G.1.4. Porter Chapter 5 Flashcards

1
Q

Briefly describe 4 Types of Filing Laws:

A
  1. Prior approval - Insurance rates and coverages must be approved by the state insurance department before they can be used in the state
  2. File and use - Insurer must file insurance rates or coverages with the state insurance department but can then use them immediately
  3. Use and file - Insurer can use the rate or coverage it wants, provided the insurer files the rate or coverage within a specified period after it is put into use
  4. No file - Insurer not required to make a filing of the rate or coverage
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2
Q

Purpose of insurance regulation:

A

Assure that the future performance promise, to pay a claim, will be fulfilled as needed (Protects the public interest)

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3
Q

Describe the basic purposes of a financial examination:

A
  • Detect as early as possible those insurers in financial trouble and/or engaging in unlawful and improper activities
  • Develop the information needed for timely, appropriate regulatory action
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4
Q

List some of the most common reasons for rate or coverage disapproval:

A
  • Not in the public interest
  • Illegal
  • Unfairly discriminatory
  • Other - excessive, inadequate or not meeting minimum standards
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5
Q

Briefly describe a market conduct examination.

A

Review of the ways in which insurers do business - advertising, soliciting, policy issuing, claims handling

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6
Q

What is reviewed in the financial examination:

A

Insurer’s statistical statements, accounting procedures,financial statements, financial controls, management practices, and investment procedures

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7
Q

How did the 1994 Omnibus Crime Control and Safe Streets Act address insurance fraud:

A
  • Made it illegal to defraud, loot, or plunder an insurer

- Established a multi-state approach to anti fraud activity

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8
Q

2 reasons why only a few states have historically had fraud departments:

A
  1. Restraints on budgets

2. Lack of insurance fraud laws

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9
Q

Briefly describe a “Receivership”

A

Type of bankruptcy an insurer enters into when a receiver is appointed to manage the insurer and its property

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10
Q

Briefly describe a “Receiver”

A

Disinterested person/business appointed to receive, protect, and account for money or other property due

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11
Q

Briefly describe a “Liquidation”

A

Bankruptcy proceeding in which a bankrupt organization does not have enough assets to pay all creditors, and the creditors are prioritized and paid according to the types of their claims

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12
Q

Briefly describe a “Rehabilitation”

A

Process of reorganizing an insurer’s financial affairs so it can continue to exist as a financial entity, with creditors satisfying their claims from its future earnings

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13
Q

List potential grounds for rehabilitation:

A
  • Liabilities exceed assets
  • Insurance company refused to submit books, records, accounts or affairs to insurance department
  • Insurer willfully violates its charter or any other state law
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14
Q

Consumer services provided by regulators

A
  • Help with claims, complaints and inquiries from the general public
  • Offer educational programs
  • Publish information about guides for purchase of insurance
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