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
What is the purpose of a 'market conduct examination' conducted by a state insurance department?
Answer: To assess whether an insurer's business practices comply with state laws and regulations
Market conduct examinations evaluate whether an insurer's practices—including underwriting, claims handling, and policyholder service—comply with applicable state insurance laws.
The NAIC's Insurance Regulatory Information System (IRIS) ratios are used primarily to:
Answer: Identify insurers that may warrant closer regulatory scrutiny
IRIS ratios are a set of financial ratios used by state regulators to flag insurers whose financial results fall outside normal ranges, triggering further review.
Under OFAC (Office of Foreign Assets Control) compliance requirements, what must an insurer do before binding coverage?
Answer: Screen applicants against the Specially Designated Nationals (SDN) list
Insurers must screen applicants, insureds, beneficiaries, and other parties against OFAC's SDN list to ensure they do not provide insurance services to sanctioned individuals or entities.
Which of the following best describes the 'principle of utmost good faith' (uberrimae fidei) as it applies to insurance contracts?
Answer: Both the insurer and insured must disclose all material facts truthfully
Uberrimae fidei imposes a duty on both parties to disclose all material facts that could influence the other party's decision to enter into or price the contract.
A policy condition that requires the insured to notify the insurer of a loss 'as soon as practicable' is an example of which type of policy provision?
Answer: Condition precedent
A notice requirement is a condition precedent; failure to satisfy it may relieve the insurer of its obligation to pay the claim if prejudice results.
Which federal regulation requires life insurers to implement anti-money laundering (AML) programs?
Answer: Bank Secrecy Act (BSA) as implemented by FinCEN rules
FinCEN rules under the Bank Secrecy Act require life insurers issuing permanent life, annuities, and other covered products to establish AML compliance programs.
In the context of insurance underwriting compliance, what is 'redlining'?
Answer: Refusing to insure or charging higher premiums based on geographic areas associated with protected class characteristics
Redlining is the illegal practice of denying or limiting insurance based on the racial or ethnic composition of a neighborhood rather than legitimate risk factors.