Question 1

Which government entity has primary authority to regulate insurance in the United States?

Accepted Answer

Individual state governments regulate insurance, not the federal government, as established by the McCarran-Ferguson Act of 1945.

Question 2

What is the difference between an insurance agent and an insurance broker?

Accepted Answer

An agent represents the insurer and can bind coverage on the insurer's behalf. A broker represents the insured and typically cannot bind coverage; they place business with insurers on behalf of clients.

Question 3

What is twisting in insurance?

Accepted Answer

Twisting is the act of inducing a policyholder to lapse, forfeit, or cancel an existing policy and replace it with a new one through misrepresentation or incomplete comparisons, to the detriment of the policyholder.

Question 4

During the initial policy period, what reasons can an insurer typically use to cancel a policy?

Accepted Answer

During the initial policy period (usually the first 60 days), an insurer can cancel for any reason, provided proper advance notice is given to the insured.

Question 5

Under a 'file and use' rate law, when may an insurer begin using new rates?

Accepted Answer

Under 'file and use,' an insurer may begin using new rates immediately upon filing them with the state insurance department, without waiting for prior approval.

Insurance Regulations — P&C License Exam

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