Section G Flashcards
fwhat happened in 1752
first american property insurer in philadelphia
what happened in 1792
pennsylvania was the first state to chrater insurers
3 things about New York as a leader in regulating insurance
10% retaliatory premium tax
required insurers to maintain reserves for unearned premiums
1859 created first DOI
what happened in 1871
national insurance convention formed (NIC)
early 1900s insurers also started writing auto, but
DOIs did not allow multiline insurers until after 1945
in 1923 NCIC passed
resolution to bring about repeal of state anticompact laws, trying to deal with ineffective competition leading to insolvencies
amendment of the Clayton act requiring price differences to be justified by reduced operating costs
Robinson-Patman Act
6 state surplus lines laws
- surplus lines broker is accountable for placing business with eligible nonadmitted/unauthorized companies
- set forth the rqeuirements for nonadmitted/unauthorized companies
- domiciliary jurisdiction reviews insurers for solvency
- licensicng only available to producesers who already have PC licenses
- licensee must place business with insurer with adequate capital and surplus
- diligent search
GLB prohibits national banks from
forming subsidiaries to underwrite insurance
What case says that licensing of insurance companies and agents is part of the business of insurance
Robertson v California (1946)
What case says that selling and advertising of insurance policies is part of the business of insurance
FTC v National Casualty co (1958)
NFIP established in ___ as ____
1968 as a federal response to a private insurance industry uninsurable risk
ERISA was enacted to
curb abuse in private pension system and in employee benefit plans
3 federal agencies that affect the insurance industry
FBI (detect and prosecute fraudulent activities)
Environmental Protection Agency
Interstate Commerce Commision (minimum policy limits, forms & endorsement layout, thirty days’ written notice before canceling)
a couple examples of additional requirements for the commissioner’s annual report
annual report of fraudulent claims
annual report on the profitability of a specific line of insurance
Role of the NAIC
coordinate the regulation of insurers operating in multiple jurisdictions
day to day regulation of insurance is done by
the executive branch, either by a separate department/division or buy a unit that is responsible for more than just the admin of insurance laws
9 regulatory departments and functions
licensing regulating coverage and pricing conducting examinations licensing producers regulating claim adjusters fraud determining the need for insurer receivership providing consumer services monitoring the investment activities of insurers
most states have prior approval for
coverage filigns
about half of the states have prior approval for
rate filings
two examples of statistical agents and their services
ISO (insurance services office) : auto, HO, commercial fire & FL
NCCI (national council on compensation insurance) : WC
statistical agent/ prospective loss filings / actuarial services
interstate compacts
binding agreements among states that subordinate individual state lawmaking
how many states have taken some action limiting use of credit scoring
48 states (transparency, prohibiting use for cancel, banning use for existing costumers)
how many states have banned the use of credit history info
4
UBI participation agreements could clearly identify these 3 things
the driving factor being measured
why is it being measured
explanation of the factors that impact safety
ACORD is working on
standardizing the data elements of UBI in order to improve analytical consistency and reduce the need to support multiple data interfaces
Progressive UBI
snapshot
wireless device plugged in, does not record location or have GPS
Allstate UBI
Drivewise
installed into the port
most expansive intervention into insurance regulation by the federal government
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
insurers were likely included in the scope of Dodd Frank because
the “Financial Products” division of the insurer AIG was heavily involved in the crisis
Reason why the Fed’s set of requirements for the insurers is not yet complete
quantitative liquidity requirements have not yet been established
what removed the Dodd-Frank mandate that the regulated insurers maintain the same capital standards as banks
Insurance Capital Standards Clarification act (2014)
NRRA
Nonadmitted and Reinsurance Reform Act (part of the dodd-frank)
export lists
lists of coverages that are considered to be unavailable from the admittted market
a state may not prohibit a surplus lines broker from placing non-admitted insurance with a non US non-admitted insurer that is listed in the
quarterly listing of alien insurers
surplus lines carriers need to be approved as a Domestic Surplus Lines Insurer to
issue surplus lines insurance in their state of domicile
all members insured must be owners of the RRG, and
all owners of the RRG must be insured by the RRG
NAIC accreditation standards for RRGS require them to
comply with filing requirement including:
- financial statements
- Management’s discsusison and analyais
- audited statements
- actuarial opinions
rating agencies do not respond as quickly as
the bond and stock markets
surety insures that
construction firm will complete project
AM best credit ratings- investment grade
exceptional aaa
very strong aa+, aa, aa-
strong a+, a, a-
adequate bbb+. bbb. bbb-
AM best credit reatings- non-investment grade
speculative bb+. bb. bb-
very speculative b+ b b-
extremely speculative ccc+, ccc, ccc-, cc, c
in default d
RBC was designed to provide these four things
capital adequacy standard that is based on risk
safety net for insurers
uniformity among states
regulatory authority for timely action
value of duplicaiton illustrated by
Martin Frankel case (MS catching the fraud even though several regulators did not)
3 areas of improvement identified by regulators
revisiting reliance on rating agencies in RBC calc
new reporting and other requirements applying to securities lending
more attention to pottential impact of unregulated affiliates of insurers
