Practice Test Geeks(CU) Certified Underwriter Practice Test
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Regulatory and Ethical Frameworks 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 Regulatory and Ethical Frameworks flashcards as text

  1. Under the McCarran-Ferguson Act, which entity has primary regulatory authority over insurance?

    Answer: State governments

    The McCarran-Ferguson Act of 1945 grants states the primary authority to regulate insurance, limiting federal oversight.

  2. An underwriter who accepts a gift from a broker in exchange for favorable policy terms is most likely violating which ethical principle?

    Answer: Conflict of interest

    Accepting gifts for favorable decisions creates a conflict of interest, compromising the underwriter's objectivity and impartiality.

  3. Which of the following best describes a 'file-and-use' rate regulation system?

    Answer: Rates are filed with regulators and can be used immediately

    In a file-and-use system, insurers submit rates to regulators and may implement them immediately without waiting for approval.

  4. The principle of 'utmost good faith' (uberrimae fidei) in insurance requires that:

    Answer: Both parties disclose all material facts fully and honestly

    Utmost good faith obligates both the insurer and insured to disclose all material information relevant to the insurance contract.

  5. Which regulatory document outlines an insurer's obligations regarding the fair treatment of policyholders in claims handling?

    Answer: Unfair Trade Practices Act

    The Unfair Trade Practices Act, adopted by most states, sets standards for fair claims settlement and prohibits deceptive practices.

  6. When an underwriter applies different premium rates to similar risks based solely on the applicant's race, this is an example of:

    Answer: Unfair discrimination

    Charging different rates based on race rather than actuarially justified risk factors constitutes unfair discrimination, which is illegal.

  7. Which term describes the practice where insurers refuse to write coverage in specific geographic areas regardless of individual risk quality?

    Answer: Redlining

    Redlining is the illegal practice of denying coverage to entire neighborhoods or geographic areas based on demographic characteristics rather than individual risk assessment.