Porter Ch. 3: Federal Role in Insurance Regulation

Question 1

Robertson v. California

Answer 1

1946 - licensing of insurance companies and agents part of business of insurance

Question 2

FTC v. National Casualty Co.

Answer 2

1958 - selling and advertising of insurance polices part of business of insurance

Question 3

SEC v. Variable Annuity

Answer 3

1959 - risk UW distinctive feature within business of insurance; variable annuities not part of this

Question 4

SEC v. National Securities

Answer 4

1969 - company-stockholder relations not part of business of insurance

Question 5

NOT business of insurance

Answer 5

If an activity affects the insurer as it would any other business

Question 6

Group Life v. Royal Drug

Answer 6

1979 - Blue Shield fixing prices, not business of insurance

Question 7

Characteristics of business of insurance

Answer 7

Spreading and UW of risk
Direct connection between insurer and insured
Unique to insurers
Only need one to be exempt from McCarran

Question 8

Product Liability Risk Retention Act of 1981

Answer 8

Addressed price and availability crisis; enabled manufacturers, wholesalers, etc to form own RRG to spread exposures; 1986 allowed for other CI exposures

Question 9

Causes of Product Liability insurance price and availability crisis

Answer 9

Questionable reserving / ratemaking
Unsafe products
Uncertainties in tort / legislation system

Question 10

Securities Exchange Act of 1934: Obligations

Answer 10

Annual reports to shareholders
5 years financial data
Liquidity / capital plans
Industry segment information for three years

Question 11

Employee Retirement Income Security Act of 1974

Answer 11

Designed to ensure plan participants become more informed about benefits; insurers became subject to responsibilities of compliance

Question 12

OSHA

Answer 12

Requires both employers and employees to comply with safety / health standards

Question 13

“Other” Federal Regulation affecting insurance industry

Answer 13

OSHA
FBI
EPA
Interstate Commerce Commission

Question 14

Interstate Commerce Commission

Answer 14

Dictates acceptable minimum policy limits / conditions; forms must be approved; insurer must give ICC 30 days’ written notice before cancellation

Question 15

Contract of adhesion

Answer 15

Drawn up by insurer; ambiguous language favors insured

Question 16

Doctrine of reasonable expectations

Answer 16

Insured’s reasonable expectation of coverage is honored

Question 17

Insurance Industry Trade Association

Answer 17

Exerts influence on NAIC, state/federal legislators and regulators, becomes source of information

Question 18

Insurance Advisory Organizations

Answer 18

Primarily deal with filing rates or prospective loss costs; provides forum for discussion, researches topics, education

Question 19

Consumer groups

Answer 19

Voice of the customer; alert regulators to industry problems

Question 20

Priority for insurance regulators, by line

Answer 20

Private auto
Homeowners
Commercial Auto
CMP

Question 21

Priority for insurance regulators, by topic

Answer 21

Price
Market
Availablilty
Solvency
Licensing
Corporate Org

Question 22

Federal intervention in “business of insurance”

Answer 22

NFIP
TIRA
Risk Retention Acts

Question 23

Federal intervention in activities that are not “business of insurance”

Answer 23

ERISA
Federal Taxation
SEC requirements