Chapter 8

Question 1

Paul V. Virginia

Answer 1

1868, the supreme court ruled that insurance was not interstate commerce, and that the states rather than the federal government had the right to regulate the insurance industry

Question 2

US V. South Eastern Underwriters Association

Answer 2

1944, the Court ruled that insurance was interstate commerce when conducted across state lines and was subject to federal antitrust laws

Question 3

McCarran-Ferguson Act

Answer 3

1945, states that continued regulation and taxation of the insurance industry by the states are in the public interest

Question 4

Financial Modernization Act

Answer 4

1999, changed federal law that earlier prevented banks, insurers, and investment firms from competing outside their core area

Question 5

The Dodd-Frank Wall Street Reform and Consumer Act

Answer 5

2010, was enacted to address abuses in the financial services industry. Created the Financial Stability Oversight Council (FSOC)

Question 6

National Association of Insurance Commissioners

Answer 6

meets periodically to discuss industry problems and draft model laws

Question 7

Domestic Insurer

Answer 7

Domiciled (headquarters) in the state that you insurer in

Question 8

Foreign Insurer

Answer 8

Headquarters are out-of-state, insurer that is chartered by another state, but licensed to operate in the state

Question 9

Alien Insurer

Answer 9

is an insurer that is chartered by a foreign country but is licensed to operate in the state

Question 10

Admitted assets

Answer 10

are assets that an insurer can show on its statutory balance sheet in determining its financial condition

Question 11

Risk-Based Capital (RBC)

Answer 11

standard means that insurer must have a certain amount of capital, depending on the riskiness of their investments and insurance operations

Question 12

Guaranty Funds, Guaranty Laws, Guaranty Associations

Answer 12

Where premium taxes go, pays the claims of policy owners of insolvent insurers (when they go bankrupt)

Question 13

Assessment Method

Answer 13

the major method used to raise the necessary funds to pay unpaid claims

Question 14

Twisting

Answer 14

the inducement of a policyowner to drop an existing policy and replace it with a new one that provides little or no economic benefit to the client

Question 15

Rebating

Answer 15

is the practice of giving an individual a premium reduction or some other financial advantage not stated in the policy as an inducement to purchase the policy

Question 16

Dodd-Frank Wall Street Reform and Consumer Protection Act

Answer 16

2010, contains numerous provision to reform the financial services industry, Created FSOC, FIO to identify and treat systemic risks

Question 17

Financial Stability Oversight Council (FSOC)

Answer 17

has the authority to treat systemic risk and to classify nonbank companies, which include insurance companies, as systemically important financial institutions (SIFIs)- too big to fail

Question 18

Market Conduct

Answer 18

refers to the marketing practices of insurers and agents that involve interaction with insureds, claimants, or consumers.