Porter Ch. 6: Licensing Regulation

Question 1

Initial free surplus requirement

Answer 1

Amount of surplus a new stock insurer must provide above minimum capital required

Question 2

Minimum required basic surplus

Answer 2

Amount of surplus existing insurers must hold to continue writing insurance

Question 3

Line authority differences

Answer 3

Capitalization unique to LOBs

More hazardous lines demand larger capital

Question 4

Domestic Licensing requirements

Answer 4

Books and records kept in state

Principal office in state (create jobs, easier regulator access)

Question 5

Domestic Licensing prerequisites

Answer 5

Organizational examination; Minimum capital met, management team in pace, records in good order, approved forms/rates

Question 6

Foreign Insurer advantages over start-up

Answer 6

If strong performer, more likely to receive approval; has history within own state

Question 7

Foreign insurer licensing prerequisites

Answer 7

Charter and bylaws
Annual Statements (2-3 yrs)
Certificates of Compliance
Most recent report of financial examination

Question 8

Alien insurer

Answer 8

Insurer licensed in US state but incorporated in another country; must select state to act as “port of entry”