148 Market Conduct Exams

When reviewing Marketing and Sales, how many Life and Annuity Exam Standards are to be considered? 5 10 15 20

15

There are ________ standards specific to Property & Casualty examinations. 5 10 12 18

18

Under normal circumstances, examinations need to be entered into MATS no later than _____ before the expected date of the on-site examination. 60 days 90 days 120 days 1 year

60 days

There are _________ General Standards for conducting the Underwriting and Rating portion of an examination. 5 8 9 15

9

In what order would the following be as part of the examination preparation under normal circumstances? ____ An Examiner in Charge (EIC) is selected. ____ A Call Letter is sent. ____ The Examination is properly entered into MATS

A Call Letter is sent. An Examiner in Charge (EIC) is selected. The Examination is properly entered into MATS

This is the official notice that the state will be conducting an examination of the company and should include the reason for the examination, the areas of review, and the period to be covered by the examination. A subpoena A call letter A letter of intent A complaint letter

A call letter

Other items to consider during the Examination Preparation process are: Logistical arrangements Physical requirements Parameters of examiner conduct All of the above

All of the above

Who makes the decision to conduct the examination? Chief Examiner Audit Manager Commissioner All of the above

All of the above

Regarding regulatory actions, the state submitted information includes but is not limited to the following. (select all that apply) Administrative complaints Cease and desist orders Receiverships Restitutions Closing letters and letter agreements

All of the above, including: • Administrative complaints, • Cease and desist orders, • Settlement agreements, • Consent orders, • Receiverships, • License suspensions or revocations, • Corrective action plans, • Restitutions, • Closing letters and letter agreements

Standard 2 for Life insurance concerns nonforfeiture options. Nonforfeiture options allow a policy to stay in force instead of lapsing in the event of non-payment of premiums. Common non-forfeiture options include: (select all that apply) Cash Surrender Values Extended Term Insurance Reduced Paid-Up Insurance Additional Paid-Up Insurance Automatic Premium Loans

Cash Surrender Values Extended Term Insurance Reduced Paid-Up Insurance Additional Paid-Up Insurance Automatic Premium Loans

When conducting the P&C portion of the examination, you should coordinate the standards that will be incorporated into an examination with the _________or____________. (Select all that apply) Chief Examiner Chief Executive Officer Chief Financial Officer Examinations Manager

Chief Examiner Examinations Manager

A ___________ is the file or files containing documentation necessary to support claim handling activity. Report file Consumer file Activity file Claim file

Claim file

Merriam-Webster defines continuum as a _______________ characterized as a collection, sequence, or progression of values or elements varying by minute degrees. Coherent whole Sum of the whole Summary of data Case file

Coherent whole

A _____________ is defined as any written communication that expresses dissatisfaction with a specific person or entity subject to regulation under the state's insurance laws. Review Complaint Consumer Report Notification

Complaint

This type of review, along with other findings during the market analysis process, can often be the reason an exam is called. Complaint Handling Policyholder Services Operations and Management Producer Licensing

Complaint Handling

Under this area of review, there are 3 different sampling methods that can be used (Random, Systematic and Stratified) Operations and Management Policy holder Services Complaint Handling Marketing and Sales

Complaint Handling

_________ are full-scope examinations that generally involve a review of all of a company's business practices. Routine Examinations Comprehensive Examinations Target examinations

Comprehensive Examinations

If there are several issues crossing over multiple areas of conduct, or the examination is statutory then regulators may conduct a__________. Targeted exam Repeated exam Comprehensive exam Surprise exam

Comprehensive exam

When continuum options are applied correctly, and issues are addressed effectively, it builds _______________ in both the industry and state regulation. Comradery Bridges Consumer confidence A common vision

Consumer confidence

______________ state the findings of state examiners and allow the Company to provide a formal response to the findings prior to preparation of a final examination report. Standards Tips Criticisms Requests

Criticisms

______________includes only refusal of an insurer to issue a policy upon receipt of a written nonbinding application or written request for coverage from a producer or an applicant, or the refusal of a producer or broker to transmit to an insurer a written nonbinding application or written request for coverage. Approval Refusal Declination Affirmation

Declination

Examinations that are generally performed at the insurance department's offices, with the company providing requested documents for review. Targeted Exam On-site Exam Comprehensive Exam Desk Exam

Desk Exam

The _______ is the on-site supervisor of the examination team and is responsible for managing the examination. CEO CFO ABC EIC

EIC

The first step in using the continuum is having to____________. Evaluate the issue. Determine an approach. Analyze the company's records. Evaluate the company's performance.

