Question 1

Which of the following is a subject of state insurance regulation?

Accepted Answer

A)  Equal employment practices of the insurer 
B)  Standards of financial solvency 
C)  Business acquisition practices 
D)  Insurance contract provisions 
A)  Equal employment practices of the insurer 
B)  Standards of financial solvency 
C)  Business acquisition practices 
D)  Insurance contract provisions D

Question 2

The best argument for continued state insurance regulation is that state regulation is cheaper and more efficient than federal regulation would be.

Accepted Answer

A) True 
 B)False  False

Question 3

The NAIC is a federal regulatory agency for administering federal insurance programs for armed service personnel.

Accepted Answer

A) True 
 B)False  False

Question 4

The Southeastern Underwriters Association (SEUA) case reversed the Paul v. Virginia decision.

Accepted Answer

A) True 
 B)False

Question 5

The McCarran-Ferguson Act recommended that:

Accepted Answer

A)  states dismantle their regulatory systems 
B)  states submit to federal insurance regulation 
C)  state regulation be phased out over a ten-year period 
D)  none of the above 
A)  states dismantle their regulatory systems 
B)  states submit to federal insurance regulation 
C)  state regulation be phased out over a ten-year period 
D)  none of the above

Question 6

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 7

The Merritt Committee Investigation looked into solutions for dealing with:

Accepted Answer

A)  unethical and undesirable behavior by insurance companies 
B)  effectiveness of state taxation as opposed to insurance regulation 
C)  states that do not have a state insurance commissioner system in place 
D)  insurers that violate risk-based capital requirements 
A)  unethical and undesirable behavior by insurance companies 
B)  effectiveness of state taxation as opposed to insurance regulation 
C)  states that do not have a state insurance commissioner system in place 
D)  insurers that violate risk-based capital requirements

Question 8

The NAIC requires life insurers to keep two different types of reserve accounts. These reserve accounts are designed to protect insureds from poor investment results the insurer may suffer. What are these two reserves called?

Accepted Answer

A)  Mandatory securities valuation reserve and supplementary securities valuation reserve 
B)  Mandatory securities valuation reserve and asset valuation reserve 
C)  Mandatory securities valuation reserve and interest maintenance reserve 
D)  Interest maintenance reserve and asset valuation reserve 
A)  Mandatory securities valuation reserve and supplementary securities valuation reserve 
B)  Mandatory securities valuation reserve and asset valuation reserve 
C)  Mandatory securities valuation reserve and interest maintenance reserve 
D)  Interest maintenance reserve and asset valuation reserve

Question 9

Which of the following is not a reason for the comprehensive regulation of insurance?

Accepted Answer

A)  Widespread abuse of consumer rights 
B)  Severe impact of insurer insolvency 
C)  Unequal knowledge and bargaining power of buyers and sellers 
D)  Unique pricing problems inherent in insurance 
A)  Widespread abuse of consumer rights 
B)  Severe impact of insurer insolvency 
C)  Unequal knowledge and bargaining power of buyers and sellers 
D)  Unique pricing problems inherent in insurance

Question 10

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 11

Under regular audits and solvency testing an insurer is subject to:

Accepted Answer

A)  no state guaranty fund participation 
B)  more restrictive rate regulation 
C)  the requirement to file an annual statement 
D)  FDIC participation and protection 
A)  no state guaranty fund participation 
B)  more restrictive rate regulation 
C)  the requirement to file an annual statement 
D)  FDIC participation and protection

Question 12

Which of the following is not directly a subject of state insurance regulation?

Accepted Answer

A)  Financial solvency of insurance companies 
B)  Trade practices of insurance companies, such as agent compensation and product pricing 
C)  Marketing activities of insurance companies 
D)  The rates that insurers charge for insurance 
A)  Financial solvency of insurance companies 
B)  Trade practices of insurance companies, such as agent compensation and product pricing 
C)  Marketing activities of insurance companies 
D)  The rates that insurers charge for insurance

Question 13

The Gramm-Leach-Bliley Act took effect on January 1, 1998.

Accepted Answer

A) True 
 B)False

Question 14

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

Question 15

Which of the following is the most important goal of insurance regulation?

Accepted Answer

A)  Limiting the number of insurance companies in the state 
B)  Promoting the solvency of insurance companies 
C)  Mandating that all citizens purchase auto insurance and health insurance 
D)  Approving the contractual language of insurance policies sold in the state 
A)  Limiting the number of insurance companies in the state 
B)  Promoting the solvency of insurance companies 
C)  Mandating that all citizens purchase auto insurance and health insurance 
D)  Approving the contractual language of insurance policies sold in the state

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

IBNR reserves are an estimate of:

Accepted Answer

A)  losses that have been incurred but not reported to the insurer 
B)  losses that have been incurred and reported to the insurer, but not yet settled 
C)  unearned premiums the insurer owes policyholders 
D)  agent commissions owed 
A)  losses that have been incurred but not reported to the insurer 
B)  losses that have been incurred and reported to the insurer, but not yet settled 
C)  unearned premiums the insurer owes policyholders 
D)  agent commissions owed

Question 18

Which one of the following is not a reason for the regulation of insurance?

Accepted Answer

A)  To prevent insurer insolvencies 
B)  To promote social goals 
C)  The unequal knowledge and bargaining power of the parties to the contract 
D)  To stabilize the economy 
A)  To prevent insurer insolvencies 
B)  To promote social goals 
C)  The unequal knowledge and bargaining power of the parties to the contract 
D)  To stabilize the economy

Question 19

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 20

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

Exam 10: Insurance Regulation

Which of the following is a subject of state insurance regulation?

The best argument for continued state insurance regulation is that state regulation is cheaper and more efficient than federal regulation would be.

The NAIC is a federal regulatory agency for administering federal insurance programs for armed service personnel.

The Southeastern Underwriters Association (SEUA) case reversed the Paul v. Virginia decision.

The McCarran-Ferguson Act recommended that:

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

The Merritt Committee Investigation looked into solutions for dealing with:

The NAIC requires life insurers to keep two different types of reserve accounts. These reserve accounts are designed to protect insureds from poor investment results the insurer may suffer. What are these two reserves called?

Which of the following is not a reason for the comprehensive regulation of insurance?

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

Under regular audits and solvency testing an insurer is subject to:

Which of the following is not directly a subject of state insurance regulation?

The Gramm-Leach-Bliley Act took effect on January 1, 1998.

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

Which of the following is the most important goal of insurance regulation?

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

IBNR reserves are an estimate of:

Which one of the following is not a reason for the regulation of insurance?

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

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

Introduction to Enterprise Risk Management and Insurance

Risk Identification

Risk Assessment and Pooling

Risk-Handling Techniques: Loss Control, Risk Transfer, and Loss Financing

Risk-Handling Techniques: Diversification and Hedging

Fundamentals of Insurance

Insurable Perils and Insuring Organizations

Insurance Functions

Insurance Markets: Economics and Issues

Insurance Contracts

The Personal Auto Policy

Homeowners Insurance

Professional Financial Planning

Life Insurance Policies

Standard Life Insurance Contract Provisions and Options

Annuities

Health Insurance and Disability Income

Employee Benefits

Social Security

Unemployment and Workers Compensation Insurance

Commercial Property Insurance

Commercial Liability Insurance

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