G.1.2. Porter Chapter 3 Flashcards Preview

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Flashcards in G.1.2. Porter Chapter 3 Deck (13):
1

List the exceptions to the rule that states are given primary regulatory control over the "business of insurance" (where the Federal government is involved)

-The Sherman Act prohibits boycott, coercion, and intimidation
-Federal antitrust laws apply to the extent that state laws do not regulate such activities
-Federal laws enacted specifically to regulate the "business of insurance" preempt any state laws that apply to the same activities addressed by the federal laws

2

List 3 circumstances in which State laws and regulations can be void under the U.S. Constitution:

1. When a state law contradicts a federal law
2. When the courts determine that a state law interferes with the purpose or results of a federal law although the state law does not expressly contradict the federal law
3. When a state law imposes an improper burden on interstate commerce, even though a federal law does not exist

3

List 2 cases in which the Federal Government does intervene in the "Business of Insurance"

1. Risk Retention Act
2. National Flood Insurance Act

4

Briefly describe the current Definition of the "Business of Insurance":

Any activity that has one or more of the following characteristics
-Insurer spreads or underwrites the policyholder's risk
-Insurer and the insured have a direct contractual agreement
-Activity is unique to entities within the insurance industry

5

Briefly describe a contract of adhesion.

Contract drawn up by only one party, the insurer. Ambiguous language will be interpreted in favor of the insured

6

House Energy and Commerce Committee identified three principal causes of Product Liability insurance price and availability crisis of the 1970s. List two.

-Questionable ratemaking and reserving practices of insurers
-Unsafe products
-Uncertainties in the tort and legislation system

7

List cases in which the Federal Government regulates the insurance industry.

-Regulation of Securities (issued by insurers)
-Federal Taxation of Insurance Companies
-Employee Retirement Income Security Act of 1974
-OSHA
-Federal regulation concerning discrimination in employment relationships
-Federal agencies affecting the insurance industry because they administer federal laws that apply to insurers

8

Briefly describe the doctrine of reasonable expectations.

Insured's reasonable expectation of coverage will be honored even if that involves reading the policy provisions in ways not intended by the insurer.

9

Briefly describe how the Courts impact insurance regulation:

-policy language
-policy coverage
-claims settlement

10

List other parties that have influence on insurance regulation:

-Courts
-Insurance industry Trade Associations
-Insurance Advisory Organizations
-Insurance Companies

11

List some services of "Insurance Advisory Organizations"

-Primarily deal with filing rates or prospective loss costs and forms
-Develop rating systems
-Collect and tabulate statistics
-Research topics important to members and the industry
-Provide a forum for discussion of issues important to members
-Educate members, the industry, insurance regulators, and the public about particular issues
-Monitor regulatory issues of concern to members

12

List some functions of Insurance Industry Trade Associations

-Prompt access to legislative developments
-Can use association personnel as their lobbying forum
-Participate on committees in drafting new legislation or influence changes to pending legislation
-Continually watch for new regulations promulgated by state insurance depts.

13

List some areas of major legislation that have been created due to consumer complaints

-Redlining prohibitions
-Unfair claims practices laws
-Unfair trade practices laws
-Compulsory insurance laws
-High-risk driver pools
-FAIR plans
-Windstorm and other catastrophe pools
-Tort Reform