The major argument in favor of an optional federal charter for insurers is that A) small insurers need a national charter to be competitive with large insurers. B) a federal charter will prevent insurer insolvencies. C) a federal charter will provide greater oversight of insurer market practices. D) national insurers are at a competitive disadvantage […]
Which of the following is an advantage of federal regulation of insurance over state regulation of insurance? A) greater opportunity for innovation B) more effective treatment of systemic risk C) greater responsiveness to local needs D) more competent regulators ANSWER Answer: B
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. A) I only B) II only C) both I and II D) neither I nor […]
Which of the following is an advantage of state regulation of insurance over federal regulation of insurance? A) uniformity of laws B) greater efficiency C) more effective in negotiating international agreements pertaining to insurance D) quicker response to local insurance problems ANSWER Answer: D
The regulation of insurers in areas that affect consumers, which include claims handling, underwriting, complaints, advertising, sales practices, and other trade practices is called A) solvency surveillance. B) market conduct regulation. C) combined ratio analysis. D) market share regulation. ANSWER Answer: B
A shortcoming of state regulation of insurance according to Congressional committees and the General Accounting Office is that state regulation A) leads to decentralized governmental power. B) provides opportunities for innovation. C) provides inadequate consumer protection. D) is more responsive to local needs. ANSWER Answer: C
The major reasons for insurer insolvency include which of the following? I. Inadequate pricing and loss reserves II. Rapid growth and inadequate surplus A) I only B) II only C) both I and II D) neither I nor II ANSWER Answer: C
A life insurance company based in Canada was licensed to operate in Massachusetts. When operating in Massachusetts, the Canadian insurer would be considered a(n) A) domestic insurer. B) captive insurer. C) foreign insurer. D) alien insurer. ANSWER Answer: D
XYZ Mutual Insurance Company has total assets of $10 million. The policyholders’ surplus is $2 million. What are XYZ Mutual’s total liabilities? A) $4.0 million B) $8.0 million C) $10.0 million D) $12.0 million ANSWER Answer: B
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? A) Paul v. Virginia B) South-Eastern Underwriters Association case C) McCarran-Ferguson Act D) Financial Modernization Act ANSWER Answer: B
