Chapter 2: Insurance Regulations Flashcards

1
Q

Reasons for Insurance Regulation

A
  • To protect consumers
  • To maintain insurer solvency
  • To prevent destructive competition
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2
Q

Reasons for Insolvency

A
  • Rapid premium growth
  • Inadequate insurance rates
  • Inadequate reserves
  • Excessive expenses
  • Lax control over managing general agents
  • Uncollectible reinsurance
  • Fraud
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3
Q

Insurance Rate Regulation Goals

A
  • Adequate
  • Not excessive
  • Not discriminatory
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4
Q

Types of Rating Laws

A
  • Prior-approval laws
  • File-and-use laws
  • Use-and-file laws
  • No filing laws (open competition)
  • Flex rating laws
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5
Q

Legislative Policy Regulation

A
  • Standard forms
  • Mandatory provisions
  • Prohibited provisions
  • Forms approval
  • Readability standards
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6
Q

Regulating Market Conduct

A
  • Producer practices
  • Underwriting practices
  • Claims practices
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7
Q

Unofficial Regulators in Insurance

A
  • Financial rating organizations
  • Insurance advisory organizations
  • Insurance industry professional and trade associations
  • Consumer groups
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8
Q

Insurance Advisory Organizations

A
  • Develop rating systems
  • Collect and tabulate statistics
  • Research important insurance topics
  • Provide a forum for discussing important issues
  • Educate members. The industry, insurance regulators, and the public about relevant issues
  • Monitor regulatory issues of concern to members
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