瑞達rejda保險教材英文練習題08217

PrinciplesofRiskManagementandInsurance,11e(Rejda)

Chapter8GovernmentRegulationofInsurance

1)Reasonsforregulationofinsuranceincludewhichofthefollowing

I.Maintaininginsurersolvency.

II.Ensuringreasonablerates.

A)Ionly

B)IIonly

C)bothIandII

D)neitherInorII

Answer:C

QuestionStatus:PreviousEdition

2)Therightofthestatestoregulatethebusinessofinsurancewasfirstestablishedby

A)theSouth-EasternUnderwritersAssociationcase.

B)Paulv.Virginia.

C)theFinancialModernizationAct.

D)theShermanAct.

Answer:B

QuestionStatus:PreviousEdition

3)Thebasisforcurrentstateregulationofinsuranceis

A)theMcCarran-FergusonAct.

B)Paulv.Virginia.

C)theSouth-EasternUnderwritersAssociationcase.

D)theNationalAssociationofInsuranceCommissioners.

Answer:A

QuestionStatus:PreviousEdition4)AllofthefollowingstatementsaboutthemethodsofregulatinginsurancearetrueEXCEPTA)Allstateshaveinsurancelawsthatregulatetheoperationsofinsurers.B)Insurersaretotallyexemptfromregulationbyfederalagenciesandlaws.C)Thecourtsregulateinsuranceinmanyways,includingtheinterpretationofpolicyclausesandprovisions.D)Stateinsurancecommissioners,throughadministrativerulings,haveconsiderablepoweroverinsurersdoingbusinessintheirstates.

Answer:B

QuestionStatus:PreviousEdition

5)Whichofthefollowingstatementsaboutthelicensingofinsurancecompaniesis(are)true

I.Anewcapitalstockinsurermustmeetminimumcapitalandsurplusrequirements,whichvarybystateandlineofinsurance.

II.Thelicensingrequirementsforinsurancecompaniesarelessstringentthan

thoseimposedonmostothertypesoffirms.

A)Ionly

B)IIonly

C)bothIandII

D)neitherInorII

Answer:A

QuestionStatus:PreviousEdition

6)Aninsurancecompanyincorporatedinanotherstatehasbeenlicensedtooperateinyourstate.Inyourstate,theinsurerwouldbeconsidereda(n)

A)nonadmittedinsurer.

B)foreigninsurer.

C)alieninsurer.

D)reciprocalinsurer.

Answer:B

QuestionStatus:PreviousEdition

7)Aninsurancecompanycharteredinanothercountryhasbeenlicensedtooperateinyourstate.Inyourstate,theinsurerwouldbeconsidereda(n)

A)nonadmittedinsurer.

B)foreigninsurer.

C)alieninsurer.

D)reciprocalinsurer.

Answer:C

QuestionStatus:PreviousEdition

8)Whichofthefollowingisconsideredanonadmittedassetforaninsurer

A)cash

B)preferredstocks

C)realestate

D)officefurniture

Answer:D

QuestionStatus:PreviousEdition

9)Thepolicyholders'surplusofaninsurerisdefinedasthedifferencebetweenits

A)assetsanditsliabilities.

B)premiumincomeanditsexpenses.

C)reservesanditsliabilities.

D)assetsanditsnonadmittedassets.

Answer:A

QuestionStatus:PreviousEdition

10)Whichofthefollowingstatementsabouttheuseofrisk-basedcapitalrequirementsis(are)true

I.Insurersmusthaveacertainamountofcapitaldependingontheriskinessoftheirinvestmentsandinsuranceoperations.

II.Insurersmayberequiredtotakecertainactionsdependingonhowmuchcapitaltheyhaverelativetotheirrisk-basedcapitalrequirements.

A)Ionly

B)IIonly

C)bothIandII

D)neitherInorII

Answer:C

QuestionStatus:PreviousEdition

11)Whichofthefollowingstatementsabouttheregulationofinsurancecompanyinvestmentsis(are)true

I.Thepurposeofregulatinginsurancecompanyinvestmentsistopreventinsurersfrommakingunsoundinvestmentswhichcouldthreatentheirsolvency.

