Loma 311 module 3 exam questions with
correct answers
Preemption |- |CORRECT |ANSWER✔✔-"a |legal |doctrine |that |holds |that |some |matters |are |of |
such |national |importance |that |the |federal |laws |override—or |preempt—any |conflicting |state |
laws. |The |states |cannot |pass |laws |that |are |inconsistent |with |such |federal |laws."
interstate |commerce |vs |intrastate |commerce |- |CORRECT |ANSWER✔✔-interstate= |commerce |
across |state |lines
intrastate= |commerce |WITHIN |a |state
McCarran-Ferguson |Act |(1945) |- |CORRECT |ANSWER✔✔-gives |the |states |primary |authority |to |
regulate |insurance |as |long |as |Congress |finds |such |state |regulation |to |be |adequate. |According |
to |the |McCarran-Ferguson |Act, |the |regulation |of |insurance |by |the |states |is |in |the |public |
interest.
+++ |in |the |US, |insurance |companies |are |subject |to |DUAL |regulation
+++ |the |Federal |Government |had |the |power |to |regulate |interstate |commerce.
Legislative, |Executive, |Judicial |- |CORRECT |ANSWER✔✔-Legislative. |
The |state |legislature |enacts |and |modifies
statutes |to |regulate |the |activities |of |insurers. |These |statutes |are |found |in |the |state |insurance |
code, |which |is |updated |periodically. |STATUTORY
Executive. |
,The |state |insurance |department |adopts |regulations |that |fill |in |the |details |of |insurance |
statutes. |The |insurance
department |also |enforces |statutes |and |regulations |and |oversees |the |operations |of |all |insurers |
that |operate |in |the |state. |The |state |attorney |general |writes |opinions |that |interpret |state |laws |
or |regulations. |The |attorney |general |writes |opinions |upon |the |request |of |legislators, |state |
officials, |private |persons, |or |businesses. |Although |attorney |general |opinions |do |not |have |the |
same |force |of |law |as |statutes, |regulations, |or |court |decisions, |state |officials |usually |follow |
these |opinions. |ADMINISTRATIVE
Judicial.
The |state |courts |have |authority |to |interpret |an |insurance |law's |meaning |when |the |application |
of |the |law |to |a |specific |situation |is |not |clear.
CASE |LAW
Solvency |vs. |market |Conduct |laws |- |CORRECT |ANSWER✔✔-Solvency |laws |are |enacted
| to |make |sure |that |insurers |are |financially |able |to |meet |their |debts |and
| pay |policy |benefits |when |they |come |due. |Solvency |laws |affect |an |insurer's
capitalization, |policy |design, |and |policy |reserves.
Market |conduct |laws |are
|enacted |to |make |sure |that |insurers |conduct |business |fairly |and |ethically. |Market |conduct |laws
|set |mandated |benefits |and |regulate |most |of |the |nonfinancial |operations |of |insurers, |such |as |
management, |marketing |and |advertising, |sales, |underwriting, |policyowner |service, |complaint |
handling, |agent |licensing,
and |claims.
Solvency |laws |apply |to |reserves, |assets, |investments, |capital |and |surplus
financial |condition |exam |- |CORRECT |ANSWER✔✔-a |formal |investigation |that |is |designed |to |
IDENTIFY |and |MONITOR |THREATS |to |an |insurer's |solvency. |These |examinations |may |be |carried |
,out |by |one |or |more |state |insurance |departments. |Statutes |typically |require |an |examination |of |
each |insurer |within |a |specified |period |of |time. |State |insurance |departments
also |have |authority |to |conduct |more |frequent |examinations |if |needed. |
States |conduct |two |types |of |financial |condition |examinations. |
1. |A |full-scope |examination |reports |on |an |insurer's |financial |position |taken |as |a |whole. |
2. |A |limited-scope |examination |focuses
|on |one |or |more |specific |areas |of |an |insurer's |finances, |such |as |its |reserves |or |its |ability |to |pay
|claims.
a |state |does |NOT |undergo |the |FCE |each |year
Market |Conduct |Examination |- |CORRECT |ANSWER✔✔-a |formal |investigation |of |an |insurer's |
nonfinancial |operations. |
A |market |conduct |examination |determines |if |the |insurer's |operations |comply |with |applicable |
laws |and |regulations. |Like |financial |condition |examinations, |a |market |conduct |examination |
may |be |carried |out |by |one |or |more |state |insurance
departments.
