Property And Casualty Insurance License State Regulations and Ethics

Question 1

Which organization accredits state insurance departments and promotes uniformity in insurance regulation?

Accepted Answer

National Association of Insurance Commissioners (NAIC)

Answer

Federal Insurance Office (FIO)

Answer

Insurance Information Institute (III)

Answer

American Council of Life Insurers (ACLI)

Question 2

What is the purpose of a state's 'guaranty fund'?

Accepted Answer

To pay claims of policyholders when their insurer becomes insolvent

Answer

To guarantee insurers a profit margin each year

Answer

To provide low-cost insurance to high-risk individuals

Answer

To fund state insurance department operations

Question 3

What does the 'McCarran-Ferguson Act' of 1945 establish?

Accepted Answer

That the regulation and taxation of insurance is a matter for the states, not the federal government

Answer

Federal regulation of all insurance companies

Answer

Minimum capital requirements for insurers

Answer

A federal guaranty fund for insolvent insurers

Question 4

What is a 'cease and desist' order from a state insurance department?

Accepted Answer

An official order requiring an individual or company to stop an unlawful insurance practice

Answer

An order requiring an insurer to stop selling new policies temporarily

Answer

An order directing an insurer to pay a disputed claim

Answer

An order suspending an insurer's surplus lines authorization

Question 5

What is 'twisting' in insurance sales?

Accepted Answer

Inducing a policyholder to lapse, cancel, or surrender a policy through misrepresentation in order to replace it with another policy

Answer

Misrepresenting policy terms to keep an existing client from canceling

Answer

Selling insurance to a family member at a discounted rate

Answer

Altering a claim form after submission

Question 6

What is 'rebating' in insurance?

Accepted Answer

Returning a portion of the premium or providing other valuable consideration not listed in the policy as an inducement to purchase insurance

Answer

Offering a discount for multi-policy holders

Answer

Reducing premiums based on favorable loss history

Answer

Returning premium when a policy is cancelled mid-term