USAA API STUDY GUIDE QUESTIONS AND CORRECT ANSWERS

USAA API STUDY GUIDE QUESTIONS AND CORRECT ANSWERS Describe what happened in the case of Paul vs. Virginia. Include proximate dates and court decisions. - Answer-This was the first case to regulate insurance. Paul challenged the right of the state to regulate insurance by refusing to obtain a license from the state. When he continued to sell insurance w/o a license, he was arrested and fined $50. The case went all the way to Supreme Court and was finally decided in 1869, that insurance wasn't interstate commerce. Describe the importance of the US vs South Eastern Underwriters association case and how it changed insurance. - Answer-After 75 years the federal govt was tested again on regulating insurance. In 1942, the Attorney General of the US filed a brief on the Sherman act against the SEUA, a cooperative rating bureau, alleging that the bureau constituted a combo in restraint of trade. The decision (1944) reversed its decision of Paul vs. Virginia, stating that insurance is interstate commerce and is therefore subject to regulation by the fed govt. This decision stands today. What is the McCarran Ferguson Act? What is another name for it? - Answer-A bill that became law on March 9, 1945. Congress insisted that it was the right of the Federal government to regulate the insurance industry but stated in the act that the federal government would not regulate insurance as long as the states did an adequate job of regulating the industry. Public law 15 provided that the Sherman Act would continue to apply to boycott, coercion, or intimidation. A.K.A as Public law 15 What does NAIC stand for, and what is its function? - Answer-National Association of Insurance Commissioners who drafted the McCarran-Ferguson Act in 1945. The NAIC is an organization composed of insurance commissioners from all 50 states, the district of columbia and the 4 US territories. Resolves insurance regulatory problems. They are active in the formation and recommendation of model legislation and regulations designed to bring uniformity from state to state and simplify the marketing of insurance. How is an insurance company able to protect such a large number of people who could potentially suffer a loss? - Answer-The law of Large Numbers What does indemnify mean? - Answer-Also known as reimbursement) is a provision in an insurance policy that states that in the event of loss, an insured or a beneficiary is permitted to collect only to the extent of the financial loss, and isn't allowed to gain financially because of the existence of an insurance contract. The purpose of insurance is to restore, but not let an insured or a beneficiary profit from the loss.