Evaluate the issue.

It is important that the examiner check with the ________________ to determine where the policyholder service function lies, and then apply the following test to determine the effectiveness of the unit. Commissioner Examination Coordinator Department Staff NAIC

Examination Coordinator

Cancellation processing for nonpayment of premium should include a___________. Brochure to the insured. Formal notice to the insurance agent. Formal notice to the insured. Detailed report to the EIC.

Formal notice to the insured.

There are 4 steps necessary to develop an appropriate sampling strategy. Please place the following steps in the correct order. Take a random sample Audit the sample Map out the probability of various outcomes Formulate a hypothesis

Formulate a hypothesis Map out the probability of various outcomes Take a random sample Audit the sample

Areas of concern during the Marketing and Sales section of the exam are: (select all that apply) Ill-advised purchases Unscrupulous producers Under-educated producers Misleading advertising

Ill-advised purchases Unscrupulous producers Under-educated producers Misleading advertising

________ are used to identify the examination of an entity where a significant amount of time has lapsed since the jurisdiction previously examined the company. Initial examinations Subsequent examinations Re-examinations

Initial examinations

The notification letter sent by the EIC, should include (select all that apply). Legal basis A listing of new policies, claims or producers representing the company Estimated costs The state's billing procedures Audit Software

Legal basis A listing of new policies, claims or producers representing the company Estimated costs The state's billing procedures

This tool provides an overall score, a national score, and a state score for companies writing a specified line of business based on both market and financial data. MARS SPDL MCAS MAPT

MAPT The Market Analysis Prioritization Tool provides an overall score, a national score, and a state score for companies writing a specified line of business based on both market and financial data.

In addition to the MAPT information, states often use ________ data to identify outliers. MCAS RIRS SPDL MARS

MCAS In addition to the MAPT information, states often use state Market Conduct Annual Statement data to identify outliers, or they utilize an internal state created system to cull and combine data from MAPT, MCAS, financial information, complaint indices and other available information that the state finds valuable in determining companies in their state that require review.

This Microsoft excel based tool can be found on the NAIC's state net internet site under the reference document section of the Market Regulation Handbook. MATS MARS Market Conducting Sampling Utility RIRS

Market Conducting Sampling Utility (MCSU)

The most recent changes to the Market Regulation Handbook can be found on the NAIC ____________________. Legal website Market Regulation and Consumer Affairs (D) Committee website Human Resources website Education and Training Website

Market Regulation and Consumer Affairs (D) Committee website

A general exam standard under this area of review ensures a regulated entity internal producer training materials are in compliance with applicable statutes, rules and regulations. Marketing and Sales Underwriting and Rating Claims Handling Producer Licensing

Marketing and Sales

A standard under this area of review, is designed to protect the consumer from misleading, incomplete, or illegal advertising or sales materials. Complaint Handling Marketing and Sales Policyholder Services Operations and Management

Marketing and Sales

An exam that is conducted because a regulator receives information that leads them to believe that an entity may be acting in bad faith or committing fraudulent acts is known as a ______________ exam. No-knock Scheduled Comprehensive

No-knock

Most of these types of examinations are conducted at an insurer's home office or at the location where the records under examination are stored. Targeted Exam On-site Exam Comprehensive Exam Desk Exam

On-site Exam

The EIC should prepare the __________________ in preparation for the first day at the company. Opening meeting Data on a spreadsheet To do list Catered lunch

Opening meeting

This area of review includes a history of the company which identifies when the company was formed, and how it is formed. Operations and Management Marketing and Sales Policyholder Service Claims Handling

Operations and Management

Under this area of review, it is identified if the regulated entity is licensed for the lines of business that are being written. Producer Licensing Marketing and Sales Policyholder Services Operations and Management

Operations and Management

Under this area of review, it is identified whether or not an entity has a valid disaster recovery plan. Operations and Management Marketing and Sales Complaint Handling Policyholder Services

