G.1.5. Porter Chapter 6 Flashcards

1
Q

2 reasons that regulators would prefer that insurer maintain an office in the state:

A
  1. Create jobs

2. Give regulator easier access

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2
Q

2 criteria that DOIs look at when insurers are seeking a license:

A
  1. Location of books and records - usually seeks assurance the insurer will retain books and records in the state
  2. Principal office - many DOIs require insurer to maintain an office in the state
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3
Q

Briefly describe a domestic insurer, foreign insurer, and alien insurer

A

Domestic - Incorporated in the state writing insurance business
Foreign - Licensed to operate in a state but incorporated in another state
Alien - Licensed in a U.S. state but incorporated in another country

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4
Q

What do regulators examine during an organizational exam of an insurer applying for a license:

A
  • Verify minimum capitalization is on deposit at an approved financial institution
  • Verify that management team in place
  • Corporate records are in good order
  • Policy forms and rates have department approval
  • Gives employees chance to review with the examiners the various DOI expectations for reporting
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5
Q

List some differences in the licensing application between a foreign and domestic insurer:

A

Foreign also has to provide:

  • Charter and bylaws - reviews to evaluate the terms of its operations as a legal entity
  • Annual Statements - reviews for previous 2-3 years
  • Examination report - most recent report of financial examination
  • Financial statements - SAP and sometimes GAAP
  • Certificates of compliance - evidence that in compliance with domiciliary state
  • Holding insurer registration statement - if applicant is member of an insurer holding system
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6
Q

2 advantages that foreign insurers have when applying for a license:

A
  1. If a strong performer with solid financial record, more likely to receive approval
  2. Already gone through rigors of the domiciliary jurisdiction’s review
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7
Q

Some regulators require that the insurer be seasoned to obtain a license. List some exceptions to this requirement:

A
  • insurer has substantial capital
  • owned by an insurer with lengthy history
  • department is satisfied with the application for other reasons
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8
Q

List an additional requirement if seeking to be licensed in state where an affiliate already writing:

A

May require u/w guidelines to ensure parent insurer does not shift business back and forth between affiliated insurers

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9
Q

What additional requirements does an alien insurer have when filing for a license:

A
  • Appointment of U.S. manager
  • Provide a Trust agreement - contract in which one party transfers ownership of property to another party that will administer the property for a third party’s benefit
  • Certicate of alien funds on deposit
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10
Q

Briefly describe a reciprocal insurer or insurance exchange

A

Groups similarly engaged in business that agree to indemnify one another for certain kinds of losses by way of the exchange of insurance contracts

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