Porter Ch 6

Question 1

2 criteria that DOIs look at when insurers are seeking a

license:

Answer 1

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

Question 2

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

Answer 2

1. Create jobs

2. Give regulator easier access

Question 3

What do regulators examine during an organizational

exam of an insurer applying for a license:

Answer 3

-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

Question 4

Briefly describe a domestic insurer, foreign insurer, and

alien insurer

Answer 4

-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

Question 5

2 advantages that foreign insurers have when applying

for a license:

Answer 5

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

Question 6

List some differences in the licensing application

between a foreign and domestic insurer:

Answer 6

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
-Certicates of compliance - evidence that in compliance with domiciliary state
-Holding insurer registration statement - if applicant is
member of an insurer holding system

Question 7

List an additional requirement if seeking to be licensed

in state where an affiliate already writing:

Answer 7

May require u/w guidelines to ensure parent insurer does not

shift business back and forth between aliated insurers

Question 8

Some regulators require that the insurer be seasoned to

obtain a license. List some exceptions to this requirement:

Answer 8

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

Question 9

What additional requirements does an alien insurer

have when filing for a license:

Answer 9

-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