Operations and Management

Under this area of review, it is identified whether or not an entity has initiatives in place to prevent, detect, and prosecute acts of fraud. Policyholder Services Operations and Management Underwriting and Rating Marketing and Sales

Operations and Management

Under this area of review, it should be determined if the entity has an internal audit function, who performs the audits, how often audits are performed and if the results are available for you to review. Marketing and Sales Complaint Handling Operations and Management Underwriting and Rating

Operations and Management

When comparing MAPT data between companies, it is anticipated that data __________ can be identified. Sets Outliers Points Calls

Outliers

What confidential document between the EIC and Chief Examiner should be completed during the first week if possible? Exam Report Task Spreadsheet Planning Memorandum Examiner checklist

Planning Memorandum

Once the EIC has become familiar with the company, he/she will need to initiate the ________________. Work From Home Program Staging Work Program Implementing Work Program Planning Work Program

Planning Work Program

In sampling, a __________________ measures the probability of all possible outcomes. Hypothesis Determination Probability distribution Preliminary exam

Probability distribution

In which type of sampling are no items or units are pre-selected? Random Sampling Systematic Sampling Stratified Sampling

Random Sampling

Insurance companies cannot use __________to compensate for previous losses. Rates Commissions Earnings Wages

Rates

________ is the valuation of risk of an individual or organization. Focus Analyzing Rating Judging

Rating

_________ is the process of determining the cost of insurance premiums. Estimating Rating Guessing Averaging

Rating

_________ are follow-up examinations that are based on specific issues. The focus is to determine company compliance with previous market conduct examination report recommendations or administrative orders. Initial examinations Subsequent examinations Re-examinations

Re-examinations

The continuum represents the spectrum of ______________ available for addressing all of the variations and possible violations they come across. Regulatory actions Regulatory opinions Regulatory options Websites

Regulatory options

An examiner should review (select all that apply) Relevant underwriting information-underwriting guidelines Underwriting bulletins Declination procedures Agency agreements Correspondence with producers

Relevant underwriting information-underwriting guidelines Underwriting bulletins Declination procedures Agency agreements Correspondence with producers

The ______________ is a listing of all Requests that were submitted to the Company personnel. Request Log Criticism Log Tips Log

Request Log

In addition to reviewing the complaints received directly from consumers, the examiner should also review complaints received from ____________________. Reviews from Angie's List Reviews from Google Review from the various insurance departments Reviews from local critics

Review from the various insurance departments

_________ are conducted by jurisdictions who have statutory requirements that examinations be performed at regular intervals, either in conjunction with financial examinations or separately. Routine Examinations Comprehensive Examinations Target examinations

Routine Examinations

Examiners are strongly encouraged to use _______ rather than requiring the company to produce photocopies of each producer's license. MARS MATS RIRS SPDL

SPDL

The class rate is modified on commercial policies based on the special characteristics of the risk because experience has shown a direct correlation between certain physical characteristics and the risk of loss. These types of policies are referred to as___________ Special rated Unique rated Double rated Schedule rated

Schedule rated

If the examination is a result of something such as concerns found during analysis, then it would mostly like be known as a ____________exam. No-knock Scheduled Statutory Comprehensive

Scheduled

Which of the following additional information should be considered when making analysis and exam decisions. (select all that apply) Staff recommendations Number of employees Current hot topics Time zone MCAS results

Staff recommendations Current hot topics MCAS results Once the market analyst or market analysis team finds the baseline review system that best meets their needs, additional information should be considered when making analysis and exam decisions, including: Staff Recommendations, Current "Hot Topics", Internal Complaints, MCAS Results, Market Share and Recent Exams.

List the following Health Exam Standards with their corresponding descriptions in order. __Outline of coverages is in compliance with all applicable statutes, rules and regulations. __The regulated entity has suitability standards for its products, when required by applicable statutes, rules and regulations. __Regulated entity rules on replacement are in compliance with applicable statutes, rules and regulations.

Standard 1: Regulated entity rules on replacement are in compliance with applicable statutes, rules and regulations. Standard 2: Outline of coverages is in compliance with all applicable statutes, rules and regulations. Standard 3: The regulated entity has suitability standards for its products, when required by applicable statutes, rules and regulations.

