Difference between revisions of "Porter.3-Roles-Fed"
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| + | Porter Chapter 3, ''Federal and Other Influences on Insurance Regulation'', covers several historical court decisions and Acts of Congress that have influenced the federal role. | ||
| + | |||
[https://www.battleacts6us.ca/vanillaforum6us/categories/porter-3-roles-fed<span style="font-size: 12px; background-color: lightgrey; border: solid; border-width: 1px; border-radius: 10px; padding: 2px 10px 2px 10px; margin: 0px;">'''Forum'''</span>] | [https://www.battleacts6us.ca/vanillaforum6us/categories/porter-3-roles-fed<span style="font-size: 12px; background-color: lightgrey; border: solid; border-width: 1px; border-radius: 10px; padding: 2px 10px 2px 10px; margin: 0px;">'''Forum'''</span>] | ||
| − | == | + | ==Study Tips== |
| + | |||
| + | Porter Chapter 3 is an example of syllabus material where your best bet is to take a leap of faith and recognize the following: | ||
| + | |||
| + | * historically this chapter has appeared on 1 exam out of 5 ''(frequency = 20%)'' | ||
| + | * historically this chapter has accounted for roughly 1 point when it appears on an exam ''(severity = 1.0 / 70.0 pts = 1.4%)'' | ||
| + | |||
| + | That means if you skipped this chapter entirely, the '''overall impact''' on you score would be roughly 20% x 1.4% = 0.3%. This equates to about 0.25 pts on the exam. Now, one-quarter of a point could mean the difference between passing and failing, but the real issue is the '''opportunity cost'''. If you spend more time here, you have to spend less time elsewhere. Is there an '''opportunity''' to spend that time in a more valuable way studying or reviewing something else? That's a matter of judgment. | ||
| + | |||
| + | Alice's advice is that instead of studying the whole of chapter 3 in Porter, just memorize these 2 things: | ||
| + | |||
| + | * characteristics of the 'business of insurance' | ||
| + | * exceptions to the McCarran-Ferguson Act | ||
| + | |||
| + | This will take you 10 minutes and <u>is</u> a good use of your time because if a question on this chapter shows up on the exam, it will almost certainly be one of those two. | ||
| + | '''Alice's Fun Fact''': ''This study tip is almost as long as the actual content of this wiki article. :-)'' | ||
==BattleTable== | ==BattleTable== | ||
| Line 8: | Line 25: | ||
Based on past exams, the '''main things''' you need to know ''(in rough order of importance)'' are: | Based on past exams, the '''main things''' you need to know ''(in rough order of importance)'' are: | ||
| − | * | + | * characteristics of the <span style="color: green;">'''business of insurance'''</span> |
| − | * | + | * exceptions to the <span style="color: blue;">'''McCarran-Ferguson Act'''</span> |
| − | : {| class="wikitable" style="width: | + | : {| class="wikitable" style="width: 1050px;" |
|- | |- | ||
| − | ! style="width: 175px;" | reference !! part (a) !! part (b) !! part (c) !! part (d) | + | ! style="width: 175px;" | reference !! style="width: 175px;" | part (a) !! style="width: 175px;" | part (b) !! style="width: 175px;" | part (c) !! style="width: 175px;" | part (d) !! parts (e) & (f) |
|- | |- | ||
| [https://www.battleacts6us.ca/pdf/Exam_(2017_2-Fall)/(2017_2-Fall)_(04).pdf <span style='font-size: 12px; background-color: yellow; border: solid; border-width: 1px; border-radius: 5px; padding: 2px 5px 2px 5px; margin: 5px;'>E</span>] <span style="color: red;">'''(2017.Fall #4)'''</span> | | [https://www.battleacts6us.ca/pdf/Exam_(2017_2-Fall)/(2017_2-Fall)_(04).pdf <span style='font-size: 12px; background-color: yellow; border: solid; border-width: 1px; border-radius: 5px; padding: 2px 5px 2px 5px; margin: 5px;'>E</span>] <span style="color: red;">'''(2017.Fall #4)'''</span> | ||
| − | || | + | || <span style="color: green;">'''business of insurance:'''</span> <br> - characteristics |
| − | || | + | || '''SEUA decision''': <span style="color: red;">'''<sup>1</sup>'''</span> <br> - rationale for decision |
| − | || | + | || <span style="color: blue;">'''McCarran-Ferguson Act:'''</span> <br> - exceptions |
| − | || | + | || '''rate regulation''': <br> - regulator difficulties <span style="color: red;">'''<sup>2</sup>'''</span> |
| + | || ''[[Baribeau.Regs]] | ||
|- | |- | ||
| [https://www.battleacts6us.ca/pdf/Exam_(2016_1-Spring)/(2016_1-Spring)_(06).pdf <span style='font-size: 12px; background-color: yellow; border: solid; border-width: 1px; border-radius: 5px; padding: 2px 5px 2px 5px; margin: 5px;'>E</span>] <span style="color: red;">'''(2016.Spring #6)'''</span> | | [https://www.battleacts6us.ca/pdf/Exam_(2016_1-Spring)/(2016_1-Spring)_(06).pdf <span style='font-size: 12px; background-color: yellow; border: solid; border-width: 1px; border-radius: 5px; padding: 2px 5px 2px 5px; margin: 5px;'>E</span>] <span style="color: red;">'''(2016.Spring #6)'''</span> | ||
