Question 1

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 2

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 3

"Prior-approval" price regulation is known as "use-and-file" regulation.

Accepted Answer

A) True 
 B)False

Question 4

Which one of the following is an argument for federal regulation of the insurance transaction?

Accepted Answer

A)  If there were federal regulation, state regulation would still be required for intrastate transactions. 
B)  State regulation allows experimentation and isolation of bad laws. 
C)  Many states do not have enough trained people to regulate insurance efficiently. 
D)  All of the above 
A)  If there were federal regulation, state regulation would still be required for intrastate transactions. 
B)  State regulation allows experimentation and isolation of bad laws. 
C)  Many states do not have enough trained people to regulate insurance efficiently. 
D)  All of the above

Question 5

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 6

A domestic 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)  none of the above 
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)  none of the above

Question 7

Unrestrained price competition does not work in the insurance market because prices have to be determined long before final costs are known.

Accepted Answer

A) True 
 B)False

Question 8

It is generally illegal for an insurance agent to share her commissions with an insured.

Accepted Answer

A) True 
 B)False

Question 9

The South-Eastern Underwriters Association Case:

Accepted Answer

A)  preceded the Paul V. Virginia case 
B)  upheld the precedent set in Paul v. Virginia 
C)  reversed the Paul v. Virginia decision 
D)  none of the above 
A)  preceded the Paul V. Virginia case 
B)  upheld the precedent set in Paul v. Virginia 
C)  reversed the Paul v. Virginia decision 
D)  none of the above

Question 10

McCarran-Ferguson Act expressed the intent of the federal government to forever abandon to the states the right to regulate insurance.

Accepted Answer

A) True 
 B)False

Question 11

The NAIC requires life insurers to have reserve accounts that protect insureds from the:

Accepted Answer

A)  insurer's poor underwriting decisions 
B)  insurer's poor investment results 
C)  catastrophic hurricane years 
D)  effects of terrorism risk on the insurer's stability 
A)  insurer's poor underwriting decisions 
B)  insurer's poor investment results 
C)  catastrophic hurricane years 
D)  effects of terrorism risk on the insurer's stability

Question 12

The arguments for federal regulation of insurance all of the following except:

Accepted Answer

A)  lack of uniformity of state regulation 
B)  state regulation costs more to administer 
C)  federal regulation would be less expensive 
D)  federal regulation would be more flexible 
A)  lack of uniformity of state regulation 
B)  state regulation costs more to administer 
C)  federal regulation would be less expensive 
D)  federal regulation would be more flexible

Question 13

What was the major result of the Armstrong and Merrit Investigations?

Accepted Answer

A)  Passage of the McCarran Act 
B)  Bankruptcy of the SEUA 
C)  The repeal of McCarran-Ferguson Act 
D)  A new insurance code for the state of New York 
A)  Passage of the McCarran Act 
B)  Bankruptcy of the SEUA 
C)  The repeal of McCarran-Ferguson Act 
D)  A new insurance code for the state of New York

Question 14

The Appleton Rule applies to all insurance companies doing business in Wisconsin.

Accepted Answer

A) True 
 B)False

Question 15

Risk-based capital requirements take into account differences in a particular insurers' underwriting and investment practices.

Accepted Answer

A) True 
 B)False

Question 16

Currently, the extent of the federal government's right to exercise regulatory authority over insurance companies is dictated by:

Accepted Answer

A)  SEUA case 
B)  Paul v. Virginia decision 
C)  Robinson-Patman Act 
D)  McCarran-Ferguson Act 
A)  SEUA case 
B)  Paul v. Virginia decision 
C)  Robinson-Patman Act 
D)  McCarran-Ferguson Act

Question 17

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 18

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

Accepted Answer

A) True 
 B)False

Question 19

An alien insurer is a non-U.S. insurer.

Accepted Answer

A) True 
 B)False

Question 20

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

Exam 10: Insurance Regulation

An alien insurer is:

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

"Prior-approval" price regulation is known as "use-and-file" regulation.

Which one of the following is an argument for federal regulation of the insurance transaction?

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

A domestic insurer is:

Unrestrained price competition does not work in the insurance market because prices have to be determined long before final costs are known.

It is generally illegal for an insurance agent to share her commissions with an insured.

The South-Eastern Underwriters Association Case:

McCarran-Ferguson Act expressed the intent of the federal government to forever abandon to the states the right to regulate insurance.

The NAIC requires life insurers to have reserve accounts that protect insureds from the:

The arguments for federal regulation of insurance all of the following except:

What was the major result of the Armstrong and Merrit Investigations?

The Appleton Rule applies to all insurance companies doing business in Wisconsin.

Risk-based capital requirements take into account differences in a particular insurers' underwriting and investment practices.

Currently, the extent of the federal government's right to exercise regulatory authority over insurance companies is dictated by:

One result of the Gramm-Leach-Bliley act has been:

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

An alien insurer is a non-U.S. insurer.

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

Introduction to Enterprise Risk Management and Insurance

Risk Identification

Risk Assessment and Pooling

Risk-Handling Techniques: Loss Control, Risk Transfer, and Loss Financing

Risk-Handling Techniques: Diversification and Hedging

Fundamentals of Insurance

Insurable Perils and Insuring Organizations

Insurance Functions

Insurance Markets: Economics and Issues

Insurance Contracts

The Personal Auto Policy

Homeowners Insurance

Professional Financial Planning

Life Insurance Policies

Standard Life Insurance Contract Provisions and Options

Annuities

Health Insurance and Disability Income

Employee Benefits

Social Security

Unemployment and Workers Compensation Insurance

Commercial Property Insurance

Commercial Liability Insurance

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