When the exam is called, requests for information are made via _______________ requests. Personal data Standardized data Combined data Publicized data

Standardized data

Within the Market Regulation Handbook, _____________ can be found which identify specific areas to be investigated, and were created to assist in ensuring that each area of the examination is thoroughly completed. Standards Tips Requests Criticisms

Standards

An exam that conducted under a standard every five-year timeline, would be known as a ___________ exam. No-knock Scheduled Statutory Comprehensive

Statutory

Which type of sampling is obtained by performing a separate and independent random sample on each subpopulation of interest? Random Sampling Systematic Sampling Stratified Sampling

Stratified Sampling

________ indicate that the entity was previously examined by a jurisdiction. This term is most commonly used by states that conduct routine examinations. Initial examinations Subsequent examinations Re-examinations

Subsequent examinations

Baseline analysis is a _____________ process that allows basic parameters to be used to evaluate the entire marketplace. Demographic Analytic Systematic Catalytic

Systematic

Which type of sampling uses an interval throughout a listing of all files? Random Sampling Systematic Sampling Stratified Sampling

Systematic Sampling

_________ are a focused examination reviewing either a specific line of business or a specific business practice, such as underwriting, marketing or claims. Routine Examinations Comprehensive Examinations Target examinations

Target examinations

When there are only one or two issues of concern regulators will often conduct a _______. Targeted exam Surprise exam

Targeted exam

This is a Windows-based file repository and auditing software package that states may purchase to assist them in conducting examinations. SERFF iSite+ TeamMate Tableau

TeamMate

The _______________________ is a comprehensive source of reference material designed solely to provide assistance to each jurisdiction in developing effective and consistent examination methodology. The Regulators Handbook The Market Guide to Regulation The Market Regulation Handbook None of the above

The Market Regulation Handbook

Once a decision has been made to conduct an examination, what needs to be determined next? (select all that apply) The scope The location The type The data The method All of the above

The scope The type The method

The ____________ provides an estimate of the length of the exam and use of resources. Time control Time budget Time sheet Time criteria

Time budget

The ____________ is a document that keeps track of the actual time spent for each area. Time control Time budget Time sheet Time criteria

Time control

The decision to conduct an exam should only be made after proper analysis an all other realistic continuum options have been tried or ruled out. True False

True

When contacting a company, simple issues can be addressed by an email or letter. True False

True

________________is the file or files containing documents such as the new business application, renewal application (if applicable), rate classification sheets, billings, audits, inspection or investigative reports, motor vehicle reports (MVRs), credit reports, policies, endorsements, cancellation and reinstatement notices and correspondence. Underwriting File Policyholder File Standards File Consumer File

Underwriting File

This portion of the examination is designed to provide a view of how an insurance company or regulated entity treats the public, and whether that treatment is in compliance with applicable statutes, rules and regulations. Underwriting and Rating Producer Licensing Marketing and Sales Operations and Management

Underwriting and Rating

What two things are essential for the exam team to do with data throughout the examination process? (select the two that apply) Validate the data with control tools. Organize a lunch with the company's leadership. Ignore any red flags presented during the exam. Conduct a cursory review of the data.

Validate the data with control tools. Conduct a cursory review of the data.

Which of the following is true regarding two-stage sampling, or acceptance sampling. (select all that apply) a. Makes use of small samples to determine whether further investigation is warranted. b. Designed solely as a labor-saving device. c. It is not designed to support point estimates, or estimates of the actual rate of noncompliance. d. A and C only e. None of the above

a. Makes use of small samples to determine whether further investigation is warranted. b. Designed solely as a labor-saving device. c. It is not designed to support point estimates, or estimates of the actual rate of noncompliance.

General Standard 1 states: a. The rates charged for the policy coverage are in accordance with the filed rates (if applicable) or the regulated entity's rating plan. b. The regulated entity does not permit illegal rebating, commission-cutting or inducements. c. The regulated entity does permit illegal rebating, commission-cutting or inducements. d. None of the above

a. The rates charged for the policy coverage are in accordance with the filed rates (if applicable) or the regulated entity's rating plan.

