REGULATION OF INSURANCE
PRODUCTS (APIR) ELABORATION
2024-2025 EXAM WITH ALL
QUESTIONS AND ANSWERS COVERED
Describe the purpose and functional concepts of insurance and insurance
regulation with respect to the property & casualty, health, and life and
annuity lines of business. - ANSWER provide competitive rates without going
insolvent
Describe the purpose of insurance regulation. - ANSWER provide competitive
rates without going insolvent
Explain the purpose of insurance products from a consumer's perspective. -
ANSWER
Product design - ANSWER specific requirements for states that insurers are writing
policies in.
what can and cannot be done in the policy.
insurers need to know requirements so they can customize products.
Pricing - ANSWER Actuaries assist in establishing rate or premium based on:
probability theories
1
,law of large numbers
loss cost for P&C
Distribution Channels - ANSWER captive producers/agents - under contract - sell
for only one insurer
independent producers - represent many insurers
brokers - represent clients buying insurance
direct writing marketing.- telephone solicitation, mail, internet
Underwriting - ANSWER the selection process used by insurers to determine what
products or business to write
determines what risks should and should not be accepted
determines policy exclusions, limits, and deductibles
Claim settlements - ANSWER the claimant notifies the insurer that they suffered a
loss
the claim is settled when it is either denied or paid, with or without legal action
Investment - ANSWER obtain a Certificate of Authority
CoA is given when insurer adequately satisfies reserve requirement
reserves can be invested but restriction may apply
Regulatory Review - ANSWER Regulatory review of filings is very important for
consumer protection.
State Regulation - ANSWER -Comply with state laws
2
,-Rates are adequate, and not excessive or discriminatory
Adequate Rates - ANSWER Are sufficient to determine a normal anticipated loss
and company expenses.
Excessive Rates - ANSWER Make it hard on consumers and allows insurance
companies to make an unreasonably large profit.
Purpose for Filing Review Process - ANSWER Ensures protection for the public
(Consumers) and the insurance companies making filings (filers).
Regulators must review forms to ensure they contain the necessary elements.
Some states also include a review of advertising material.
Benefit to Insurers - ANSWER State Contract Review Analyst:
-Assures compliance with state law(s).
-Provides quality assurance.
-Assures contract is acceptable for intended audience.
Policy Forms include: - ANSWER -Policies
-Certificates
-Applications
-Riders
-Declarations
3
, -Amendments
-Endorsements
-Advertising Material
-Notices
-Disclosures
-Actuarial Memorandum
The US Insurance Market - ANSWER -Has approximately 6,300 domestic insurance
companies
-Manages assets of $7 trillion
-Employs two million people
-$1.7 trillion in premiums in 2011 - 11% of Gross Domestic Product (GDP)
Insurance Functions - ANSWER -Product Design
-Pricing
-Distribution
-Underwriting
-Claim Settlement
-Investment
-Reinsurance
Product Design - ANSWER -Specific requirements for state(s) that insurer is writing
policy in.
-What can and cannot be done in the policy.
-Insurers need to know requirements, so they can customize products.
4
PRODUCTS (APIR) ELABORATION
2024-2025 EXAM WITH ALL
QUESTIONS AND ANSWERS COVERED
Describe the purpose and functional concepts of insurance and insurance
regulation with respect to the property & casualty, health, and life and
annuity lines of business. - ANSWER provide competitive rates without going
insolvent
Describe the purpose of insurance regulation. - ANSWER provide competitive
rates without going insolvent
Explain the purpose of insurance products from a consumer's perspective. -
ANSWER
Product design - ANSWER specific requirements for states that insurers are writing
policies in.
what can and cannot be done in the policy.
insurers need to know requirements so they can customize products.
Pricing - ANSWER Actuaries assist in establishing rate or premium based on:
probability theories
1
,law of large numbers
loss cost for P&C
Distribution Channels - ANSWER captive producers/agents - under contract - sell
for only one insurer
independent producers - represent many insurers
brokers - represent clients buying insurance
direct writing marketing.- telephone solicitation, mail, internet
Underwriting - ANSWER the selection process used by insurers to determine what
products or business to write
determines what risks should and should not be accepted
determines policy exclusions, limits, and deductibles
Claim settlements - ANSWER the claimant notifies the insurer that they suffered a
loss
the claim is settled when it is either denied or paid, with or without legal action
Investment - ANSWER obtain a Certificate of Authority
CoA is given when insurer adequately satisfies reserve requirement
reserves can be invested but restriction may apply
Regulatory Review - ANSWER Regulatory review of filings is very important for
consumer protection.
State Regulation - ANSWER -Comply with state laws
2
,-Rates are adequate, and not excessive or discriminatory
Adequate Rates - ANSWER Are sufficient to determine a normal anticipated loss
and company expenses.
Excessive Rates - ANSWER Make it hard on consumers and allows insurance
companies to make an unreasonably large profit.
Purpose for Filing Review Process - ANSWER Ensures protection for the public
(Consumers) and the insurance companies making filings (filers).
Regulators must review forms to ensure they contain the necessary elements.
Some states also include a review of advertising material.
Benefit to Insurers - ANSWER State Contract Review Analyst:
-Assures compliance with state law(s).
-Provides quality assurance.
-Assures contract is acceptable for intended audience.
Policy Forms include: - ANSWER -Policies
-Certificates
-Applications
-Riders
-Declarations
3
, -Amendments
-Endorsements
-Advertising Material
-Notices
-Disclosures
-Actuarial Memorandum
The US Insurance Market - ANSWER -Has approximately 6,300 domestic insurance
companies
-Manages assets of $7 trillion
-Employs two million people
-$1.7 trillion in premiums in 2011 - 11% of Gross Domestic Product (GDP)
Insurance Functions - ANSWER -Product Design
-Pricing
-Distribution
-Underwriting
-Claim Settlement
-Investment
-Reinsurance
Product Design - ANSWER -Specific requirements for state(s) that insurer is writing
policy in.
-What can and cannot be done in the policy.
-Insurers need to know requirements, so they can customize products.
4
