RMIN 4000 brown exam 3 Questions and
Answers Graded A+
Formation & Licensing of Insurers - Correct answer-Minimum capital and surplus
requirements.
Domestic Insurer Domiciled in the state
.Foreign Insurer Chartered (domiciled) in another state, but licensed to operate in
the state.
Alien Insurer
Chartered in a foreign country, but licensed to operate in the state.
Solvency Regulation - Correct answer--assets must be sufficient to offset liabilities
-calculation of reserves
-premium to surplus ratio
-investment types and quality
-annual statement must be filed
-guaranty funds
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,Rate Regulation - Correct answer--differs by state
-prior approval
filed w state before use
-file and use
filed with state, use immediately
-other methods
Policy Forms - Correct answer-- policy forms and endorsements must be filed with
the state department of insurance
- purpose is to protect consumers from misleading, deceptive, or unfair provisions
Sales Practices and Consumer Protection - Correct answer-All states require:
- licensing of brokers and agents
- continuing education for brokers and agents
Prohibit unfair trade practices:
- twisting
drop existing policy, replace with one that provides little or no economic benefit
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, - rebating
cutting the price down so someone buys the policy
Taxation of insurers - Correct answer-insurers pay a state tax on gross premiums
received from policyholders
McCarran-Ferguson Act (1945) - Correct answer-ins regulated and taxed by the
states
Federal antitrust laws do not apply to insurance
Financial Modernization Act of 1999 (Gramm-Leach-Biley) - Correct answer-no
barriers between insurers and banks
insurers can have banking operations and banks can have insurance operations
led to several mergers and acquisitions
created confusion as to who would regulate each division
frequently cited as a contributor to the 2008 financial crisis
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
Answers Graded A+
Formation & Licensing of Insurers - Correct answer-Minimum capital and surplus
requirements.
Domestic Insurer Domiciled in the state
.Foreign Insurer Chartered (domiciled) in another state, but licensed to operate in
the state.
Alien Insurer
Chartered in a foreign country, but licensed to operate in the state.
Solvency Regulation - Correct answer--assets must be sufficient to offset liabilities
-calculation of reserves
-premium to surplus ratio
-investment types and quality
-annual statement must be filed
-guaranty funds
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
,Rate Regulation - Correct answer--differs by state
-prior approval
filed w state before use
-file and use
filed with state, use immediately
-other methods
Policy Forms - Correct answer-- policy forms and endorsements must be filed with
the state department of insurance
- purpose is to protect consumers from misleading, deceptive, or unfair provisions
Sales Practices and Consumer Protection - Correct answer-All states require:
- licensing of brokers and agents
- continuing education for brokers and agents
Prohibit unfair trade practices:
- twisting
drop existing policy, replace with one that provides little or no economic benefit
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
, - rebating
cutting the price down so someone buys the policy
Taxation of insurers - Correct answer-insurers pay a state tax on gross premiums
received from policyholders
McCarran-Ferguson Act (1945) - Correct answer-ins regulated and taxed by the
states
Federal antitrust laws do not apply to insurance
Financial Modernization Act of 1999 (Gramm-Leach-Biley) - Correct answer-no
barriers between insurers and banks
insurers can have banking operations and banks can have insurance operations
led to several mergers and acquisitions
created confusion as to who would regulate each division
frequently cited as a contributor to the 2008 financial crisis
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
