Exam (elaborations)
SR 141 INTRO TO FINANCIAL REGULATION 2024
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SR 141 INTRO TO FINANCIAL REGULATION 2024
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SR 141 INTRO TO FINANCIAL REGULATION 2024Core Principle 1 - Answers- Regulatory Reporting, Disclosure and Transparency
Core Principle 2 - Answers- Off-site Monitoring and Analysis
Core Principle 3 - Answers- On-Site Risk-focused Examinations
Core Principle 4 - Answers- Reserves, Capital Adequacy and Solvency
Core Principle 5 - Answers- Regulatory Control of Significant, Broad-based Risk-related
Transactions/Activities
Core Principle 6 - Answers- Preventive and Corrective Measures, Including
Enforcement
Core Principle 7 - Answers- Exiting the Market and Receivership
Preconditions - Answers- Ensures that regulators have appropriate regulatory authority
over insurers; operate independently of political interference; maintain an adequate staff
of sufficiently trained personnel; and treat confidential information appropriately.
Accreditation - Answers- A certification given to state insurance departments for
meeting minimum, baseline standards of solvency regulation, especially with respect to
regulation of multi-state insurers.
7 Core Principles - Answers- An approach or process that is fundamentally and directly
associated with achieving the mission, and underlies the Financial Solvency
Framework.
McCarran-Ferguson Act - Answers- 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.
2 criteria that makes the US insurance regulatory system unique. - Answers- Relies on
an extensive system of peer review, communication, and collaborative effort that
produce checks and balances in regulatory oversight.
Includes a diversity of perspectives with compromise that leads to centrist solutions.
Mission - Answers- The context of the Framework which is to protect
policyholders/claimants/beneficiaries first and foremost, while also facilitating an
effective and efficient marketplace for insurance products.
Foundations - Answers- The interaction of the risk-focused approach, peer
pressure/checks and balances, and ongoing collaboration based on consensus.
, Two-pronged test for Model Law development criteria - Answers- The issue that is the
subject of the Model Law necessitates a minimum national standard and/or requires
uniformity amongst all states.
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.
Two elected officers of the NAIC are - Answers- Presidents Elect
Secretary-Treasurer
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 world insurance premiums. - Answers-
28%
In addition to the Executive Committee, there are seven standing committees that are
consistently maintained by the NAIC and provide guidance and oversight of the
regulatory system.
True or False? - Answers- True
_____ created the first insurance company in the United States in the year _____. -
Answers- Benjamin Franklin, 1752
Why is the business of insurance regulated in the United States? - Answers- 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.
When was the first official meeting of the NAIC? - Answers- 1871
Why were statutory accounting principles designed? - Answers- For insurance
regulators to help monitor the solvency of insurance companies.
When a state insurance Commissioner allows a company to deviate from what is
required in the Accounting and Practices Procedures manual, or in state law, this is an
example of a _____. - Answers- Permitted Practice
SAP allows negative cash to be reported as _____. - Answers- a negative asset
The acquisition expenses for taxes, policy issue, expenses, etc. are $480 for a 1-year
policy. If the policy is effective January 1, what amount would be shown on the SAP
income statement as acquisition expenses as of January 31? - Answers- $480
GAAP requires premium to be recognized on a pro-rata basis (daily pro-rata or monthly
pro-rata). This results in the recording of an unearned premium liability for the portion of
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