Porter Ch. 5: State DOI Operations Flashcards Preview

Exam 6 > Porter Ch. 5: State DOI Operations > Flashcards

Flashcards in Porter Ch. 5: State DOI Operations Deck (26)
1

Day-to-day regulation of insurance

Done by executive branch of government, either by separate division or a subunit

2

State DOI Departments and Functions

Licensing
Regulating coverage and pricing

3

Four types of filing laws

Prior approval
File and use
Use and file
No file

4

Prior approval

Must be approved by state DOI before they can be used; most states have for coverage, half for rates

5

File and use

Must file rates with state DOI but can use immediately

6

Use and file

Insurer can use rate it want, provided they are filed within specific period after use

7

No file

Insurer not required to make filing of rate or coverage

8

Most common reasons for rate or coverage disapproval

Not in public interest
Illegal
Unfairly discriminatory
Inadequate, excessive, not meeting minimum standards

9

Reasons against prior approval

Competition will keep rates in line

10

Basic purposes of financial exam

Detect AS EARLY AS POSSIBLE trouble or impropriety;
Develop info needed for timely, appropriate regulatory action

11

Financial exam pieces

Annual audits by independent CPAs
Annual Statement
Conducted every few years
Review statistical statements, accounting procedures, management practices, investment procedures

12

Market conduct exams

Reviews ways in which insurers do business (advertising, soliciting, policy issuing, claims handling)

13

Market Conduct Examiners Handbook, four key areas

Model guide for:
1) Sales and advertising
2) UW
3) Pricing
4) Claims

14

Omnibus Crime Control and Safe Streets Act

1994 - addressed insurance fraud (made it illegal), established multi-state approach to anti-fraud activity

15

Receiver

Disinterested person/business appointed to receive, protect, and account for money or other property due

16

Receivership

Type of bankruptcy an insurer enters into when a receiver is appointed to manage the insurer and its property

17

Rehabilitation

Process of reorganizing an insurer's financial affairs so it can continue to exist, with creditors satisfying claims from future earnings

18

Liquidation

Bankrupt organization does not have enough assets to pay creditors; creditors prioritized and paid out

19

Grounds for rehabilitation

Liabilities > assets
Insurance company refuses to submit information to DOI
Insurance company intentionally violates charter or law

20

Advantages, file and use

Reduces time and cost of changing rates
Allows insurer to be more innovative (less worry over disapproval)

21

Advantages, prior approval

Regulator has close surveillance of insurer
Can better protect insured

22

Disadvantages, prior approval

Delays in rate approvals

23

Advantages, no file

Less costs for insurer

24

Disadvantages, no file

Regulator has trouble monitoring

25

Advantages, use and file

Use rates immediately
Quick to market

26

Disadvantages, use and file

Cost associated with completing a filing