If policies are issued by an automated system, like many personal lines policies are rated and issued, the examiner should manually check for a. proper rating based on a selection of various classes and territories. b. different ratings based on a selection of various classes and territories. c. much higher ratings based on a selection of various classes and territories. d. proper rating based on a selection of various reports.

a. proper rating based on a selection of various classes and territories.

Before an examiner begins reviewing an application, they should be familiar with the ________________________. a. statutes, rules and regulations applicable to the product. b. average cost of the product. c. amount of consumers who are purchasing the product. d. way the product is marketed to the public.

a. statutes, rules and regulations applicable to the product.

The producer licensing portion of the examination is designed to_____________________ a. test a regulated entity's compliance with state producer licensing laws and rules. b. test a regulated entity's ability to keep accurate records. c. test a regulated entity's security protocols. d. test a regulated entity's ability to comply with an examination.

a. test a regulated entity's compliance with state producer licensing laws and rules.

The Policyholder Service portion of the examination is designed to; (select all that apply) a. test a regulated entity's compliance with statutes b. test a regulated entity's compliance with regulations c. test a regulated entity's compliance with adherence to contractual language regarding notice and billing d. none of the above

a. test a regulated entity's compliance with statutes b. test a regulated entity's compliance with regulations c. test a regulated entity's compliance with adherence to contractual language regarding notice and billing

Acceptance sampling methods entail two steps prior to drawing a sample. What are the two steps? a. Decide on the size of the sample. b. Decide upon a tolerable error, which is the allowable rate of non-compliance in the population to be sampled. c. Decide on the amount of samples to be collected. d. Based upon the tolerable error, decide upon a decision rule regarding the numberer of allowable errors in the sample.

b. Decide upon a tolerable error, which is the allowable rate of non-compliance in the population to be sampled. d. Based upon the tolerable error, decide upon a decision rule regarding the numberer of allowable errors in the sample.

Regarding HIPPA, no state can substitute state laws for the federal laws, unless__________. a. The state laws grant the Governor the authority to change the minimum requirements set by the Federal Government. b. The state laws extend beyond the minimum requirements set by the Federal Government. c. The Regulator conducting the exam discovers a loophole in the company's policies. d. The state laws grant the Commissioner the authority to change the minimum requirements set by the Federal Government.

b. The state laws extend beyond the minimum requirements set by the Federal Government.

For Standard 1 in the Life and Health Examination, the examiner should review_________. a. the policy provisions that address reinstatement. b. other reinstatements to verify the regulated entity is consistent and non-discriminatory in how it treats these types of transactions. c. All of the above d. None of the above

c. All of the above

Under what circumstances would a regulator choose to conduct an on-site examination? a. When electronically available documents are sufficient. b. What a supervisor has instructed to do so. c. When original documents are needed. d. When the insurer allows it.

c. When original documents are needed.

Rates should be applied ____________________________ a. differently among similarly situation policyholders. b. consistently among all policyholders. c. consistently among similarly situated policyholders. d. differently among all policyholders.

c. consistently among similarly situated policyholders.

By using the continuum, regulators can achieve the primary goal in market regulation which is to _____________________. a. Make sure everyone is covered under the same policy by the same insurer. b. Make sure policy premiums have been paid by the policyholder. c. Make sure insurance premiums are capped at a certain dollar amount. d. Make sure that insurers meet obligations and act fairly to policyholders.

d. Make sure that insurers meet obligations and act fairly to policyholders.

An insurer was determining by information presented on the application that the applicant was a "resident alien". When additional questions were asked, and it was determined that the applicant was from a specific country, addition premiums were charged. After investigation, it was determined that this practice was____________. acceptable discriminatory standard exceptional

discriminatory

The examiner should verify that all policy forms and endorsements used have been ______________________, if applicable. updated with the latest information filed with the local law enforcement sent to the insured filed with the appropriate regulatory authority

filed with the appropriate regulatory authority

Underwriting guidelines may vary by ____________ areas. similar geographic office political

geographic

States have different _____________for filing rates with the Departments of Insurance. rules laws and regulations organizational structure levels

laws and regulations

Standard 3 for Life Insurance concerns annual_________. earnings reviews on different types of policies reports of policy values reports on company costs

reports of policy values

Changes to the Market Regulation Handbook are made on a ___________ basis. yearly monthly bi-annual quarterly

yearly