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3 Cards in this Set

  • Front
  • Back
A state requires prior approval of proposed rate changes only if they exceed 5 percent of existing rates. No prior approval is needed for proposed rate changes at 5 percent or less. This is an example of
Answer
C) a flex-rating law

The answer is (C). (A) is incorrect because with a use-and-file law, rates are filed within a specified time after they are first used, and they may be disapproved. (B) is incorrect because a file-and-use law permits immediate use of filed rates without affirmative approval, although the commissioner may disapprove rates within a certain time period. (D) is incorrect because open competition relies on competition, rather than regulation, to set rates.
An insurance company that has not gained approval to place insurance business from a department of insurance in the jurisdiction where it or a producer wants to sell insurance is known as a(n)
(D) unauthorized entity

The answer is (D). An entity that has not gained approval to place insurance business from a department of insurance in the jurisdiction where it or a producer wants to sell insurance is referred to an unauthorized entity.
The Financial Services Modernization Act, also known as the Gramm-Leach-Bliley Act, addressed some issues involving the regulation of banks and insurance. Which of the following statements concerning this act is (are) correct? I. State insurance regulators have primary regulatory authority for insurance activities of banks. II. State insurance regulators have primary regulatory authority over the banking activities of banks that sell insurance.
(A) I only

The answer is (A). II is incorrect because insurance commissioners do not regulate banking activities.