Government Regulation Of Insurance

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Questions Bank

Risk and Its Treatment
Insurance and Risk
Introduction to Risk Management
Enterprise Risk Management and Related Topics
Types of Insurers and Marketing Systems
Insurance Company Operations
Financial Operations of Insurers
Government Regulation of Insurance
Fundamental Legal Principles
Analysis of Insurance Contracts
Life Insurance
Life Insurance Contractual Provisions
Buying Life Insurance
Annuities and Individual Retirement Accounts
Health-Care Reform; Individual Health Insurance Coverages
Employee Benefits: Group Life and Health Insurance
Employee Benefits: Retirement Plans
Social Insurance
The Liability Risk
Auto Insurance
Auto Insurance (continued)
Homeowners Insurance, Section I
Homeowners Insurance, Section II
Other Property and Liability Insurance Coverages
Commercial Property Insurance
Commercial Liability Insurance
Crime Insurance and Surety Bonds

All Questions

Question 1

Free

Multiple Choice

Reasons for regulation of insurance include which of the following?
I)Maintaining insurer solvency
II)Ensuring reasonable rates

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I only

II only

both I and II

neither I nor II

Check answer

Question 2

Free

Multiple Choice

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

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the South-Eastern Underwriters Association case.

the case of Paul v. Virginia.

the Financial Modernization Act.

the Sherman Act.

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Question 3

Free

Multiple Choice

The basis for current state regulation of insurance is

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the McCarran-Ferguson Act.

Paul v. Virginia.

the South-Eastern Underwriters Association case.

the National Association of Insurance Commissioners.

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Question 4

Free

Multiple Choice

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

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All states have insurance laws that regulate the operations of insurers.

Insurers are totally exempt from regulation by federal agencies and laws.

The courts regulate insurance in many ways, including the interpretation of policy clauses and provisions.

State insurance commissioners, through administrative rulings, have considerable power over insurers doing business in their states.

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Question 5

Free

Multiple Choice

Which of the following statements about the licensing of insurance companies is (are) true?
I)A new capital stock insurer must meet minimum capital and surplus requirements, which vary by state and line of insurance.
II)The licensing requirements for insurance companies are less stringent than those imposed on most other types of firms.

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I only

II only

both I and II

neither I nor II

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Question 6

Multiple Choice

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

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nonadmitted insurer.

foreign insurer.

alien insurer.

reciprocal insurer.

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Question 7

Multiple Choice

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)

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nonadmitted insurer.

foreign insurer.

alien insurer.

reciprocal insurer.

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Question 8

Multiple Choice

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

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cash

preferred stocks

real estate

office furniture

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Question 9

Multiple Choice

The policyholders' surplus of an insurer is defined as the difference between its

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assets and its liabilities.

premium income and its expenses.

reserves and its liabilities.

assets and its nonadmitted assets.

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Question 10

Multiple Choice

Which of the following statements about the use of risk-based capital requirements is (are) true?
I)Insurers must have a certain amount of capital depending on the riskiness of their investments and insurance operations.
II)Insurers may be required to take certain actions depending on how much capital they have relative to their risk-based capital requirements.

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I only

II only

both I and II

neither I nor II

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Question 11

Multiple Choice

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.

Choose correct answer/s

I only

II only

both I and II

neither I nor II

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Question 12

Multiple Choice

Which of the following statements about the regulation of life insurance companies is (are) true?
I)The percentage of assets a life insurance company may invest in a specific type of asset (e.g., stocks or bonds) is generally limited by law.
II)The purpose of limiting the accumulation of surplus is to prevent an insurer from increasing its surplus at the expense of policyowner dividends.

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I only

II only

both I and II

neither I nor II

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Question 13

Multiple Choice

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.

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I only

II only

both I and II

neither I nor II

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Question 14

Multiple Choice

Under one type of rate regulation, insurers do not have to register their rates with state regulatory authorities. However, insurers may be required to furnish rate schedules and supporting data to state officials. A fundamental assumption underlying this type of rating law is that market forces will determine the price and availability of insurance, rather than discretionary acts of regulators. This type of rate regulation is called

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a flex-rating law.

a prior-approval law.

a file-and-use law.

no filing required.

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Question 15

Multiple Choice

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?

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flex-rating law

prior-approval law

file-and-use law

use-and-file law

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Question 16

Multiple Choice

By misrepresenting the true facts, Gretchen was able to convince someone to replace an existing life insurance policy with another company and to purchase a new policy from the company that Gretchen represents. Gretchen has engaged in an illegal sales practice called

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bait and switch.

rebating.

retaliating.

twisting.

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Question 17

Multiple Choice

Which of the following statements about premium taxes is (are) true?
I)They are levied by the federal government as a result of the McCarran-Ferguson Act.
II)Their primary purpose is to provide funds for insurance regulation.

Choose correct answer/s

I only

II only

both I and II

neither I nor II

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Question 18

Multiple Choice

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

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greater opportunity for innovation

more effective treatment of systemic risk

greater responsiveness to local needs

more competent regulators

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Question 19

Multiple Choice

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

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uniformity of laws

greater efficiency

more effective in negotiating international agreements pertaining to insurance

quicker response to local insurance problems

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Question 20

Multiple Choice

A shortcoming of state regulation of insurance according to Congressional committees and the General Accounting Office is that state regulation

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leads to decentralized governmental power.

provides opportunities for innovation.

provides inadequate consumer protection.

is more responsive to local needs.

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Government Regulation Of Insurance

Reasons for regulation of insurance include which of the following?I)Maintaining insurer solvencyII)Ensuring reasonable rates

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

The basis for current state regulation of insurance is

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

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

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 considered a nonadmitted asset for an insurer?

The policyholders' surplus of an insurer is defined as the difference between its

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.

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?

By misrepresenting the true facts, Gretchen was able to convince someone to replace an existing life insurance policy with another company and to purchase a new policy from the company that Gretchen represents. Gretchen has engaged in an illegal sales practice called

Which of the following statements about premium taxes is (are) true?I)They are levied by the federal government as a result of the McCarran-Ferguson Act.II)Their primary purpose is to provide funds for insurance regulation.

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

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

A shortcoming of state regulation of insurance according to Congressional committees and the General Accounting Office is that state regulation

Reasons for regulation of insurance include which of the following?
I)Maintaining insurer solvency
II)Ensuring reasonable rates

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 statements about premium taxes is (are) true?
I)They are levied by the federal government as a result of the McCarran-Ferguson Act.
II)Their primary purpose is to provide funds for insurance regulation.