CU Regulatory and Ethical Frameworks 2

Question 1

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

Accepted Answer

State governments

Answer

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

Question 2

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

Accepted Answer

Conflict of interest

Answer

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

Question 3

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

Accepted Answer

Rates are filed with regulators and can be used immediately

Answer

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

Question 4

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

Accepted Answer

Both parties disclose all material facts fully and honestly

Answer

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

Question 5

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

Accepted Answer

Unfair Trade Practices Act

Answer

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

(CU) Certified Underwriter Practice Test