Porter Ch. 4: Roles of State Regulators / NAIC

Question 1

Legislative Branch

Answer 1

Enacts statutes resulted in statutory law

Question 2

Executive Branch

Answer 2

DOI enforces state code; Attorney General provides legal advice; administers and enforces law; law is administrative law

Question 3

Judicial Branch

Answer 3

Adjudicates disputes resulting in case law

Question 4

Typical state insurance regulatory system

Answer 4

Licensing requirements
Reporting/filing requirements
Periodic examinations
Power to impose sanctions

Question 5

State Legislatures as Insurance Regulators

Answer 5

Directly control DOI budgets

Pass the laws commissioners must enforce

Question 6

NCOIL

Answer 6

Educate, mediate, improve regulation, asserting legislators’ prerogative in making policy

Question 7

NCSL

Answer 7

Main purpose is to inform legislators about insurance

Question 8

DOI Annual Reports

Answer 8

Commissioner summarizes activities of department and status of industry in state

Question 9

Requirements of DOI Annual Reports

Answer 9

Statement of income and expenses of DOI; insurers closed that year and in receivership; summary of financial status and business transactions; fraudulent claims

Question 10

Legislative insurance through noninsurance laws

Answer 10

Truth in Lending Act
Contract Law
Premiums
Fraud
Investments
Lobbying

Question 11

NAIC fundamental insurance regulatory objectives

Answer 11

Protect public interest
Promote competitive markets
Facilitate fairness
Promote reliability and solvency
Support and improve state regulation
(Instituted uniform financial reporting)

Question 12

NAIC staff support for state insurance regulators

Answer 12

Expert advice
Publications about insurance issues
Valuing securities
Scrutinizing alien E&S insurers
Track insurance issues at federal level

Question 13

Model law objective

Answer 13

Help legislative bodies streamline legislative development process

Question 14

Model law benefits

Answer 14

Help guide states in adopting same or similar laws, regulations, and guidelines; states can adopt or modify

Question 15

Benefits of legal uniformity among states

Answer 15

Licensing standards, pricing, coverage requirements; less costly for multistate insurers

Question 16

Model Laws, Regulations, and Guidelines

Answer 16

Includes record of whether state government has taken action

Question 17

Reasons for rejection / non-acceptance of model laws

Answer 17

Inappropriate or unnecessary
Modified to meet states’ particular needs
May see NAIC model law as just another agenda item

Question 18

Financial Accreditation of DOIs

Answer 18

Request review by NAIC
NAIC review team visits
Review team meets with Financial Regulation Standards Accreditation Committee
Yes or make required changes and restart

Question 19

NAIC review team

Answer 19

Interviews, review laws, prior exam reports, inspecting regulatory files, reviewing organizational and personnel policies, gain understanding of document and communication flows

Question 20

Criteria to be Financially Accredited

Answer 20

Laws/regulations must meet basic standards of NAIC models
Acceptable regulatory methods
Adequate department practices

Question 21

Concerns with NAIC accreditation program

Answer 21

Budget out of hands of NAIC
Resentment with legislators who believe this goes over their head
Revisions by NAIC creates continual need for new legislation

Question 22

Techniques used by DOIs or NAIC in regulating solvency

Answer 22

RBC ratio
IRIS ratios
Financial exams

Question 23

Model law

Answer 23

To streamline regulatory process, NAIC drafts model laws and state regulators modify or adopt as is

Question 24

Model law benefits, states

Answer 24

Streamlines legislative process
Saves time and money
Helps for accreditation
Easier to pass law

Question 25

Model law benefits, insurers

Answer 25

Compliance with multiple states less costly if standards are uniform
Alleviates insurers from excessive costs for filing