Exam 8: Government Regulation of Insurance

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.

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

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

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?

In which of the following did the Court decide that insurance was interstate commerce when conducted across state lines, and therefore was subject to federal regulation?

The right of the states to regulate the business of insurance was first established by

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?

The basis for current state regulation of insurance is

Which of the following statements about the regulation of insurance company investments is (are) true? I.The purpose of regulating insurance company investments is to prevent insurers from making unsound investments which could threaten their solvency. II.Life insurers can invest an unlimited amount of their assets in common stocks.

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?

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