Licensing |Requirements |- |CORRECT |ANSWER✔✔-state |insurance |laws |require |insurers |to
obtain |a |license |in |each |jurisdiction |where |they |do |business. |
Similarly, |state |insurance |laws |require |individuals |who |market |and |sell |insurance |to |obtain |a |
license |in |each |jurisdiction |where |they |do |business.
Annual |Statement |- |CORRECT |ANSWER✔✔-a |comprehensive |financial |report |that |insurers |
must |file |with |the |NAIC |and |all |the |state |ins |depts |they |are |licensed |in. |
, STORED |in |a |financial |database |
Must |file |by |March |1st |
Most |state |require |shorter |versions |to |be |filed |quarterly.
Right |to |take |action/ |fines/ |suspend |- |CORRECT |ANSWER✔✔-Typically, |an |insurer |found |to |be |
in |violation |of |state |insurance |laws |must |pay |a |fine. |In |more |serious |cases, |the |insurance |
department |may |suspend |or |revoke |the |insurer's |certificate |of |authority.
-If |the |insurance |department |suspends |the |insurer's |certificate |of |authority, |the |insurer |must |
cease |operating. |The |insurance |department
| may |impose |a |suspension |for |a |stated |period |of |time |or |until |the |insurer
corrects |the |violation.
|
- |If |the |insurance |department |revokes |the |insurer's |certificate |of
authority, |the |certificate |is |no |longer |valid. |The |insurer |cannot |conduct
business |in |the |state |until |the |insurance |department |issues |a |new |certificate
of |authority.
administrative |hearing |- |CORRECT |ANSWER✔✔-a |proceeding |held |by |an |administrative |agency
—in |this |case, |the |insurance
| department—in |accordance |with |the |state's |administrative |laws |and |procedures.
An |individual, |known |as |an |administrative |law |judge, |conducts |the |hearing. |The |administrative
|law |judge |has |the |authority |to |hear |testimony |and |decide |questions |of |law |and |fact. |The |
insurance |department |must |give |the |insurer |proper |notice |of |the |hearing.
++++ |the |state |ins |dept |may |NOT |take |action |against |an |insurer |without |an |ADMIN |hearing, |
UNLESS |the |insurer |consents |to |the |action
correct answers
Preemption |- |CORRECT |ANSWER✔✔-"a |legal |doctrine |that |holds |that |some |matters |are |of |
such |national |importance |that |the |federal |laws |override—or |preempt—any |conflicting |state |
laws. |The |states |cannot |pass |laws |that |are |inconsistent |with |such |federal |laws."
interstate |commerce |vs |intrastate |commerce |- |CORRECT |ANSWER✔✔-interstate= |commerce |
across |state |lines
intrastate= |commerce |WITHIN |a |state
McCarran-Ferguson |Act |(1945) |- |CORRECT |ANSWER✔✔-gives |the |states |primary |authority |to |
regulate |insurance |as |long |as |Congress |finds |such |state |regulation |to |be |adequate. |According |
to |the |McCarran-Ferguson |Act, |the |regulation |of |insurance |by |the |states |is |in |the |public |
interest.
+++ |in |the |US, |insurance |companies |are |subject |to |DUAL |regulation
+++ |the |Federal |Government |had |the |power |to |regulate |interstate |commerce.
Legislative, |Executive, |Judicial |- |CORRECT |ANSWER✔✔-Legislative. |
The |state |legislature |enacts |and |modifies
statutes |to |regulate |the |activities |of |insurers. |These |statutes |are |found |in |the |state |insurance |
code, |which |is |updated |periodically. |STATUTORY
Executive. |
,The |state |insurance |department |adopts |regulations |that |fill |in |the |details |of |insurance |
statutes. |The |insurance
department |also |enforces |statutes |and |regulations |and |oversees |the |operations |of |all |insurers |
that |operate |in |the |state. |The |state |attorney |general |writes |opinions |that |interpret |state |laws |
or |regulations. |The |attorney |general |writes |opinions |upon |the |request |of |legislators, |state |
officials, |private |persons, |or |businesses. |Although |attorney |general |opinions |do |not |have |the |
same |force |of |law |as |statutes, |regulations, |or |court |decisions, |state |officials |usually |follow |
these |opinions. |ADMINISTRATIVE
Judicial.
The |state |courts |have |authority |to |interpret |an |insurance |law's |meaning |when |the |application |
of |the |law |to |a |specific |situation |is |not |clear.
