P&C State-Specific Laws and Rules 3

Question 1

Most states require P&C producers to disclose which of the following to clients?

Accepted Answer

Material conflicts of interest and compensation arrangements that could influence their recommendations

Answer

Their annual income and net worth

Answer

Their complete client list

Answer

The insurer's internal loss ratios

Question 2

The 'NAIC Insurance Information and Privacy Protection Model Act' is designed to:

Accepted Answer

Govern how insurers collect, use, and disclose personal information about insurance applicants and policyholders

Answer

Require all insurance companies to share data with the NAIC

Answer

Establish federal privacy standards that override state laws

Answer

Allow insurers to share medical information freely with employers

Question 3

Under state law, a property and casualty insurance policy may be cancelled by the insurer for non-payment of premium with a minimum notice of:

Accepted Answer

10 days (most states)

Answer

24 hours

Answer

5 days

Answer

30 days

Question 4

Which of the following best describes the role of the NAIC's Financial Regulation Standards and Accreditation Program?

Accepted Answer

It evaluates and accredits state insurance departments that meet minimum financial regulatory standards, facilitating reliance by other states

Answer

It licenses individual insurance producers nationwide

Answer

It provides federal bailout funds for insolvent insurers

Answer

It sets mandatory rate levels for all lines of insurance

Question 5

State 'anti-rebating' laws generally prohibit insurance producers from:

Accepted Answer

Offering or giving any inducement to purchase insurance that is not specified in the policy, including sharing commissions with the insured

Answer

Charging premiums above the filed rate

Answer

Advertising their services to new clients

Answer

Placing business with multiple insurers

Question 6

Under the 'valued policy laws' that exist in many states, an insurer that insures real property for a stated amount must pay:

Accepted Answer

The full policy amount in the event of a total loss, regardless of the actual replacement cost at the time of loss

Answer

Only the actual cash value if it is less than the policy amount

Answer

The lower of replacement cost or the policy amount

Answer

Only the cost to reconstruct minus depreciation