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
Under one type of rating law, insurers are free to change rates and to use modified rates immediately. However, the new rate must be filed with regulators within a specified period, such as 60 days after the modified rate is employed. This type of rating law is called A) prior approval. B) file-and-use. C) use-and-file. […]
Date: September 19th, 2020
ABC Insurance Company would like to purchase a bank. For many years, ABC was not permitted under federal law to enter into banking operations. Which of the following legislative acts eliminated the prohibition that prevented banks, insurers, and investment firms from entering into one another’s markets? A) The McCarran-Ferguson Act B) The Tax Reform Act […]
Date: September 19th, 2020
State X’s premium tax rate is 2 percent. State Y’s premium tax rate is 3 percent. State X insurers are required to pay the 3 percent rate on business written in State Y. State X requires insurers from State Y to pay a 3 percent premium tax on business written in State X, even though […]
Date: September 19th, 2020
The National Association of Insurance Commissioners (NAIC) administers an “early warning system” to help ensure insurance company solvency. This system uses data provided in the annual statement to identify companies that may pose a solvency risk. This early warning system is called A) the risk-based capital requirements. B) an insurance guaranty fund. C) the Insurance […]
Date: September 19th, 2020
The number of title insurance companies operating in State Z is relatively low. Recently, the largest of these companies (50 percent market share) acquired the second largest company (30 percent market share). Immediately after the acquisition, the insurer raised premiums by 75 percent. This scenario demonstrates which of the following rationales for the regulation of […]
Date: September 19th, 2020
Which of the following is a method used to help ensure the solvency of insurers? A) commercial lines deregulation B) risk-based capital standards C) use of credit-based insurance scores D) use of no filing required rating laws ANSWER Answer: B
Date: September 19th, 2020
Which of the following is a principal method of ensuring the solvency of insurers? A) requiring submission of annual financial statements to state regulators B) tracking and investigating market conduct complaints against insurers C) disciplining agents of the insurer for illegal sales practices D) regulating the forms (applications and policies) employed by the insurer […]
Date: September 19th, 2020
Which of the following statements concerning the proposed optional federal charter for life insurers is (are) true? I. Large insurers operating in many states would more likely prefer a state charter while smaller, regional, insurers would more likely choose a federal charter. II. Proponents of the federal charter argue that it would speed the development […]
Date: September 19th, 2020
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
Date: September 19th, 2020
