One of the reasons higher prices will not always increase the supply of insurance is:
consumers will not buy insurance if prices are increased.
the loss and therefore the expense ratio both will increase.
the premiums to surplus ratio must be maintained at a reasonable level.
the number of insurance contracts written by an insurer is totally regulated.
Insurance obtained from insurers licensed by the state in which the insurance is purchased is called:
Paul v. Virginia stipulated that solvency regulation and investment regulation fell under the jurisdiction of which of the following:
federal insurance departments.
state insurance departments.
local insurance departments.
A foreign insurer is one that:
is home-officed outside the U.S.
has offices both in the U.S. and in other countries.
is incorporated in another state.
has not been in existence for at least three fiscal years.
Which of the following is the most important goal of insurance regulation?
Limiting the number of insurance companies so the law of large numbers is able to work adequately.
Promoting the solvency of insurance companies.
Mandating that all drivers of automobiles purchase insurance coverage.
Approving the contractual language of insurance policies sold in the state.
All of these are reasons why an insurer might legitimately deny claims except the insured:
may have attempted to defraud the insurer.
may have failed to pay the premiums.
may have been circulating false literature about insurer.
violated a contract condition.
All of the following insurance areas and activities are regulated by the states except:
policy form approval and expense limitations.
The purposes of the Gramm-Leach-Bliley Act of 1999 included all the following except to:
make financial markets more competitive.
formalize regulation of financial services markets.
modernize U.S. financial services markets.
prohibit federal licensing of financial markets.
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“Best’s Insurance Reports” allows you to determine which of the following about your insurer?
Its reputation for settling claims.
Its customer service rating.
How many complaints have been filed against it.
It’s financial strength rating.
In choosing an insurance company, the most important factor is:
how many dollars it pays for claims.
the number of employees it has.
its financial strength and stability.
the state in which it is domiciled.
In the market for most consumer goods and services we assume the law of supply and demand, operating through open competition, determines the price. Competition, however, does not necessarily work to the consumer’s advantage in the insurance market. Here are the questions. How does the pricing of an insurance policy for the insurer differ from a bologna manufacture’s pricing its product? Why does the difference in pricing problems require that insurance pricing be subject to regulation? Why might be lowest-priced insurance policy be undesirable from the consumer’s standpoint?
We all know football is enjoyable for spectators and participants because of comprehensive roles. Similarly, insurance transaction also needs regulation. So, what is meant by the term insurance regulation”? Why is the solvency of insurers of such great importance to regulators? How do the regulators try to establish and maintain insurers’ solvency?