II.Lifeinsurerscaninvestanunlimitedamountoftheirassetsincommonstocks.

A)Ionly

B)IIonly

C)bothIandII

D)neitherInorII

Answer:A

QuestionStatus:PreviousEdition

12)Whichofthefollowingstatementsabouttheregulationoflifeinsurance

companiesis(are)true

I.Thepercentageofassetsalifeinsurancecompanymayinvestinaspecifictypeofasset.,stocksorbonds)isgenerallylimitedbylaw.

II.Thepurposeoflimitingtheaccumulationofsurplusistopreventaninsurerfromincreasingitssurplusattheexpenseofpolicyownerdividends.

A)Ionly

B)IIonly

C)bothIandII

D)neitherInorII

Answer:C

QuestionStatus:PreviousEdition

13)Whichofthefollowingstatementsaboutstateinsuranceguarantyfundsis(are)true

I.Theylimittheamountthatpolicyownerscancollectifaninsurerbecomes

insolvent.

II.Theyareusuallyfundedbygeneralrevenuesofthestates.

A)Ionly

B)IIonly

C)bothIandII

D)neitherInorII

Answer:A

QuestionStatus:PreviousEdition

14)Underonetypeofrateregulation,insurersarenotrequiredtofiletheirrateswiththestateinsurancedepartment.However,insurersmayberequiredtofurnishrateschedulesandsupportingdatatostateofficials.Afundamentalassumption

underlyingthistypeofratinglawisthatmarketforceswilldeterminetheprice

andavailabilityofinsurance,ratherthandiscretionaryactsofregulators.This

typeofrateregulationiscalled

A)aflex-ratinglaw.

B)aprior-approvallaw.

C)afile-and-uselaw.

D)nofilingrequired.

Answer:D

QuestionStatus:Revised

15)Underwhattypeofrateregulationareinsurersrequiredtoobtainapprovalofratesbeforeusingthemiftheratechangeexceedsaspecifiedpredeterminedrange

A)flex-ratinglaw

B)prior-approvallaw

C)file-and-uselaw

D)use-and-filelaw

Answer:A

QuestionStatus:Revised

16)Bymisrepresentingthetruefacts,GretchenwasabletoconvinceaclienttodropalifeinsurancepolicywithanothercompanyandtopurchaseapolicyfromthecompanythatGretchenrepresents.Gretchenhasengagedinanillegalsalespracticecalled

A)baitandswitch.

B)rebating.

C)retaliating.

D)twisting.

Answer:D

QuestionStatus:PreviousEdition17)Whichofthefollowingstatementsaboutpremiumtaxesis(are)trueI.TheyareleviedbythefederalgovernmentasaresultoftheMcCarran-FergusonAct.II.Theirprimarypurposeistoprovidefundsforinsuranceregulation.A)IonlyB)IIonlyC)bothIandIID)neitherInorII

Answer:D

QuestionStatus:PreviousEdition

QuestionStatus:PreviousEdition

18)Advantagescitedbyproponentsoffederalregulationofinsuranceincludeall

ofthefollowingEXCEPT

A)greaterefficiency.

B)greateropportunityforinnovation.

C)uniformityoflaws.

D)morecompetentregulators.

Answer:B

QuestionStatus:PreviousEdition

19)AdvantagescitedbyproponentsofstateregulationofinsuranceincludeallofthefollowingEXCEPT

A)uniformityoflawsbytheNAIC.

B)greateropportunityforinnovation.

C)greaterresponsivenesstolocalneeds.

D)centralizationofpoliticalpower.

Answer:D

QuestionStatus:PreviousEdition

20)ShortcomingsofstateregulationofinsurancefoundbyCongressionalcommitteesandtheGeneralAccountingOfficeincludeallofthefollowingEXCEPT

A)inadequateprotectionofconsumers.

B)inadequatemarketconductexaminations.

C)inabilitytorespondtouniquelocalneeds.

D)regulator'sover-responsivenesstotheinsuranceindustry.

Answer:C

21)Themajorreasonsforinsurerinsolvencyincludewhichofthefollowing

I.Inadequatepricingandlossreserves.

II.Rapidgrowthandinadequatesurplus.

