of authority in a state where it is not licensed is known as a/an:

Accepted Answer

Unauthorized insurer

Answer

An unauthorized insurer operates without a certificate of authority in a given state, which generally makes it illegal for agents to place business with that insurer.

Question 3

Which regulatory document defines the rights and obligations between an insurer and policyholder and must be filed with the state insurance department?

Accepted Answer

Policy form

Answer

Policy forms must be filed with and often approved by the state insurance department to ensure they comply with state law and are not unfair to consumers.

Question 4

What is the primary purpose of an insurance company's annual statement filed with the NAIC?

Accepted Answer

To disclose financial condition and solvency to regulators

Answer

The annual statement (also called the convention blank) provides regulators with detailed financial data to assess an insurer's solvency and financial stability.

Question 5

A 'cease and desist' order issued by a state insurance commissioner requires an insurer to:

Accepted Answer

Stop engaging in a specified illegal or improper practice

Answer

A cease and desist order is a regulatory enforcement tool that commands an insurer to immediately stop a specified illegal, unfair, or deceptive practice.

(CIA) Certified Insurance Appraiser Practice Test

(CIA) Certified Insurance Appraiser Practice Test

CIA Legal & Regulatory Compliance in Insurance 2