Question 1

What is the overall regulatory objective for a state's rate regulations?

Accepted Answer

The overall objective of a sta

Question 2

The best argument for continued state insurance regulation is that state regulation is cheaper and more efficient than federal regulation would be.

Accepted Answer

A) True 
 B)False

Question 3

Life insurance companies have a debtor/creditor relationship with their living insureds that is similar to a fiduciary relationship.

Accepted Answer

A) True 
 B)False

Question 4

The Optional Federal Charter law took effect on January 1,2007

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is a subject of state insurance regulation?

Accepted Answer

A) equal employment practices of the insurer 
B) standards of financial solvency 
C) business acquisition practices 
D) insurance contract provisions 
A) equal employment practices of the insurer 
B) standards of financial solvency 
C) business acquisition practices 
D) insurance contract provisions

Question 6

The regulator's objective with respect to insurance rates is to ensure that rates are:

Accepted Answer

A) understood by consumers and affordable for most consumers 
B) equal for all applicants, adequate, and minimally discriminatory 
C) fair, adequate and not unfairly discriminatory 
D) fair, not excessive, and affordable 
A) understood by consumers and affordable for most consumers 
B) equal for all applicants, adequate, and minimally discriminatory 
C) fair, adequate and not unfairly discriminatory 
D) fair, not excessive, and affordable

Question 7

Which of the following is the most important goal of insurance regulation?

Accepted Answer

A) limiting the number of insurance companies in the state 
B) promoting the solvency of insurance companies 
C) mandating that all citizens purchase auto insurance and health insurance 
D) approving the contractual language of insurance policies sold in the state 
A) limiting the number of insurance companies in the state 
B) promoting the solvency of insurance companies 
C) mandating that all citizens purchase auto insurance and health insurance 
D) approving the contractual language of insurance policies sold in the state

Question 8

A foreign insurer is:

Accepted Answer

A) one that is home-officed outside the U.S. 
B) one that has offices both in the U.S. and in other countries 
C) one that is incorporated in another state 
D) one that has not been in existence for at least three fiscal years 
A) one that is home-officed outside the U.S. 
B) one that has offices both in the U.S. and in other countries 
C) one that is incorporated in another state 
D) one that has not been in existence for at least three fiscal years

Question 9

Explain what a guarantee fund is.How are guarantee funds financed?

Accepted Answer

A guarantee fund is designed t

Question 10

What is the purpose of the interest maintenance reserve?

Accepted Answer

A) to absorb losses arising from sales of assets for less than their cost (capital losses) 
B) to absorb losses arising from the insolvency of debtors (credit losses) 
C) to absorb losses caused by changes (increases)in interest rates on government securities 
D) to absorb losses caused by guaranty fund assessments made against insurer assets 
A) to absorb losses arising from sales of assets for less than their cost (capital losses) 
B) to absorb losses arising from the insolvency of debtors (credit losses) 
C) to absorb losses caused by changes (increases)in interest rates on government securities 
D) to absorb losses caused by guaranty fund assessments made against insurer assets

Question 11

The failure of three large life insurance companies resulted in the NAIC's development of which of the following for life insurers?

Accepted Answer

A) interest maintenance reserves 
B) asset valuation reserves 
C) risk-based capital requirements 
D) national guaranty funds 
A) interest maintenance reserves 
B) asset valuation reserves 
C) risk-based capital requirements 
D) national guaranty funds

Question 12

Which of the following is an example of a nonadmitted asset?

Accepted Answer

A) office furniture 
B) supplies 
C) equipment 
D) all of the above 
A) office furniture 
B) supplies 
C) equipment 
D) all of the above

Question 13

The Optional Federal Charter was proposed as a solution for dealing with:

Accepted Answer

A) uniformity and efficiency problems of state insurance regulation 
B) ineffectiveness of state insurance regulation 
C) states that do not have a state insurance commissioner system in place 
D) insurers that violate risk-based capital requirements 
A) uniformity and efficiency problems of state insurance regulation 
B) ineffectiveness of state insurance regulation 
C) states that do not have a state insurance commissioner system in place 
D) insurers that violate risk-based capital requirements

Question 14

NAIC stands for:

Accepted Answer

A) National Association of Investment Commissioners 
B) National Affiliated Insurance Commissioners 
C) National Association of Insurance Commissioners 
D) None of the above 
A) National Association of Investment Commissioners 
B) National Affiliated Insurance Commissioners 
C) National Association of Insurance Commissioners 
D) None of the above

Question 15

Risk-based capital requirements have been developed for both life and non-life insurers.

