G.1.5. Porter Chapter 6 Flashcards
2 reasons that regulators would prefer that insurer maintain an office in the state:
- Create jobs
2. Give regulator easier access
2 criteria that DOIs look at when insurers are seeking a license:
- Location of books and records - usually seeks assurance the insurer will retain books and records in the state
- Principal office - many DOIs require insurer to maintain an office in the state
Briefly describe a domestic insurer, foreign insurer, and alien insurer
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
What do regulators examine during an organizational exam of an insurer applying for a license:
- 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
List some differences in the licensing application between a foreign and domestic insurer:
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
2 advantages that foreign insurers have when applying for a license:
- If a strong performer with solid financial record, more likely to receive approval
- Already gone through rigors of the domiciliary jurisdiction’s review
Some regulators require that the insurer be seasoned to obtain a license. List some exceptions to this requirement:
- insurer has substantial capital
- owned by an insurer with lengthy history
- department is satisfied with the application for other reasons
List an additional requirement if seeking to be licensed in state where an affiliate already writing:
May require u/w guidelines to ensure parent insurer does not shift business back and forth between affiliated insurers
What additional requirements does an alien insurer have when filing for a license:
- 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
Briefly describe a reciprocal insurer or insurance exchange
Groups similarly engaged in business that agree to indemnify one another for certain kinds of losses by way of the exchange of insurance contracts