Regulatory Frameworks & Compliance Flashcards
7 cards from real Insurance 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 Frameworks & Compliance flashcards as text
Which state office is primarily responsible for licensing insurance agents, investigating consumer complaints, and examining insurer financial condition?
Answer: Department of Insurance
Each state's Department of Insurance (or equivalent) is the primary regulatory body overseeing all aspects of the insurance industry within that state.
The term 'prior approval' in insurance rate regulation means that:
Answer: Rates must be approved by the regulator before use
Under prior approval systems, a state regulator must formally approve rates before an insurer can charge them to policyholders.
What is the primary purpose of the NAIC's Insurance Regulatory Information System (IRIS)?
Answer: To flag insurers with potential financial solvency problems
IRIS uses financial ratios to help regulators identify insurers that may be experiencing financial difficulties and warrant closer examination.
Under the Dodd-Frank Wall Street Reform Act, which office was created within the U.S. Treasury to monitor systemic risk in the insurance industry?
Answer: Federal Insurance Office (FIO)
The Federal Insurance Office (FIO) was established by Dodd-Frank to monitor the insurance industry for systemic risk and coordinate federal insurance policy.
An insurer that operates without a certificate of authority in a state is considered:
Answer: An unauthorized or non-admitted insurer
An insurer doing business without a certificate of authority (license) in a state is unauthorized or non-admitted and may be subject to regulatory penalties.
Which provision in most state insurance codes prohibits insurers from canceling or nonrenewing homeowner policies solely because the insured filed one claim?
Answer: Arbitrary cancellation prohibition
Many states have laws preventing 'arbitrary' cancellation or nonrenewal, requiring insurers to show objective underwriting justification beyond a single claim.
The McCarran-Ferguson Act of 1945 primarily established that:
Answer: States have primary authority to regulate the insurance industry
McCarran-Ferguson confirmed that regulation of the insurance business is the responsibility of the states and that federal antitrust law applies only where state regulation is absent.