Insurance Regulatory Frameworks & Compliance 4

Question 1

Which type of market conduct examination focuses specifically on how an insurer handles policyholder claims, complaints, and cancellations?

Accepted Answer

Targeted market conduct exam

Answer

A targeted market conduct examination reviews specific business practices such as claims handling, underwriting, and policyholder treatment rather than overall financial condition.

Question 2

Under COBRA, for how long may a qualified beneficiary typically continue group health coverage after losing eligibility due to termination of employment?

Accepted Answer

18 months

Answer

COBRA generally provides 18 months of continuation coverage for qualified beneficiaries who lose coverage due to reduced hours or termination of employment (not for gross misconduct).

Question 3

A free-trade zone regulatory approach in which insurers from states with 'substantially similar' laws may do business in other states without additional licensing is provided by the:

Accepted Answer

Interstate Insurance Product Regulation Compact

Answer

The Interstate Insurance Product Regulation Compact (IIPRC) allows insurers to file certain life, annuity, disability, and long-term care products for approval by a single interstate authority.

Question 4

An insurer's 'risk-based capital' (RBC) ratio compares its actual capital to its required capital. A ratio below 200% typically triggers which level of regulatory action?

Accepted Answer

Company action level

Answer

An RBC ratio below 200% (the Company Action Level) requires the insurer to submit a plan to regulators explaining how it will improve its capital position.

Question 5

Which regulation requires insurers to provide written notice to policyholders before canceling a policy mid-term, with most states requiring at least:

Accepted Answer

30 days

Answer

Most states require at least 30 days' advance written notice before mid-term cancellation, though some states require fewer days for nonpayment of premium.

Insurance Practice Test

Insurance Practice Test

Insurance Regulatory Frameworks & Compliance 4