Legal & Regulatory Compliance Flashcards
7 cards from real CU practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Legal & Regulatory Compliance flashcards as text
Which federal law requires insurers to provide consumers with a notice of privacy practices describing how personal information is collected and shared?
Answer: Gramm-Leach-Bliley Act (GLBA)
The Gramm-Leach-Bliley Act requires financial institutions, including insurers, to give consumers privacy notices and allow opt-out of certain information sharing.
Under state insurance regulation, what is the primary purpose of a 'prior approval' rate filing requirement?
Answer: To require regulator approval of rates before they are used
Prior approval systems require the insurance department to formally approve rates before an insurer may charge them, ensuring rates are adequate, not excessive, and not unfairly discriminatory.
Which entity is responsible for overseeing the financial solvency of insurance companies in the United States?
Answer: Individual state insurance departments
Insurance solvency regulation is primarily a state function, with each state's insurance department monitoring the financial condition of insurers licensed in that state.
What does the term 'rebating' mean in insurance regulation, and why is it prohibited in most states?
Answer: Offering a return of premium as an inducement to purchase insurance
Rebating—returning part of the premium or providing other inducements not specified in the policy—is prohibited because it creates unfair competition and discriminates among policyholders.
An insurer that knowingly issues a policy to cover an already-occurred loss is engaging in which prohibited practice?
Answer: Backdating fraud
Backdating fraud involves issuing a policy with an effective date prior to the loss, making the loss appear to be a covered future event when it was already known.
Under the McCarran-Ferguson Act of 1945, federal antitrust laws apply to the insurance industry when:
Answer: The conduct involves boycott, coercion, or intimidation
The McCarran-Ferguson Act grants states the authority to regulate insurance but preserves federal antitrust jurisdiction over acts of boycott, coercion, or intimidation.
Which insurance regulatory standard requires that policy language be written so that a person of average intelligence can understand it?
Answer: Plain language or readability standard
Plain language or readability standards, often measured by Flesch Reading Ease scores, require that policy language be understandable to the average consumer.