Risk Management

Business

Quiz 8 :

Insurance Markets and Regulation

Quiz 8 :

Insurance Markets and Regulation

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Insurance companies are required to submit uniform financial statements to the regulators.These statements are based on statutory accounting (SAP) as opposed to the generally accepted accounting (GAP) system.
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True

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The solvency of an insurer depends partly on the amount and quality of its assets, and how the assets' liquidity matches the needs of liquidity to pay losses.
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True

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If the actual combined ratio for homeowner's is 106, the industry is experiencing negative results because homeowner's have the lowest break-even combined ratio levels.
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True

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Life insurers have less stringent investment regulations than property/casualty insurers.
True False
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Risk-based capital describes assets with values that may vary widely over time.
True False
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In states that use the file-and-use method, n insurer or its rating bureau must file its new rates and have them approved by the commissioner before using them.
True False
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Depending on the investment income contribution of each line of insurance, the longer tail lines have a smaller break-even combined ratio level.
True False
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Reinsurers, by the nature of their business, suffer to a greater extent than insurers when catastrophes hit.
True False
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In a soft market, when insurance capacity is low.
True False
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National Association of Insurance Commissioners (NAIC) model laws cannot be modified by the state; this is to ensure uniformity in insurance regulations.
True False
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Stock insurers do not show "capital" on their balance sheets.
True False
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Combined ratio does not include income from investments.
True False
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In 2002, in the wake of a series of corporate financial scandals, including those affecting Enron, Arthur Andersen, and WorldCom, the Gramm-Leach-Bliley Act of 2002 was adopted.
True False
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The life and health insurance markets do not show similar underwriting cycles.
True False
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The commissioner of insurance generally has more control over insurers not licensed in the state.
True False
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Insurance rates are considered dynamic because of the actuarial cycle.
True False
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An insurer must have a license from each state in which it conducts business.
True False
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Each line of business has its own break-even point.
True False
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The investment activity of the life/health industry is similar to that of the property/casualty segment.
True False
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All states have state guaranty fund associations for both property/casualty and life/health insurance.
True False
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