Flashcards in Porter Ch 3 Deck (13)
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
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
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
List 2 cases in which the Federal Government does intervene in the "Business of Insurance"
1. Risk Retention Act
2. National Flood Insurance Act
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
-Uncertainties in the tort and legislation system
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
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.
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
-Federal regulation concerning discrimination in employment relationships
-Federal agencies affecting the insurance industry because they administer federal laws that apply to insurers
List other parties that have influence on insurance regulation:
-Insurance industry Trade Associations
-Insurance Advisory Organizations
Briefly describe how the Courts impact insurance regulation:
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.
List some services of "Insurance Advisory
-Primarily deal with filing rates or prospective loss costs and
-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