Porter 5 Flashcards

1
Q

Describe two benefits of a file and use rating law for insurers

A
  • reduces time and cost of changing rates, easier to be responsive
  • allows insurer to be more innovative since less worry over disapproval
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2
Q

Describe two benefits of a file and use rating law for insureds

A
  • reduced cost can be passed on to insureds at lower rates

- those insureds benefiting from price decreases/ innovation benefit from quicker sped to market

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3
Q

Describe two benefits of a file and use rating law for regulators

A
  • allows regulator to focus on other areas such as solvency

- reduces resources needed since prior approval can be very costly

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4
Q

Describe one advantage and one disadvantage for Prior Approval

A

Advantage: regulator has close surveillance of insurer and can protect insured
Disadvantage: delays in rate approvals that do not allow insurers to charge rates based on market trends

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5
Q

Describe one advantage and one disadvantage for No File

A

Advantage: easy for insurer, less costs
Disadvantage: regulator has trouble monitoring

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6
Q

Describe one advantage and one disadvantage for Use and File

A

Advantage: use rates immediately/ quick to market
Disadvantage: cost associated with completing a filing

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7
Q

State 4 arguments for Elected Commissioners

A
  • appointed subject to dismissal for cause which could make term uncertain
  • appointed might continue regulating in the same manner as predecessor when a different approach is required
  • appointed might or might not be as aware of public’s concerns
  • appointed might feel inclined to yield to the interests of those responsible for the appointment
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8
Q

State 4 arguments for Appointed Commissioners

A
  • no need to campaign or raise funds for a campaign, so not unduly influenced by particular group
  • experienced and knowledgeable person can be designated whereas an elected might not be knowledgeable about insurance
  • less likely to be swayed by public opinion which may have an adverse effect on insurance regulation
  • more likely to be perceived as a career state government employee interested in insurance regulation whereas an elected may be seen as a politician
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9
Q

Identify 9 duties of the Insurance Commissioner

A
  • overseeing operation of state insurance department
  • promulgating orders, rules, and regulations necessary for admin of insurance laws
  • determining whether to issue business licenses to new insurance companies, agents, and brokers, and other insurance entities
  • reviewing insurance pricing and coverage
  • handling hearings on insurance ins sues
  • taking action when violations of insurance laws occur
  • issuing an annual report on status of state’s insurance industry and department
  • maintaining records of insurance department activities
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10
Q

Briefly describe the four basic types of filing laws

A
  • Prior approval: regulator must authorize rate or coverage filing before it can be used
  • File and Use: must submit the rate or coverage to department before it can be used
  • Use and File: company can go ahead and use the rate or coverage, provided that it is sent to regulator within a short period of time
  • No File: not required to make a filing
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11
Q

What are the most common reasons for rate or coverage disapproval?

A
  • not in the public interest
  • illegal
  • unfairly discriminatory
  • rate excessive, inadequate or not meeting minimum standards
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12
Q

What are 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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13
Q

Briefly describe a market conduct examinations

A
  • review of the ways in which insurers do business: advertising, soliciting, policy issuing, claims handling
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14
Q

Name the two main reasons insurance department may not have a fraud unit

A
  • restraints on budgets

- lack of insurance fraud laws

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15
Q

State 3 reasons an insurance department will rehab an impaired insurer

A
  • liabilities exceed assets
  • insurance company refused to submit books, records, accounts or affairs to insurance department
  • insurer has willfully violated its charter
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16
Q

Give 3 examples of consumer services provided by regulators

A
  • help with claims, complaints, and inquiries from the general public
  • offer educational programs to inform policyholders about insurance and loss prevention
  • publish information about guide for the purchase of insurance
17
Q

List 5 methods state insurance departments communicate with the insurance industry

A
  • written material: informational newsletters and bulletins
  • surveys of insurance companies
  • advisory groups
  • announce to news media
  • annual reports
18
Q

Revenue for state insurance departments can come from many sources. List 5

A
  • premium taxes
  • fees and assessments
  • appropriation from the state treasury
  • fines and penalties
  • services for which state insurance departments charge fees
19
Q

List 3 regulatory duties of an Insurance Commissioner

A
  • promulgating regulations and rules necessary to enforce insurance laws
  • licensing insurance companies and insurance producers
  • reviewing insurers’ rates and forms
20
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
21
Q

Briefly describe Receiver

A

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

22
Q

Briefly describe Receivership

A

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

23
Q

Briefly describe 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

24
Q

Briefly describe 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