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39 Cards in this Set
- Front
- Back
Insurance Regulations on state level controlled by |
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N.A.I.C. |
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What does the N.A.I.C do? |
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What does the N.A.I.C do? #2 |
Utilize expensive personnel on nation level-spread charge basis. |
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Six key legal events |
Gave rise to the legal landscape of insurance today. |
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1. Paul vs. Virginia (1869) problem |
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1. Paul vs. Virginia (1869) Solution |
Supreme court ruled insurance is not interstate commerce. (state won)
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2. Sherman Anti-trust Act |
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3. Southern Underwriting Association Decision (1944) Problem |
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3. Southern Underwriting Association Decision (1944) Solution |
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4. McCarron-Ferguson Act (1945) |
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5. ISO case (what did ISO comp. do) |
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5. ISO case problem |
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5. ISO case solution |
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6. Gramm-Leach-Bliley Act (1996) Also known as |
Financial Services Modernization Act |
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6. Gramm-Leach-Bliley Act (1996) problem (prior to act) |
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6. Gramm-Leach-Bliley Act (1996) Solution |
Allowed financial serve companies to compete in all three areas. |
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Changes and Mergers from act. |
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Gramm-Leach-Bliley Act caused Variable Annuities |
Annuities with investment in stock |
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Gramm-Leach-Bliley Act caused Variable Life Insurance |
Life insurance where mortality is partially financed by investment stock. |
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BAD GBL (Gramm-Leach-Bililey)
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Mortgage back securities
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Securiteization of mortgage risk |
They default. |
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Mortgage Companies and bankers |
bundle investment and sell as a security |
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Investors hedge their investment risk |
by purchasing credit default swaps. |
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Good GBL (Gramm-Leach-Bililey) |
Cat Bonds |
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What are Cat bonds |
Insurers issue debt to help finance Catastrophic losses |
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Cat bond risk linked Securities. |
secularization of cat bonds |
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What does the buyer of a cat bond do? |
Provides large upfront investments |
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Buyer of Cat bond Provides large upfront investments in return for |
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Insurers have the right to |
reduce or eliminate if cat. loss occurs |
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Cat bond uses random |
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Cat bond money is only paid out if... |
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Why do investors buy cat bonds? |
Higher interest than available form other bonds of similar default risk |
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Investors can use cat bonds to |
Diversify their investment portfolio because cat bond are not correlated with financial markets. |
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Cat bonds are particular helpful to |
Non-stock insurers like mutuals |
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Cat bond triggered- Indemnity |
exposure portfolio Tied to that insurers specific loss |
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Cat bond triggered- moderate loss |
exposure portfolio is moderate- result of model must exceed a certain threshold. |
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Cat bond triggered- Index |
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Cat bond triggered- parametic |
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