Policy Anatomy
The Declarations page contains:
The who, what, when, and how much — named insured, policy period, limits, and premium
Explain risk migration
Name at least 2 of the compliance guardrails that apply to everyone.
Handle Claims Fairly & Promptly
Disclose Policy Information Clearly
Ensure Proper Licensing
Avoid Discriminatory Practices
Maintain Documentation & Reporting
The McCarran-Ferguson Act (1945) established that:
Insurance regulation would remain with the states, not the federal government
Who is the Director of Operations for ARU?
Amanda Bryant
Why do exclusions exist in insurance policies?
To protect insurer capital, prevent coverage overlap, and control pricing
Name at least 2 reasons why the Excess & Surplus Lines exists.
Standard forms do not fit
Emerging industries need coverage now
High severity or volatility
Distressed or declines risks
Innovation outpaces regulation
What is the term used when surplus lines brokers must prove the admitted market declined a risk?
Diligent Search
True or False: The Federal Insurance Office can enforce compliance and create rules for each state to follow.
False. The Federal Insurance Office can only monitor insurance operations in each state and report to Congress, as needed.
What 3 features define specialty insurance?
Risk Uniqueness
Customization/Complexity
Underwriting Judgement
A claims-made policy covers:
Claims filed during the policy period, subject to any retroactive date
A custom-drafted policy with negotiated terms built specifically for a single risk
Manuscript policy
Name at least 2 of the core functions of the state regulators.
Licensing
Approve Rates & Forms
Monitor Financial Solvency
Conduct Market Examinations (audits)
Enforce Consumer Protection
Name at least 2 of the steps in a market conduct exam (audit).
Trigger, scope, review, findings, and enforcement.
Catastrophe -> Hard Market -> Capital Enters -> Soft Market
An occurrence-based policy covers:
Events that happen during the policy period, even if the claim is filed later
One key tradeoff for policyholders placed in the E&S market is:
They do not have state guaranty fund protection if the E&S carrier becomes insolvent.
The AIG corporate bailout led to the creation of this insurance entity within the federal government.
Federal Insurance Office
The NRRA (Nonadmitted and Reinsurance Reform Act, 2010) simplified E&S compliance by:
Requiring surplus lines tax to be paid only to the insured's home state, not every state where the risk exists
What was Michelle's Perry's career before she entered the insurance industry?
Social worker/working with at-risk children
What are the six building blocks of every insurance policy?
1. Declarations (dec page) 2. insuring agreement 3. definitions 4. conditions 5. exclusions 5. endorsements.
Name at least 2 key features of the admitted insurance market.
State-filed and approved rates and forms, state regulators, and guaranty fund protection for policyholders
How many state regulators are there?
56 (All 50 states and 6 territories)
What is the name of the voluntary organization that interconnects all of the insurance regulators in the US?
National Association of Insurance Commissioners (NAIC)
If an insurance company pays out too much money in claims compared to premiums, their _____ becomes too high.
Loss ratio