Flashcards in G.1.4. Porter Chapter 5 Deck (14):
Briefly describe 4 Types of Filing Laws:
1. Prior approval - Insurance rates and coverages must be approved by the state insurance department before they can be used in the state
2. File and use - Insurer must file insurance rates or coverages with the state insurance department but can then use them immediately
3. Use and file - Insurer can use the rate or coverage it wants, provided the insurer files the rate or coverage within a specified period after it is put into use
4. No file - Insurer not required to make a filing of the rate or coverage
Purpose of insurance regulation:
Assure that the future performance promise, to pay a claim, will be fulfilled as needed (Protects the public interest)
Describe the basic purposes of a financial examination:
-Detect as early as possible those insurers in financial trouble and/or engaging in unlawful and improper activities
-Develop the information needed for timely, appropriate regulatory action
List some of the most common reasons for rate or coverage disapproval:
-Not in the public interest
-Other - excessive, inadequate or not meeting minimum standards
Briefly describe a market conduct examination.
Review of the ways in which insurers do business - advertising, soliciting, policy issuing, claims handling
What is reviewed in the financial examination:
Insurer's statistical statements, accounting procedures,financial statements, financial controls, management practices, and investment procedures
How did the 1994 Omnibus Crime Control and Safe Streets Act address insurance fraud:
-Made it illegal to defraud, loot, or plunder an insurer
-Established a multi-state approach to anti fraud activity
2 reasons why only a few states have historically had fraud departments:
1. Restraints on budgets
2. Lack of insurance fraud laws
Briefly describe a "Receivership"
Type of bankruptcy an insurer enters into when a receiver is appointed to manage the insurer and its property
Briefly describe a "Receiver"
Disinterested person/business appointed to receive, protect, and account for money or other property due
Briefly describe a "Liquidation"
Bankruptcy proceeding in which a bankrupt organization does not have enough assets to pay all creditors, and the creditors are prioritized and paid according to the types of their claims
Briefly describe a "Rehabilitation"
Process of reorganizing an insurer's financial affairs so it can continue to exist as a financial entity, with creditors satisfying their claims from its future earnings
List potential grounds for rehabilitation:
-Liabilities exceed assets
-Insurance company refused to submit books, records, accounts or affairs to insurance department
-Insurer willfully violates its charter or any other state law