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Foundations of Insurance Regulation
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- Nursing 220 Final Exam Review
Foundations of Insurance Regulation
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Foundations of Insurance Regulation1752 - ANS-Philidelphia Contributorship
1857 - ANS-First insurance commissioner
1871 - ANS-Formation of the NAIC
1944 - ANS-US vs SE Underwriters Association
-The Supreme Court ruled that the industry is subject to regulation by the United States
Congress, under the Commerce Clause. This means that the court determined
insurance to be a business that crosses state lines and is, therefore, subject to antitrust
laws
-NOT left to states
1945 - ANS-McCarran Ferguson Act
-Also limited the application of the antitrust laws to the business of insurance, if and to
the extent that, state law regulates the business of insurance. However, if states do not
regulate insurance, the Sherman Act, the Clayton Act, and the Federal Trade
Commission (FTC) Act still apply.
1999 - ANS-Gramm Leach Bliley Act
-GLBA was passed on the heels of commercial bank Citicorp merger with the insurance
firm Travelers Group. This led to the formation of the conglomerate Citigroup, which
offered not only commercial banking and insurance services, but also lines of business
related to securities.
2 Insurance Product servicers - ANS--Managing General Agent (MGA)
-Third Party administrator (TPA)
2 outcomes for the idea - ANS-1. Becomes apparent no further action is needed: OR
2. Found that no national interest or no benefit gained by a national effort, and the idea
is shelved until it becomes significant
,2 pronged test - ANS-1. The issue that is the subject of the model law necessitates a
minimum national standard and/or requires uniformity amongst all states
2. NAIC members are committed to devoting significant regulator and association
resources to educate, communicate, and support a model that has been adopted by the
membership
A licensed or qualified MGA may - ANS--Negotiate or bind ceding reinsurance contracts
for an insurer
-Adjust or pay claims of more than $500
-Maintain loss reserves for which claims may be paid
A TPA is a person that - ANS--Has control over or custody of premiums, contributions,
or any other money with respect to a plan, for any period of time (Does not include a
producer that is not also responsible for adjustment, payment, or settlement of benefit
claims): OR
-Has discretionary authority over the adjustment, payments, or settlement of benefit
claims under a plan or over the investment of a plan's assets
Accreditation - ANS--Financial regulation is subject to accreditation
-Each state subject to review by the NAIC
-Ensures consistency and reduces redundancy
Act - ANS--Type of law enacted by legislature
-More specific in its purpose and intention
-May be a provision of a law
Admitted (Authorized) - ANS--an insurer licensed to do business in a state
-Can be domestic or foreign
-Often referred to as authorized
, Advisory organzation - ANS--An entity (other than an insurer) whose primary objective
is to assist insurers with their own filings and rate making by collecting, and furnishing
loss or expense statistics
Examples:
-Association for Cooperative Operations Research and Development (ACORD)
-Independent Statistical Services Inc. (ISS)
Affordable Care Act (2010) - ANS--Federally mandated law to reform the health
insurance industry
-Some portions of the law are the responsibility of the states
Agent licensing - ANS--Licensing and admissions
-Agents and Brokers
Alien - ANS--Incorporated or formed under the laws of another country
-Are non-admitted and can offer surplus lines under certain conditions
Annuities - ANS--Systematically liquidate a certain sum
-Objective is to protect the annuitant against outliving other sources of income
Life contingency?
-only pays when the annuitant is alive
Application - ANS--The info on the application assists the insurer in evaluating the
consumer's risk for loss under the specific coverage requested
-The application is the main source of information for underwriting
-The producer or broker usually is required to provide disclosures in the application
Association captive - ANS--An association forms a subsidiary insurer (captive) to insure
the risks of the association members
Attorney General's Office - ANS--Merchandising Act
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