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
The Gramm-Leach-Bliley Act (GLBA) primarily governs which aspect of insurance operations?
Answer: Protection of nonpublic personal financial information
GLBA requires financial institutions, including insurers, to protect consumers' nonpublic personal information and provide privacy notices.
An insurer that becomes insolvent has its obligations to policyholders typically covered by:
Answer: State guaranty associations
State guaranty associations step in to pay covered claims up to statutory limits when a licensed insurer becomes insolvent.
Which regulatory examination type focuses on an insurer's market conduct, claims practices, and policyholder treatment?
Answer: Market conduct examination
Market conduct examinations review how insurers treat policyholders, handle claims, and comply with consumer protection laws.
A certified underwriter is asked to approve a risk that falls outside their authority level. The most appropriate action is to:
Answer: Escalate it to the appropriate authority level
Underwriters must operate within delegated authority limits and must escalate risks exceeding their authority to appropriate decision-makers.
The principle of 'indemnity' in insurance means that an insured should:
Answer: Be restored to approximately the same financial position as before the loss
Indemnity ensures the insured is made financially whole but does not allow profit from a loss, preventing moral hazard.
Under the Insurance Holding Company Act, which of the following transactions between affiliated companies typically requires regulatory approval?
Answer: Material transactions such as dividends above a statutory threshold
Material transactions between holding company affiliates, including large dividends, require prior regulatory notification or approval to protect policyholder interests.
Which of the following is an example of a 'twisting' violation in insurance ethics?
Answer: An agent persuading a client to lapse an existing policy using misrepresentation to buy a new one
Twisting is the illegal act of inducing a policyholder to cancel an existing policy by misrepresenting facts to replace it with a new one.