Question 1

The main outcome of the Gramm-Leach-Bliley Act of 1999 is to allow:

Accepted Answer

A) banks, insurers and security dealers to openly compete with one another 
B) banks, insurers and security dealers to form financial services holding companies 
C) insurers to choose between state or federal regulation 
D) banks to evade the provisions of the Glass-Steagall Act 
A) banks, insurers and security dealers to openly compete with one another 
B) banks, insurers and security dealers to form financial services holding companies 
C) insurers to choose between state or federal regulation 
D) banks to evade the provisions of the Glass-Steagall Act B

Question 2

Which one of the following is an argument for federal regulation of the insurance transaction?

Accepted Answer

A) if there were federal regulation, state regulation would still be required for intrastate transactions 
B) state regulation allows experimentation and isolation of bad laws 
C) many states do not have enough trained people to regulate insurance efficiently 
D) all of the above 
A) if there were federal regulation, state regulation would still be required for intrastate transactions 
B) state regulation allows experimentation and isolation of bad laws 
C) many states do not have enough trained people to regulate insurance efficiently 
D) all of the above C

Question 3

Which of the following is not an argument for federal regulation?

Accepted Answer

A) there will be substantial improvement in efficiency due to fewer jurisdictional requirements 
B) there will be less influence over federal regulators by insurance companies 
C) more expertly trained personnel 
D) it will bring more tax money to the federal government 
A) there will be substantial improvement in efficiency due to fewer jurisdictional requirements 
B) there will be less influence over federal regulators by insurance companies 
C) more expertly trained personnel 
D) it will bring more tax money to the federal government D

Question 4

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

Accepted Answer

A) SEUA decision 
B) Paul v. Virginia decision 
C) National Association of Insurance Commissioners Act 
D) McCarran Ferguson Act 
A) SEUA decision 
B) Paul v. Virginia decision 
C) National Association of Insurance Commissioners Act 
D) McCarran Ferguson Act

Question 5

A foreign insurer is a non-U.S.insurer.

Accepted Answer

A) True 
 B)False

Question 6

An alien insurer is a non-U.S.insurer.

Accepted Answer

A) True 
 B)False

Question 7

Under the provisions of the Gramm-Leach-Bliley Act,all of the following are true except:

Accepted Answer

A) State insurance commissioners oversee insurers operating in their state 
B) Within a financial services holding company, insurance records must be kept separate from other financial records 
C) Only licensed insurance agents can receive commissions for insurance sales 
D) State insurance commissioners and the Federal Reserve jointly oversee the banking activities of insurer-owned banks 
A) State insurance commissioners oversee insurers operating in their state 
B) Within a financial services holding company, insurance records must be kept separate from other financial records 
C) Only licensed insurance agents can receive commissions for insurance sales 
D) State insurance commissioners and the Federal Reserve jointly oversee the banking activities of insurer-owned banks

Question 8

Insurance regulations require legal reserves and surplus because

Accepted Answer

A) assets have to equal liabilities plus owners' equity 
B) reserves are long term obligations and must be met with long term assets 
C) they provide a cushion against bad underwriting and investment results 
D) insurers must pre-fund all agent's commissions and underwriting expenses 
A) assets have to equal liabilities plus owners' equity 
B) reserves are long term obligations and must be met with long term assets 
C) they provide a cushion against bad underwriting and investment results 
D) insurers must pre-fund all agent's commissions and underwriting expenses

Question 9

A life insurer's policy reserve equals the difference between the mathematical liability of a future death claim and the value of:

Accepted Answer

A) future premiums the insured will have to refund to its policyholders 
B) future premiums the insured will pay the insurer 
C) future investment earnings on premiums the insured will pay the insurer 
D) all present death claims 
A) future premiums the insured will have to refund to its policyholders 
B) future premiums the insured will pay the insurer 
C) future investment earnings on premiums the insured will pay the insurer 
D) all present death claims

Question 10

A legal reserve is a cash asset account maintained by life insurers.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following best describes the two sources of insurance regulation?