A)Ionly

B)IIonly

C)bothIandII

D)neitherInorII

Answer:C

QuestionStatus:PreviousEdition

22)TheprincipalmethodsofensuringinsurersolvencyincludeallofthefollowingEXCEPT

A)SecurityandExchangeCommissionoversightofinvestments.

B)risk-basedcapitalstandards.

C)fieldexaminations.

D)reviewofrequiredannualfinancialstatements.

Answer:A

QuestionStatus:PreviousEdition

23)WhichofthefollowingisanargumentforrepealingtheMcCarran-FergusonAct

A)Itwouldmakeiteasierforsmallinsurerstocompete.

B)Itwouldencouragesharingofinformation.

C)Itwouldmakeiteasiertodevelopcommoncoverageforms.

D)Itwouldcorrectfordefectsinstateregulation.

Answer:D

QuestionStatus:PreviousEdition

24)ThenumberoftitleinsurancecompaniesoperatinginStateZisrelativelylow.Recently,thelargestofthesecompanies(50percentmarketshare)acquiredthe

secondlargestcompany(30percentmarketshare).Immediatelyaftertheacquisition,theinsurerraisedpremiumsby75percent.Thisscenariodemonstrateswhichofthefollowingrationalesfortheregulationofinsurance

A)maintaininsurersolvency

B)compensateforinadequateconsumerknowledge

C)ensurereasonablerates

D)makeinsuranceavailable

Answer:C

QuestionStatus:PreviousEdition

25)InwhichofthefollowingdidtheCourtdecidethatinsurancewasinterstatecommercewhenconductedacrossstatelines,andthereforewassubjecttofederalregulation

A)Paulv.Virginia

B)South-EasternUnderwritersAssociationcase

C)McCarran-FergusonAct

D)FinancialModernizationAct

Answer:B

QuestionStatus:PreviousEdition26)AlifeinsurancecompanybasedinCanadawaslicensedtooperateinMassachusetts.WhenoperatinginMassachusetts,theCanadianinsurerwouldbeconsidereda(n)A)domesticinsurer.B)captiveinsurer.C)foreigninsurer.D)alieninsurer.

Answer:D

QuestionStatus:PreviousEdition27)XYZMutualInsuranceCompanyhastotalassetsof$10million.Thepolicyholders'surplusis$2million.WhatareXYZMutual'stotalliabilitiesA)$millionB)$millionC)$millionD)$million

Answer:B

QuestionStatus:PreviousEdition28)MutualPropertyInsuranceCompanyhasasurplusof$2million.Accordingtoaconservativeruleofthumb,howmuchnewnetpremiumscanMutualPropertyInsuranceCompanysafelywriteA)$2millionB)$8million

Answer:A

C)$10million

D)$20million

Answer:A

QuestionStatus:PreviousEdition

29)Fly-By-NightInsuranceCompanyhadmuchlargerlossesthanforecast.Thecompanydidnotchargeadequatepremiumsnordidthecompanypurchasereinsurance.IfFly-By-Nightbecomesinsolvent,whichofthefollowingwillhelppaytheunpaid

claimsoftheinsurer

A)guarantyfund

B)premiumrebates

C)risk-basedcapital

D)admittedassets

Answer:A

QuestionStatus:PreviousEdition

30)Graceisalifeinsuranceagent.Sheisattemptingtosellalargelifeinsurancepolicy,buttheprospectivepurchaserishavingsecondthoughts.Topersuadethe

prospectivepurchaser,Gracesaid,"Iwillearna$1,000commissionifyoubuythispolicy.I'llgiveyou$500ofmycommissionifyoubuythepolicy."Inmoststates,whatillegalsalespracticewillGracebeguiltyofifshesplitshercommission

withthepurchaser

A)rebating

B)churning

C)twisting

D)backdating

QuestionStatus:PreviousEdition31)StateX'spremiumtaxrateis2percent.StateY'spremiumtaxrateis3percent.StateXinsurersarerequiredtopaythe3percentrateonbusinesswritteninStateY.StateXrequiresinsurersfromStateYtopaya3percentpremiumtaxonbusinesswritteninStateX,eventhoughthepremiumtaxrateisonly2percentinStateX.ThispracticeisknownasaA)taxtariff.B)guarantyfundassessment.C)risk-basedcapitalrequirement.D)retaliatorytaxlaw.

