Regulatory Framework and Compliance Flashcards
7 cards from real CAS practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Regulatory Framework and Compliance flashcards as text
Under the NAIC model law, which entity has primary authority to regulate insurance companies in the United States?
Answer: Individual state insurance departments
Insurance regulation in the US is primarily state-based, with each state's insurance department having regulatory authority over insurers operating within its borders.
What is the primary purpose of the NAIC's Financial Regulation Standards and Accreditation Program?
Answer: To ensure state insurance departments meet minimum regulatory standards
The NAIC accreditation program certifies that state insurance departments maintain adequate financial regulatory standards, enabling efficient cross-state regulation.
Which of the following best describes a 'prior approval' rate regulation system?
Answer: Regulators must approve rates before insurers can use them
Under prior approval, an insurer must receive explicit regulatory approval before implementing new rates, providing the strictest form of rate oversight.
The Annual Statement filed by insurers with state regulators follows which accounting standard?
Answer: Statutory Accounting Principles (SAP)
Statutory Accounting Principles (SAP) are used for insurance regulatory filings because they are more conservative than GAAP and focus on solvency protection.
Under state insurance regulation, what is the 'admitted assets' concept critical for?
Answer: Measuring the assets that count toward solvency requirements
Admitted assets are those recognized by state regulators for solvency purposes; non-admitted assets cannot be counted toward satisfying statutory liabilities.
Which federal law provided the first significant federal oversight role in insurance by establishing the Federal Insurance Office?
Answer: The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
Dodd-Frank (2010) created the Federal Insurance Office (FIO) within the Treasury Department to monitor the insurance industry, though it did not transfer primary regulatory authority from states.
In the context of insurance regulation, what does 'market conduct examination' primarily assess?
Answer: An insurer's compliance with laws governing policy sales and claims handling
Market conduct examinations review insurer business practices including underwriting, rating, claims handling, and policyholder treatment to ensure regulatory compliance.