G.1.5. Porter Chapter 6 Flashcards Preview

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Flashcards in G.1.5. Porter Chapter 6 Deck (10):
1

2 reasons that regulators would prefer that insurer maintain an office in the state:

1. Create jobs
2. Give regulator easier access

2

2 criteria that DOIs look at when insurers are seeking a license:

1. Location of books and records - usually seeks assurance the insurer will retain books and records in the state
2. Principal office - many DOIs require insurer to maintain an office in the state

3

Briefly describe a domestic insurer, foreign insurer, and alien insurer

Domestic - Incorporated in the state writing insurance business
Foreign - Licensed to operate in a state but incorporated in another state
Alien - Licensed in a U.S. state but incorporated in another country

4

What do regulators examine during an organizational exam of an insurer applying for a license:

-Verify minimum capitalization is on deposit at an approved financial institution
-Verify that management team in place
-Corporate records are in good order
-Policy forms and rates have department approval
-Gives employees chance to review with the examiners the various DOI expectations for reporting

5

List some differences in the licensing application between a foreign and domestic insurer:

Foreign also has to provide:
-Charter and bylaws - reviews to evaluate the terms of its operations as a legal entity
-Annual Statements - reviews for previous 2-3 years
-Examination report - most recent report of financial examination
-Financial statements - SAP and sometimes GAAP
-Certificates of compliance - evidence that in compliance with domiciliary state
-Holding insurer registration statement - if applicant is member of an insurer holding system

6

2 advantages that foreign insurers have when applying for a license:

1. If a strong performer with solid financial record, more likely to receive approval
2. Already gone through rigors of the domiciliary jurisdiction's review

7

Some regulators require that the insurer be seasoned to obtain a license. List some exceptions to this requirement:

-insurer has substantial capital
-owned by an insurer with lengthy history
-department is satisfied with the application for other reasons

8

List an additional requirement if seeking to be licensed in state where an affiliate already writing:

May require u/w guidelines to ensure parent insurer does not shift business back and forth between affiliated insurers

9

What additional requirements does an alien insurer have when filing for a license:

-Appointment of U.S. manager
-Provide a Trust agreement - contract in which one party transfers ownership of property to another party that will administer the property for a third party's benefit
-Certicate of alien funds on deposit

10

Briefly describe a reciprocal insurer or insurance exchange

Groups similarly engaged in business that agree to indemnify one another for certain kinds of losses by way of the exchange of insurance contracts