Practice Test Geeks(RIMS) Risk and Insurance Management Society Certification Practice Test
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Regulatory Framework & Compliance Flashcards

7 cards from real RIMS practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Regulatory Framework & Compliance flashcards as text

  1. Under the McCarran-Ferguson Act, which entity has primary regulatory authority over insurance companies in the United States?

    Answer: Individual state governments

    The McCarran-Ferguson Act of 1945 explicitly grants individual states the primary authority to regulate the insurance industry.

  2. Which Dodd-Frank Act provision most directly affects large insurance holding companies by subjecting them to Federal Reserve oversight?

    Answer: SIFI designation for systemically important financial institutions

    Dodd-Frank allows the Financial Stability Oversight Council (FSOC) to designate insurers as SIFIs, subjecting them to Federal Reserve supervision.

  3. A risk manager discovers their company's captive insurer is not licensed in the state where most claims originate. What is the PRIMARY compliance concern?

    Answer: Unauthorized insurance transaction exposure under state law

    Conducting insurance transactions in a state without proper licensure constitutes unauthorized insurance and exposes the company to regulatory penalties.

  4. The NAIC's Insurance Regulatory Information System (IRIS) ratios are primarily used to:

    Answer: Identify insurers warranting regulatory attention based on financial condition

    IRIS ratios are financial solvency tools that help regulators identify insurers whose financial condition may require closer scrutiny.

  5. Which federal law most significantly impacts how risk managers handle employee benefit plan risks, preempting most state insurance laws for self-funded plans?

    Answer: ERISA

    ERISA preempts state insurance laws for self-funded employee benefit plans, creating a federal regulatory framework that supersedes state requirements.

  6. Under Risk-Based Capital (RBC) requirements, what action is triggered when an insurer's RBC ratio falls below the 'Company Action Level'?

    Answer: The insurer must submit a comprehensive financial plan to regulators

    At the Company Action Level, the insurer must file a corrective action plan with the state insurance department outlining steps to restore capital adequacy.

  7. A company operating in multiple states must file its workers' compensation rates. Which regulatory filing approach requires prior approval before using new rates?

    Answer: Prior approval

    Under prior approval systems, insurers must receive explicit regulatory approval before implementing new rates, as opposed to file-and-use which allows immediate use after filing.