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141 INTRO TO FINANCIAL REGULATION
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141 INTRO TO FINANCIAL REGULATION
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141 INTRO TO FINANCIAL REGULATIONWhen was the first official meeting of the NAIC?
1871
1891
1910
1851 - Answers- 1871
Accreditation is a certification given to a state insurance department once it has
demonstrated that it has met and continues to meet a wide range of legal, financial,
functional, and organizational standards.
True
False - Answers- True
In 1945, the U.S. Congress enacted the __________________________________ to
ensure that the states had the right to regulate the business of insurance without
interference from federal regulation, as long as federal laws do not provide intervention.
Dodd-Frank Act
Clayton Act
Gramm-Leach-Bliley Act
McCarran-Ferguson Act - Answers- McCarran-Ferguson Act
_________________ ____________________ created the first insurance company in
the United States in ____________.
Benjamin Franklin ; 1752
Nathaniel Hawthorn ; 1756
George Washington ; 1789
Samuel Paul ; 1762 - Answers- Benjamin Franklin ; 1752
List the Core Principles in the correct order.
__ Regulatory Control of Significant, Broad-Based Risk-Related Transactions / Activities
__ Preventative and Corrective Measures, including Enforcement
__ On-Site Risk-Focused Examinations
__ Regulatory Reporting, Disclosure, and Transparency
__ Exiting the Market and Receivership
__ Off-Site Monitoring and Analysis
__ Reserves, Capital Adequacy, and Solvency - Answers- CP #1 - Regulatory
Reporting, Disclosure, and Transparency
CP #2 - Off-Site Monitoring and Analysis
CP #3 - On-Site Risk-Focused Examinations
CP #4 - Reserves, Capital Adequacy, and Solvency
,CP #5 - Regulatory Control of Significant, Broad-Based Risk-Related Transactions /
Activities
CP #6 - Preventative and Corrective Measures, including Enforcement
CP #7 - Exiting the Market and Receivership
Why is the business of insurance regulated in the United States?
a. Due to the size and complexity of the insurance industry, and to protect the public
interest by ensuring that insurance companies maintain solvency to satisfy claim
obligations when they arise, as well as compete in a fair market.
b. The NAIC requires strict regulation that each state provide a detailed look at an
insurance company's financial statement on a quarterly and annual basis.
c. To protect policyholders and stakeholders from fraudulent activities by the insurance
company.
d. Insurance is regulated in the United States to protect insurance companies from
fraudulent claims and ensure that they remain in business. - Answers- a. Due to the
size and complexity of the insurance industry, and to protect the public interest by
ensuring that insurance companies maintain solvency to satisfy claim obligations when
they arise, as well as compete in a fair market.
Which of the following make up the two-pronged test for the Model Law Development
Criteria? Select all that apply.
a. Must be a best practice guideline that can include handbooks, guidance, white
papers, and bulletins and provide peer-reviewed best thinking and offer the states a
suite of guidance and options.
b. NAIC Members are committed to devoting significant regulatory and association
resources to educate, communicate, and support a Model that has been adopted by the
Membership.
c. The issue that is the subject of the Model Law necessitates a minimum national
standard and / or requires uniformity amongst all states.
d. The idea that is the issue for the subject of the Model Law must originate by a
member state of the NAIC.
e. The issue that is the subject of the Model Law must be supported by at least 10
states and have the backing of all elected NAIC Officers. - Answers- b. NAIC Members
are committed to devoting significant regulatory and association resources to educate,
communicate, and support a Model that has been adopted by the Membership.
c. The issue that is the subject of the Model Law necessitates a minimum national
standard and / or requires uniformity amongst all states.
A Model Regulation must be enacted by state legislation in order to become a uniform
regulatory guideline.
True
False - Answers- False
, Which of the following are elected officers of the NAIC? Select all that apply.
Director
Chief Executive Officer
President Elect
Chief Operating Officer
Secretary-Treasurer - Answers- President Elect
Secretary-Treasurer
(in addition to the President and Vice President)
The insurance industry in the U.S. is a huge part of the world insurance industry. In
2018, the U.S. accounted for _____________ of the total insurance premiums globally.
18%
32%
28%
10% - Answers- 28%
Which of the following is NOT a member of the NAIC?
Dominican Republic
Guam
Northern Mariana Islands
Puerto Rico
Washington D.C. - Answers- Dominican Republic
In addition to the Executive Committee, there are eight standing committees that are
consistently maintained by the NAIC and provide guidance and oversight of the
regulatory system.
True
False - Answers- True
Which of the following criteria makes the U.S. insurance regulatory system unique in the
world? Select all that apply.
a. Relies on an extensive system of peer review, communication, and collaborative
effort that produce checks and balances in regulatory oversight.
b. Requires risk-focused financial surveillance including off-site monitoring, on-site
examinations, and requires solvency-related laws, rules, and guidelines.
c. Ensures coordination and communication by adopting uniform laws and regulations
across all states.
d. Includes a diversity of perspectives with compromise that leads to centrist solutions. -
Answers- a. Relies on an extensive system of peer review, communication, and
collaborative effort that produce checks and balances in regulatory oversight.
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