RMIN 4000 EDMUNDS EXAM 2
what is the goal of examinations of insurers? - ANSWERS-to protect consumers
from sale of unsuitable insurance products, misrepresentation of coverage,
excessive sale pressure, rates that are excessive or discriminatory, denial of
legitimate claims, or improper termination of claims
what is the argument for government regulation? - ANSWERS-decrease
compliance costs, increase competition and innovation, more effective
negotiations of international insurance agreements, and more effective treatment
of systemic risk
what is the argument for state regulation? - ANSWERS-needs of each state are
different, federal regulation is historically inefficient, transition to federal would
be costly and require dual regulation for a short time, the NAIC already advocates
for uniformity, insurers can innovate by experimenting in different states, and
unknown consequences of federal regulation
Nikki Lankford - ANSWERS-Wausau and now Liberty Mutual middle market
underwriter, manager, RVP, middle market division VP
Bryan Fowler - ANSWERS-Aon account manager, Lockton account exec., VP, and
producer
what are the key legal principles of insurance? - ANSWERS-indemnity, insurable
interest, subrogation, and utmost good faith
,indemnity - ANSWERS-Insurer agrees to pay no more than the actual loss amount
in order to prevent the insured from profiting from loss (moral Hazard)
valued policy - ANSWERS-pays the face amount of insurance if a total loss occurs
(jewelry, fine arts where appraisals may be needed)
Valued Policy Law - ANSWERS-law requiring payment of face amount of insurance
if a total loss to real property occurs from a peril
replacement cost - ANSWERS-current cost of restoring the damaged property
with new materials of like kind and quality with no deduction for appreciation
actual cash value (ACV) - ANSWERS-replacement cost - depreciations; usually used
instead of replacement cost
life insurance - ANSWERS-life policy pays stated amount of policy to beneficiaries
insurable interest - ANSWERS-insured/beneficiary must be in a position to lose
financially if a covered loss occurs
when does the timing of insurable interest start for property and life insurance? -
ANSWERS-property starts at time of loss and life starts at the inception of policy
, subrogation - ANSWERS-The process by which an insurer can, after it has paid a
loss under the policy, recover the amount paid from any party (other than the
insured) who caused the loss or is otherwise legally liable for the loss. (someone
else hits your car, insurance pays you and sues other person)
what is the reason for subrogation? - ANSWERS-It prevents from people collecting
money twice, holds negligent party responsible, and reduces claim costs
utmost good faith - ANSWERS-Higher degree of honesty is imposed on both
parties to insurance contracts than is imposed on parties to other contracts
representations - ANSWERS-statements made by the applicant for insurance
(insurance can void if false)
concealment - ANSWERS-intentional failure of the applicant for insurance to
reveal a material fact to the insurer
warranty - ANSWERS-statement that becomes part of the insurance contract and
is guaranteed by the maker to be true in all respects (Violation of a warranty may
result in a claim being denied)
What is Bad Faith? - ANSWERS-law that allows lawsuits against insurance
companies for: improper denial and/or delay of claims
what is the goal of examinations of insurers? - ANSWERS-to protect consumers
from sale of unsuitable insurance products, misrepresentation of coverage,
excessive sale pressure, rates that are excessive or discriminatory, denial of
legitimate claims, or improper termination of claims
what is the argument for government regulation? - ANSWERS-decrease
compliance costs, increase competition and innovation, more effective
negotiations of international insurance agreements, and more effective treatment
of systemic risk
what is the argument for state regulation? - ANSWERS-needs of each state are
different, federal regulation is historically inefficient, transition to federal would
be costly and require dual regulation for a short time, the NAIC already advocates
for uniformity, insurers can innovate by experimenting in different states, and
unknown consequences of federal regulation
Nikki Lankford - ANSWERS-Wausau and now Liberty Mutual middle market
underwriter, manager, RVP, middle market division VP
Bryan Fowler - ANSWERS-Aon account manager, Lockton account exec., VP, and
producer
what are the key legal principles of insurance? - ANSWERS-indemnity, insurable
interest, subrogation, and utmost good faith
,indemnity - ANSWERS-Insurer agrees to pay no more than the actual loss amount
in order to prevent the insured from profiting from loss (moral Hazard)
valued policy - ANSWERS-pays the face amount of insurance if a total loss occurs
(jewelry, fine arts where appraisals may be needed)
Valued Policy Law - ANSWERS-law requiring payment of face amount of insurance
if a total loss to real property occurs from a peril
replacement cost - ANSWERS-current cost of restoring the damaged property
with new materials of like kind and quality with no deduction for appreciation
actual cash value (ACV) - ANSWERS-replacement cost - depreciations; usually used
instead of replacement cost
life insurance - ANSWERS-life policy pays stated amount of policy to beneficiaries
insurable interest - ANSWERS-insured/beneficiary must be in a position to lose
financially if a covered loss occurs
when does the timing of insurable interest start for property and life insurance? -
ANSWERS-property starts at time of loss and life starts at the inception of policy
, subrogation - ANSWERS-The process by which an insurer can, after it has paid a
loss under the policy, recover the amount paid from any party (other than the
insured) who caused the loss or is otherwise legally liable for the loss. (someone
else hits your car, insurance pays you and sues other person)
what is the reason for subrogation? - ANSWERS-It prevents from people collecting
money twice, holds negligent party responsible, and reduces claim costs
utmost good faith - ANSWERS-Higher degree of honesty is imposed on both
parties to insurance contracts than is imposed on parties to other contracts
representations - ANSWERS-statements made by the applicant for insurance
(insurance can void if false)
concealment - ANSWERS-intentional failure of the applicant for insurance to
reveal a material fact to the insurer
warranty - ANSWERS-statement that becomes part of the insurance contract and
is guaranteed by the maker to be true in all respects (Violation of a warranty may
result in a claim being denied)
What is Bad Faith? - ANSWERS-law that allows lawsuits against insurance
companies for: improper denial and/or delay of claims
