Regulatory and Ethical Frameworks Flashcards
7 cards from real CU 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 and Ethical Frameworks flashcards as text
Which standard of conduct is typically required of insurance professionals under E&O (Errors and Omissions) liability standards?
Answer: The standard of care of a reasonably competent professional in the same field
E&O liability is judged against the standard of care a reasonably competent insurance professional would exercise under similar circumstances.
When an insurer engages in 'rebating,' it is offering:
Answer: A portion of the agent's commission or other incentives to induce purchase
Rebating involves returning part of an agent's commission or giving other inducements to a buyer to persuade them to purchase a policy, which is illegal in most states.
The concept of 'subrogation' in insurance ethics and law allows the insurer to:
Answer: Step into the insured's shoes to recover losses paid from a responsible third party
Subrogation gives the insurer the legal right to pursue a third party responsible for causing the insured's loss after paying the claim.
Anti-money laundering (AML) obligations for insurers require which of the following?
Answer: Implementing programs to detect and report suspicious financial activity
Insurers subject to AML regulations must maintain programs to identify, monitor, and report suspicious activity that may indicate money laundering.
Under the principle of 'proximate cause,' a covered loss is one where:
Answer: The dominant, unbroken cause of the loss is a covered peril
Proximate cause holds that a loss is covered if the dominant, efficient cause that sets events in motion is an insured peril.
A state insurance department ordering an insurer to halt a specific underwriting practice is an example of which regulatory action?
Answer: Cease and desist order
A cease and desist order is a regulatory directive requiring an insurer to immediately stop an unlawful or improper practice.
Which document must insurers provide to applicants outlining how their personal information will be collected, used, and shared?
Answer: Privacy notice
Under GLBA and state privacy laws, insurers must provide a privacy notice explaining their information practices to applicants and policyholders.