Insurance Regulatory Frameworks & Compliance 3

Question 1

Which state office is primarily responsible for licensing insurance agents, investigating consumer complaints, and examining insurer financial condition?

Accepted Answer

Department of Insurance

Answer

Each state's Department of Insurance (or equivalent) is the primary regulatory body overseeing all aspects of the insurance industry within that state.

Question 2

The term 'prior approval' in insurance rate regulation means that:

Accepted Answer

Rates must be approved by the regulator before use

Answer

Under prior approval systems, a state regulator must formally approve rates before an insurer can charge them to policyholders.

Question 3

What is the primary purpose of the NAIC's Insurance Regulatory Information System (IRIS)?

Accepted Answer

To flag insurers with potential financial solvency problems

Answer

IRIS uses financial ratios to help regulators identify insurers that may be experiencing financial difficulties and warrant closer examination.

Question 4

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?

Accepted Answer

Federal Insurance Office (FIO)

Answer

The Federal Insurance Office (FIO) was established by Dodd-Frank to monitor the insurance industry for systemic risk and coordinate federal insurance policy.

Question 5

An insurer that operates without a certificate of authority in a state is considered:

Accepted Answer

An unauthorized or non-admitted insurer

Answer

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.

Insurance Practice Test

Insurance Practice Test

Insurance Regulatory Frameworks & Compliance 3