Insurance Regulatory Frameworks & Compliance 2

Question 1

Which federal act established minimum standards for health insurance portability and accountability, including protections for pre-existing conditions in group health plans?

Accepted Answer

HIPAA

Answer

HIPAA (Health Insurance Portability and Accountability Act of 1996) established portability protections and limits on pre-existing condition exclusions in group health plans.

Question 2

Under the NAIC model law, what is the maximum number of days an insurer typically has to acknowledge receipt of a claim?

Accepted Answer

10 days

Answer

The NAIC Unfair Claims Settlement Practices Model Act requires insurers to acknowledge receipt of a claim within 10 working days.

Question 3

Which regulatory concept requires insurers to maintain sufficient assets to cover their liabilities and provide a cushion against unexpected losses?

Accepted Answer

Solvency margin

Answer

A solvency margin (or surplus) is the excess of assets over liabilities that regulators require to ensure insurers can pay all future claims.

Question 4

A state law that requires all admitted insurers to participate in a shared market for high-risk drivers unable to obtain standard coverage is called a(n):

Accepted Answer

Assigned risk plan

Answer

An assigned risk plan (or automobile insurance plan) distributes high-risk drivers among all licensed auto insurers in proportion to their market share.

Question 5

The principle that insurance rates must not be unfairly discriminatory means that:

Accepted Answer

Rates must reflect actual cost differences among risk classes

Answer

Non-discriminatory rates allow different premiums only when they reflect actuarially justified differences in expected losses or expenses among risk groups.

Insurance Practice Test

Insurance Practice Test

Insurance Regulatory Frameworks & Compliance 2