Chapter 2: Insurance Regulations Flashcards
1
Q
Reasons for Insurance Regulation
A
- To protect consumers
- To maintain insurer solvency
- To prevent destructive competition
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
3
Q
Insurance Rate Regulation Goals
A
- Adequate
- Not excessive
- Not discriminatory
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
5
Q
Legislative Policy Regulation
A
- Standard forms
- Mandatory provisions
- Prohibited provisions
- Forms approval
- Readability standards
6
Q
Regulating Market Conduct
A
- Producer practices
- Underwriting practices
- Claims practices
7
Q
Unofficial Regulators in Insurance
A
- Financial rating organizations
- Insurance advisory organizations
- Insurance industry professional and trade associations
- Consumer groups
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
