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
Date: September 19th, 2020
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
Date: September 19th, 2020
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
Date: September 19th, 2020
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
Date: September 19th, 2020
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
Date: September 19th, 2020
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
Date: September 19th, 2020
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
Date: September 19th, 2020
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 […]
Date: September 19th, 2020
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? A) guaranty fund B) premium rebates C) risk-based capital D) admitted assets ANSWER Answer: […]
Date: September 19th, 2020
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? A) $2 million B) $8 million C) $10 million D) $20 million ANSWER Answer: A
Date: September 19th, 2020