Accepted Answer

A) True 
 B)False

Question 16

One result of the Gramm Leach Bliley act has been

Accepted Answer

A) the separation of banks and insurance companies 
B) greater consistency of agent licensing requirements across state lines 
C) increased restrictions on where agents and insurers may operate 
D) both a and c 
A) the separation of banks and insurance companies 
B) greater consistency of agent licensing requirements across state lines 
C) increased restrictions on where agents and insurers may operate 
D) both a and c

Question 17

An alien insurer is:

Accepted Answer

A) one that is home-officed outside the U.S. 
B) one that has offices both in the U.S. and in other countries 
C) one that is incorporated in another state 
D) one that has not been in existence for at least three fiscal years 
A) one that is home-officed outside the U.S. 
B) one that has offices both in the U.S. and in other countries 
C) one that is incorporated in another state 
D) one that has not been in existence for at least three fiscal years

Question 18

Why is there unequal knowledge and bargaining power in the insurance transaction?

Accepted Answer

A) the complexity of the insurance contract and the intangible nature of the product 
B) the insurance companies want to confuse consumers so it is difficult to make choices 
C) consumers do not receive the policy until months after the contract goes into effect 
D) there is no competition in the industry, therefore the consumer is stuck with inferior products 
A) the complexity of the insurance contract and the intangible nature of the product 
B) the insurance companies want to confuse consumers so it is difficult to make choices 
C) consumers do not receive the policy until months after the contract goes into effect 
D) there is no competition in the industry, therefore the consumer is stuck with inferior products

Question 19

Which of the following is not a stated purpose of regulation?

Accepted Answer

A) promote competition among the largest insurers in the state 
B) maintain insurer solvency 
C) deal with unique pricing problems that do not allow for full and unrestrained competition 
D) promote social goals 
A) promote competition among the largest insurers in the state 
B) maintain insurer solvency 
C) deal with unique pricing problems that do not allow for full and unrestrained competition 
D) promote social goals

Question 20

In the Paul v.Virginia decision,the U.S.Supreme Court decided that Paul was legally an agent of the state of Virginia.

Accepted Answer

A) True 
 B)False

Exam 7: Insurance Regulation

What is the overall regulatory objective for a state's rate regulations?

The best argument for continued state insurance regulation is that state regulation is cheaper and more efficient than federal regulation would be.

Life insurance companies have a debtor/creditor relationship with their living insureds that is similar to a fiduciary relationship.

The Optional Federal Charter law took effect on January 1,2007

Which of the following is a subject of state insurance regulation?

The regulator's objective with respect to insurance rates is to ensure that rates are:

Which of the following is the most important goal of insurance regulation?

A foreign insurer is:

Explain what a guarantee fund is.How are guarantee funds financed?

What is the purpose of the interest maintenance reserve?

The failure of three large life insurance companies resulted in the NAIC's development of which of the following for life insurers?

Which of the following is an example of a nonadmitted asset?

The Optional Federal Charter was proposed as a solution for dealing with:

NAIC stands for:

Risk-based capital requirements have been developed for both life and non-life insurers.

One result of the Gramm Leach Bliley act has been

An alien insurer is:

Why is there unequal knowledge and bargaining power in the insurance transaction?

Which of the following is not a stated purpose of regulation?

In the Paul v.Virginia decision,the U.S.Supreme Court decided that Paul was legally an agent of the state of Virginia.

Fundamentals and Terminology

Defining the Insurable Event

Risk Management

Financial Services Companies

Insurance Occupations

the Insurance Market: the Economic Problem

Insurance Contracts

Basic Property and Liability Insurance Contracts

Homeowners Insurance

the Personal Auto Policy

Professional Financial Planning

Life Insurance Policies

Standard Life Insurance Contract Provisions And Options

Annuities

Medical Expense and Disability Insurance

Advanced Topics in Risk Management

Commercial Property Insurance

Commercial Liability Insurance

Bonding,Crime Insurance and Reinsurance

Employee Benefits

Social Security

Unemployment and Workers Compensation Insurance

Filters