CU Legal & Regulatory Compliance 2

Question 1

Which federal law requires insurers to provide consumers with a notice of privacy practices describing how personal information is collected and shared?

Accepted Answer

Gramm-Leach-Bliley Act (GLBA)

Answer

The Gramm-Leach-Bliley Act requires financial institutions, including insurers, to give consumers privacy notices and allow opt-out of certain information sharing.

Question 2

Under state insurance regulation, what is the primary purpose of a 'prior approval' rate filing requirement?

Accepted Answer

To require regulator approval of rates before they are used

Answer

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.

Question 3

Which entity is responsible for overseeing the financial solvency of insurance companies in the United States?

Accepted Answer

Individual state insurance departments

Answer

Insurance solvency regulation is primarily a state function, with each state's insurance department monitoring the financial condition of insurers licensed in that state.

Question 4

What does the term 'rebating' mean in insurance regulation, and why is it prohibited in most states?

Accepted Answer

Offering a return of premium as an inducement to purchase insurance

Answer

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.

Question 5

An insurer that knowingly issues a policy to cover an already-occurred loss is engaging in which prohibited practice?

Accepted Answer

Backdating fraud

Answer

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.

(CU) Certified Underwriter Practice Test

(CU) Certified Underwriter Practice Test

CU Legal & Regulatory Compliance 2