Regulation Flashcards
7 cards from real Actuary Certification practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Regulation flashcards as text
Under the Standard Valuation Law (SVL), what approach does the Principle-Based Reserving (PBR) framework use for life insurance reserves?
Answer: A blend of stochastic and deterministic modeling reflecting company-specific risks
PBR uses company-specific assumptions, stochastic modeling, and deterministic scenarios to determine reserves that better reflect the actual risks of the products being valued.
An actuary who discovers a material error in a previously submitted actuarial opinion has an obligation under the Code of Professional Conduct to:
Answer: Take reasonable steps to correct or withdraw the erroneous opinion
Precept 8 of the Code of Professional Conduct requires actuaries to take reasonable steps to ensure that actuarial communications are not misrepresented or used inappropriately.
Which of the following best describes the concept of 'regulatory surplus' in property-casualty insurance?
Answer: The amount by which admitted assets exceed total liabilities as measured under statutory accounting principles
Regulatory surplus under statutory accounting is the excess of admitted assets over total liabilities, representing the insurer's financial cushion under insurance regulatory standards.
The McCarran-Ferguson Act of 1945 granted primary regulatory authority over insurance to:
Answer: State governments, exempting most insurance activities from federal antitrust laws
McCarran-Ferguson affirmed state regulation of insurance and provided a limited antitrust exemption for the business of insurance when regulated by state law.
Under the Affordable Care Act (ACA), what is the medical loss ratio (MLR) requirement for large group health insurers?
Answer: At least 85% of premiums must be spent on medical claims and quality improvement
The ACA requires large group health insurers to spend at least 85% of premium revenue on medical claims and quality improvement activities, or rebate the difference.
Which actuarial standard addresses the use of models in actuarial practice?
Answer: ASOP No. 56
ASOP No. 56, Modeling, provides guidance on the use of models in actuarial work, including model governance, validation, and documentation.
When a state insurance department places an insurer into receivership, who typically acts as the receiver?
Answer: The state insurance commissioner or a designee appointed by the court
In insurance insolvency, state insurance commissioners (or their designees) serve as the receiver under state insurance insolvency statutes, not federal bankruptcy courts.