CASE |LAW
Solvency |vs. |market |Conduct |laws |- |CORRECT |ANSWER✔✔-Solvency |laws |are |enacted
| to |make |sure |that |insurers |are |financially |able |to |meet |their |debts |and
| pay |policy |benefits |when |they |come |due. |Solvency |laws |affect |an |insurer's
capitalization, |policy |design, |and |policy |reserves.
Market |conduct |laws |are
|enacted |to |make |sure |that |insurers |conduct |business |fairly |and |ethically. |Market |conduct |laws
|set |mandated |benefits |and |regulate |most |of |the |nonfinancial |operations |of |insurers, |such |as |
management, |marketing |and |advertising, |sales, |underwriting, |policyowner |service, |complaint |
handling, |agent |licensing,
and |claims.
Solvency |laws |apply |to |reserves, |assets, |investments, |capital |and |surplus
financial |condition |exam |- |CORRECT |ANSWER✔✔-a |formal |investigation |that |is |designed |to |
IDENTIFY |and |MONITOR |THREATS |to |an |insurer's |solvency. |These |examinations |may |be |carried |
,out |by |one |or |more |state |insurance |departments. |Statutes |typically |require |an |examination |of |
each |insurer |within |a |specified |period |of |time. |State |insurance |departments
also |have |authority |to |conduct |more |frequent |examinations |if |needed. |
States |conduct |two |types |of |financial |condition |examinations. |
1. |A |full-scope |examination |reports |on |an |insurer's |financial |position |taken |as |a |whole. |
2. |A |limited-scope |examination |focuses
|on |one |or |more |specific |areas |of |an |insurer's |finances, |such |as |its |reserves |or |its |ability |to |pay
|claims.
a |state |does |NOT |undergo |the |FCE |each |year
Market |Conduct |Examination |- |CORRECT |ANSWER✔✔-a |formal |investigation |of |an |insurer's |
nonfinancial |operations. |
A |market |conduct |examination |determines |if |the |insurer's |operations |comply |with |applicable |
laws |and |regulations. |Like |financial |condition |examinations, |a |market |conduct |examination |
may |be |carried |out |by |one |or |more |state |insurance
departments.
Licensing |Requirements |- |CORRECT |ANSWER✔✔-state |insurance |laws |require |insurers |to
obtain |a |license |in |each |jurisdiction |where |they |do |business. |
Similarly, |state |insurance |laws |require |individuals |who |market |and |sell |insurance |to |obtain |a |
license |in |each |jurisdiction |where |they |do |business.
Annual |Statement |- |CORRECT |ANSWER✔✔-a |comprehensive |financial |report |that |insurers |
must |file |with |the |NAIC |and |all |the |state |ins |depts |they |are |licensed |in. |
, STORED |in |a |financial |database |
Must |file |by |March |1st |
Most |state |require |shorter |versions |to |be |filed |quarterly.
Right |to |take |action/ |fines/ |suspend |- |CORRECT |ANSWER✔✔-Typically, |an |insurer |found |to |be |
in |violation |of |state |insurance |laws |must |pay |a |fine. |In |more |serious |cases, |the |insurance |
department |may |suspend |or |revoke |the |insurer's |certificate |of |authority.
-If |the |insurance |department |suspends |the |insurer's |certificate |of |authority, |the |insurer |must |
cease |operating. |The |insurance |department
| may |impose |a |suspension |for |a |stated |period |of |time |or |until |the |insurer
corrects |the |violation.
|
- |If |the |insurance |department |revokes |the |insurer's |certificate |of
authority, |the |certificate |is |no |longer |valid. |The |insurer |cannot |conduct
business |in |the |state |until |the |insurance |department |issues |a |new |certificate
of |authority.
administrative |hearing |- |CORRECT |ANSWER✔✔-a |proceeding |held |by |an |administrative |agency
—in |this |case, |the |insurance
| department—in |accordance |with |the |state's |administrative |laws |and |procedures.
An |individual, |known |as |an |administrative |law |judge, |conducts |the |hearing. |The |administrative
|law |judge |has |the |authority |to |hear |testimony |and |decide |questions |of |law |and |fact. |The |
insurance |department |must |give |the |insurer |proper |notice |of |the |hearing.
++++ |the |state |ins |dept |may |NOT |take |action |against |an |insurer |without |an |ADMIN |hearing, |
UNLESS |the |insurer |consents |to |the |action
