Exam 8: Government Regulation of Insurance

The major reasons for insurer insolvency include which of the following? I.Inadequate pricing and loss reserves II.Rapid growth and inadequate surplus

Which of the following statements is (are)true regarding the quality of insurance regulation? I.The quality of insurance regulation is uniform from state to state. II.All evidence suggests federal regulation of insurance would improve the quality of regulation.

Which of the following is authority given to the Federal Insurance Office created by the Dodd-Frank Act?

The purpose of the Financial Analysis Solvency Tracking (FAST)system employed by the NAIC is to

The risk-based capital requirements for life insurers are based on a formula that considers four types of risk.One risk reflects whether the insurer will have enough surplus if claims are higher than expected.This risk is called

ABC Insurance Company would like to purchase a bank.For many years,ABC was not permitted under federal law to enter into banking operations.Which of the following legislative acts eliminated the prohibition that prevented banks,insurers,and investment firms from entering into one another's markets?

Which of the following statements about state insurance guaranty funds is (are)true? I.They limit the amount that policyholders can collect if an insurer becomes insolvent. II.They are usually funded by general revenues of the states.

Blue Sky Insurance Company sells life annuities to sick elderly people,routinely denies legitimate claims,and cancels insureds after they submit a claim.What type of insurance regulation would sanction Blue Sky for such wrongful behavior?

Which of the following is an advantage of federal regulation of insurance over state regulation of insurance?

The major argument in favor of an optional federal charter for insurers is that

Mutual Property Insurance Company has a surplus of $2 million.According to a conservative rule,how much in new net premiums can Mutual Property Insurance Company safely write?

All of the following statements about the methods of regulating insurance are true EXCEPT

The number of title insurance companies operating in State Z is relatively low.Recently,the largest of these companies (50 percent market share)acquired the second largest company (30 percent market share).Immediately after the acquisition,the insurer raised premiums by 75 percent.This scenario demonstrates which of the following rationales for the regulation of insurance?

The risk-based capital requirements for life insurers are based on a formula that considers four types of risk.One risk reflects a range of uncertainties that life insurers face including such things as bad management decisions and guaranty fund assessments.This risk is called

Fly-By-Night Insurance Company had much larger losses than forecast.The company did not charge adequate premiums nor did the company purchase reinsurance.If Fly-By-Night becomes insolvent,which of the following will help pay the unpaid claims of the insurer?

An insurance company chartered in another country has been licensed to operate in your state.In your state,the insurer would be considered a(n)

Which of the following is a principal method of ensuring the solvency of insurers?

Which of the following is considered a nonadmitted asset for an insurer?

Grace is a life insurance agent.She is attempting to sell a large life insurance policy,but the prospective purchaser is having second thoughts.To persuade the prospective purchaser,Grace said,"I will earn a $1,000 commission if you buy this policy.I'll give you $500 of my commission if you buy the policy." In most states,what illegal sales practice will Grace be guilty of if she splits her commission with the purchaser?

Under what type of rate regulation are insurers required to obtain approval of rates before using them if the rate change exceeds a specified predetermined range?