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Flashcards in Odomirok 11 Deck (8)
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Purpose of Common Interrogatories section

Give more details about the company's
-Business practices
-Types of internal and external controls in place


Items discussed in General section of Common Interrogatories

-Holding company relationships
-Latest regulatory financial exams
-Excessive sales commission levels
-Merger activity
-Suspension of licenses
-Foreign control
-Exemptions from required regulations
-Whether senior management is subject to a code of ethics


List some examples of insight that users can get from the General Section of the Common Interrogatories

-If it has suspended licenses or does not comply with regulations, perhaps it lacks internal discipline
-If it has high commission levels, maybe it is sacrificing its commission in order to maintain or grow business


What details does the General Sections disclose about the latest financial exam

-Date of the latest exam
-Date through which the statements were evaluated
-Release date for the examiner's report
-Name of the department performing the exam
-Whether the insurer has complied with all adjustments & recommendations from the examination report


What questions do the interrogatories contain about the board of directors

-Role of the board in approving the purchase/sale of investments
-Does the company have a process in place to notify the board on conflicts of interest within senior management
-Whether the permanent records of the board proceedings are retained


Purpose of financial interrogatories

Helps users understand:
-If the insurer has financial obligations that were not reported in the Annual Statement
-If the insurer has been providing significant financial support to its stakeholders/affiliates


What areas do the investment interrogatories question

-Assets and investment decisions
-Security lending programs & associated collateral
-Hedging programs
-Mandatory convertible stocks or bonds
-Compliance with NAIC Purposes & Procedures manual


How do the interrogatories help identify if an insurer is using finite reinsurance

The insurer needs to answer an interrogatory that asks if it ceded reinsurance that:
-Resulted in an underwriting gain/loss of more than 5% of the prior surplus; or ceded premiums/loss reserves of more than 5% surplus
-Was accounted for as reinsurance (not deposit)
-Had at least one of the following features: Duration of at least 2 years and non-cancelable/limited cancellation provision/aggregate stop loss coverage/either party has the right to commute for a reason other than the downgrade in the credit rating of the other party/ability to report or pay losses less frequently than quarterly/delayed reimbursements to the ceding company