Accepted Answer

A) state governments and the federal government 
B) insurance law and the administration of that law 
C) contracts and the court system 
D) administrative bodies and the court system 
A) state governments and the federal government 
B) insurance law and the administration of that law 
C) contracts and the court system 
D) administrative bodies and the court system

Question 12

Which of the following is an example of an admitted asset?

Accepted Answer

A) office furniture 
B) supplies 
C) equipment 
D) real estate holdings 
A) office furniture 
B) supplies 
C) equipment 
D) real estate holdings

Question 13

It is generally illegal for an insurance agent to share her commissions with an insured.

Accepted Answer

A) True 
 B)False

Question 14

Insurer reserve requirements exist to:

Accepted Answer

A) force the insurer to maintain a minimum amount of assets 
B) allow the insurer to earn investment income 
C) allow the insurer to charge higher premiums 
D) set money aside for fixed asset acquisition 
A) force the insurer to maintain a minimum amount of assets 
B) allow the insurer to earn investment income 
C) allow the insurer to charge higher premiums 
D) set money aside for fixed asset acquisition

Question 15

Explain the Optional Federal Charter and what it would mean for insurers in the U.S.

Accepted Answer

The OFC would give insurers the option o

Question 16

Different prices for identical goods is one sign of a market that has uninformed buyers.

Accepted Answer

A) True 
 B)False

Question 17

Property insurance companies have more freedom in their investment activities than do life insurance companies.

Accepted Answer

A) True 
 B)False

Question 18

Risk-based capital requirements take into account differences in a particular insurers underwriting and investment practices.

Accepted Answer

A) True 
 B)False

Question 19

"Prior-approval" price regulation is known as "use-and-file" regulation.

Accepted Answer

A) True 
 B)False

Question 20

What was the major result of the Armstrong and Merrit Investigations?

Accepted Answer

A) passage of the McCarran Act 
B) bankruptcy of the SEUA 
C) the repeal of McCarran-Ferguson Act 
D) a new insurance code for the state of New York 
A) passage of the McCarran Act 
B) bankruptcy of the SEUA 
C) the repeal of McCarran-Ferguson Act 
D) a new insurance code for the state of New York

Exam 7: Insurance Regulation

The main outcome of the Gramm-Leach-Bliley Act of 1999 is to allow:

Which one of the following is an argument for federal regulation of the insurance transaction?

Which of the following is not an argument for federal regulation?

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

A foreign insurer is a non-U.S.insurer.

An alien insurer is a non-U.S.insurer.

Under the provisions of the Gramm-Leach-Bliley Act,all of the following are true except:

Insurance regulations require legal reserves and surplus because

A life insurer's policy reserve equals the difference between the mathematical liability of a future death claim and the value of:

A legal reserve is a cash asset account maintained by life insurers.

Which of the following best describes the two sources of insurance regulation?

Which of the following is an example of an admitted asset?

It is generally illegal for an insurance agent to share her commissions with an insured.

Insurer reserve requirements exist to:

Explain the Optional Federal Charter and what it would mean for insurers in the U.S.

Different prices for identical goods is one sign of a market that has uninformed buyers.

Property insurance companies have more freedom in their investment activities than do life insurance companies.

Risk-based capital requirements take into account differences in a particular insurers underwriting and investment practices.

"Prior-approval" price regulation is known as "use-and-file" regulation.

What was the major result of the Armstrong and Merrit Investigations?

Fundamentals and Terminology

Defining the Insurable Event

Risk Management

Financial Services Companies

Insurance Occupations

the Insurance Market: the Economic Problem

Insurance Contracts

Basic Property and Liability Insurance Contracts

Homeowners Insurance

the Personal Auto Policy

Professional Financial Planning

Life Insurance Policies

Standard Life Insurance Contract Provisions And Options

Annuities

Medical Expense and Disability Insurance

Advanced Topics in Risk Management

Commercial Property Insurance

Commercial Liability Insurance

Bonding,Crime Insurance and Reinsurance

Employee Benefits

Social Security

Unemployment and Workers Compensation Insurance

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