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RMI 3011: Chapter 4 RMI 3011 Florida State University -Questions with complete solution

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RMI 3011: Chapter 4 RMI 3011 Florida State University -Questions with complete solution What are the main reasons for insurance regulation? - correct answer Maintain insurer solvency Compensate for inadequate consumer knowledge Ensure Reasonable Rates Make insurance available How can we m...

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  • December 1, 2024
  • 10
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

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  • rmi 3011 chapter 4
  • rmi 3011 chapter 4 questions with complete soluti
  • rmi 3011 chapter 4 rmi 3011 florida state univers

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RMI 3011: Chapter 4 Questions with
complete solution
What are the main reasons for insurance regulation? - correct answer
✔Maintain insurer solvency
Compensate for inadequate consumer knowledge
Ensure Reasonable Rates
Make insurance available


How can we maintain insurer solvency? - correct answer ✔Pay premiums in
advance
When insurer becomes insolvent certian social/economic costs are incurred
(Loss of jobs by insurance comoanies


Why is it important to compensate for inadequate consumer knowledge? -
correct answer ✔To prevent unscrupulous insuresr from drafting a contract
so restrictive it would be worthless
Most consumers do not have suffiecient info to compare value of each
insurance (Prived same market effect from knowledgeable consumers
Protects against unethical agents


Why is regulation important in rates? - correct answer ✔Ensures that
reasonbale rates are not too high that consumers are charged excessively,
but not too law to affect the solvency of insurers


Why is regulation important in availability? - correct answer ✔Make it
avalable to all who need it

, Who was the first state to create a seperate insurance commission to regulate
insurance - correct answer ✔New Hampshire, in 1851


Who was the first state to create a seperate administrative agency - correct
answer ✔NY, in 1859


What did the Paul v Virginia case rule? - correct answer ✔Affirmed the states
rights to regulate insurance; Insurance was not interstate commerce and
states had right to regulate insurance over the fed. govt


What happened in Paul v Virgina - correct answer ✔Paul was fired for sellin
insurance without a license, appealed the case that VA laws was
unconstitutional


What is the SOuth-Eastern Underwriters Association Case (1944) - correct
answer ✔Overturned Paul v VA case, that stated that insurance was
interstate commerce when conducted across state lines and was subject to
federal regulation


What happened in SE Underwriters Association Case?> - correct answer
✔Rating bureau was found guilty of price fixing and violations of the SHerman
ANtitrust Act


What is the McCarran-Ferguson Act - correct answer ✔States that the
continued regulation and taxation of the insurance industry are in the public
interst, and that fed antitrut laws apply to insurance only


Therefore, as long as state reg is in effect, federal antritrust laws will not apply
to insurance

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