Answer:D

QuestionStatus:PreviousEdition

32)ABCInsuranceCompanywouldliketopurchaseabank.Formanyyears,ABCwas

notpermittedunderfederallawtoenterintobankingoperations.Whichofthefollowinglegislativeactseliminatedtheprohibitionthatpreventedbanks,insurers,andinvestmentfirmsfromenteringintooneanother'smarketsA)TheMcCarran-FergusonAct

B)TheTaxReformAct

C)TheConsolidatedOmnibusBudgetReconciliationAct

D)TheFinancialModernizationAct(Gramm-Leach-BlileyAct)

Answer:D

QuestionStatus:PreviousEdition

33)Underonetypeofratinglaw,insurersarefreetochangeratesandtousemodifiedratesimmediately.However,thenewratemustbefiledwithregulatorswithinaspecifiedperiod,suchas60daysafterthemodifiedrateisemployed.Thistypeofratinglawiscalled

A)priorapproval.

B)file-and-use.

C)use-and-file.

D)flexrating.

Answer:C

QuestionStatus:PreviousEdition

34)Theregulationofinsurersinareasthataffecthandling,underwriting,complaints,advertising,practicesiscalled

A)solvencysurveillance.

consumers,whichsalespractices,

includeclaimsandothertrade

B)marketconductregulation.

C)combinedratioanalysis.

D)marketshareregulation.

Answer:B

QuestionStatus:PreviousEdition

35)TheNationalAssociationofInsuranceCommissioners(NAIC)administersan

"earlywarningsystem"tohelpensureinsurancecompanysolvency.Thissystemusesdataprovidedintheannualstatementtoidentifycompaniesthatmayposeasolvencyrisk.Thisearlywarningsystemiscalled

A)therisk-basedcapitalrequirements.

B)aninsuranceguarantyfund.

C)theInsuranceRegulatoryInformationSystem(IRIS)

D)theassessmentmethod.

Answer:C

QuestionStatus:PreviousEdition

EXCEPT

36)Whichofthefollowingstatementsis(are)trueregardingthequalityofinsuranceregulation

I.Thequalityofinsuranceregulationisuniformfromstatetostate.

II.Allevidencesuggestsfederalregulationofinsurancewouldimprovethequalityofregulation.

A)Ionly

B)IIonly

C)bothIandII

D)neitherInorII

Answer:D

QuestionStatus:PreviousEdition

37)Whichofthefollowingstatementsconcerningtheproposedoptionalfederalcharterforlifeinsurersis(are)true

I.Largeinsurersoperatinginmanystateswouldmorelikelypreferastatecharterwhilesmaller,regional,insurerswouldmorelikelychooseafederalcharter.

II.Proponentsofthefederalcharterarguethatitwouldspeedthedevelopmentandapprovalofnewproducts.

A)Ionly

B)IIonly

C)bothIandII

D)neitherInorII

Answer:B

QuestionStatus:PreviousEdition

38)Allofthefollowingaremethodshelpingtoinsurethesolvencyofinsurers

A)commerciallinesderegulation

B)risk-basedcapitalstandards.

C)theNAIC'searlywarningsystem.

D)theNAIC'sFASTscreeningsystem.

Answer:A

QuestionStatus:PreviousEdition

39)Ascorederivedfromanindividual'scredithistoryandusedbymanyautoandhomeownersinsurersforunderwritingcalleda(n)

A)CLUEscore.

B)insurancescore.

C)expenseratioscore.

D)combinedratioscore.

Answer:B

QuestionStatus:PreviousEdition

otherfactorsthatis

andratingpurposesis

40)Allofthefollowingareargumentsinfavorofusinganapplicant'screditrecordinpersonallinesunderwritingEXCEPT

A)Mostconsumershavegoodcreditrecordsandbenefitwhencredithistoryisusedasaratingfactor.

B)Useofcreditdatainunderwritingorratingdiscriminatesagainstcertaingroups.

C)Underwritingandratingmaybemoreconsistentifapplicants'credithistoriesareconsidered.

D)Thereishighco