| − | || | + | || <span style="color: blue;">'''McCarran-Ferguson Act:'''</span> <br> - exceptions |
| − | || | + | || <span style="color: green;">'''business of insurance:'''</span> <br> - characteristics |
| − | || | + | || '''FIO''': <br> - Act that created it <span style="color: red;">'''<sup>1</sup>'''</span> |
| − | || | + | || ''[[Baribeau.Regs]]'' |
| + | | style="background-color: lightgrey;" | | ||
|} | |} | ||
| + | |||
| + | : <span style="color: red;">'''<sup>1</sup>'''</span> These questions really belong in ''[[Porter.2-Devlpt]]'' but Alice couldn't be bothered moving them. ''(Blame Alice!)'' | ||
| + | : <span style="color: red;">'''<sup>2</sup>'''</span> This is general knowledge that you would already have from Exam 5 on ratemaking & reserving. | ||
| + | |||
[https://www.battleacts6us.ca/FC.php?selectString=**&filter=both&sortOrder=natural&colorFlag=allFlag&colorStatus=allStatus&priority=importance-high&subsetFlag=miniQuiz&prefix=Porter&suffix=3-Roles-Fed§ion=all&subSection=all&examRep=all&examYear=all&examTerm=all&quizNum=all<span style="font-size: 20px; background-color: lightgreen; border: solid; border-width: 1px; border-radius: 10px; padding: 2px 10px 2px 10px; margin: 10px;">'''Full BattleQuiz]'''</span> <span style="color: red;">'''You must be <u>logged in</u> or this will not work.'''</span> | [https://www.battleacts6us.ca/FC.php?selectString=**&filter=both&sortOrder=natural&colorFlag=allFlag&colorStatus=allStatus&priority=importance-high&subsetFlag=miniQuiz&prefix=Porter&suffix=3-Roles-Fed§ion=all&subSection=all&examRep=all&examYear=all&examTerm=all&quizNum=all<span style="font-size: 20px; background-color: lightgreen; border: solid; border-width: 1px; border-radius: 10px; padding: 2px 10px 2px 10px; margin: 10px;">'''Full BattleQuiz]'''</span> <span style="color: red;">'''You must be <u>logged in</u> or this will not work.'''</span> | ||
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==In Plain English!== | ==In Plain English!== | ||
| − | + | When we talk about whether insurance should be regulated at the federal or state level, we assume we know the meaning of the term ''insurance''. Common forms of insurance are auto policies and product warranties, but what makes these "insurance" and other things "not insurance". | |
| + | |||
| + | :{| class='wikitable' | ||
| + | |- | ||
| + | | '''Question''': identify characteristics of the <u>business of insurance</u> | ||
| + | |} | ||
| + | :* SPECIFIC to insurance industry | ||
| + | :* SPREADING of risk ''(or transfer of risk)'' | ||
| + | :* CONTRACT between insurer & insured | ||
| + | These characteristics arose from the legal case ''Group Life & Health Co v Royal Drug (1979)'', and I found a surprisingly easy to understand summary of that case [https://supreme.justia.com/cases/federal/us/440/205/ here]. Basically the original court ruling said that ''state'' rather than ''federal'' regulation applied because the case involved the ''business of insurance''. The case was then decided on the basis of ''state regulation'', noting that the federal Sherman Antitrust Act ''wouldn't'' apply. The Court of Appeals overturned the ruling on the basis that the case <u>did not</u> involve the ''business of insurance'' and that the Sherman Act <u>did</u> apply. | ||
| − | + | This dovetails nicely into the other important topic from this chapter: | |
| − | + | :{| class='wikitable' | |
| + | |- | ||
| + | | '''Question''': identify exceptions to the ''[[Porter.2-Devlpt#1945:_McCarran-Ferguson_Act | McCarran-Ferguson Act]]'' | ||
| + | |} | ||
| + | :* FEDERAL govt may regulate insurance if | ||
| + | :: - states are NOT regulating insurance | ||
| + | :: - Sherman Act applies (boycott, intimidation by insurer) | ||
| + | :: - if Congress passes an applicable law (supersedes state law) | ||
| − | + | To finish this chapter, here are a few other examples of federal regulation: | |
| + | : '''1933''': Securities Act ''(disclosure & reporting requirements for publicly tranded companies, see also the wikipedia article [https://en.wikipedia.org/wiki/Securities_Act_of_1933 Securities Act of 1933])'' | ||
| + | : '''1968''': National Flood Insurance Act ''(discussed further in the wiki article [[Horn.Flood]] in the subsection [[Horn.Flood#Intro | Intro to NFIP]])'' | ||
| + | : '''1981''': Risk Retention Act ''(discussed further in the wiki article [[GAO.Report]] in the subsection [[GAO.Report#Intro_to_RRGs | Intro to Risk Retention Groups]])'' | ||
| − | + | [https://www.battleacts6us.ca/FC.php?selectString=**&filter=both&sortOrder=natural&colorFlag=allFlag&colorStatus=allStatus&priority=importance-high&subsetFlag=miniQuiz&prefix=Porter&suffix=3-Fed-Roles§ion=all&subSection=all&examRep=all&examYear=all&examTerm=all&quizNum=1<span style="font-size: 20px; background-color: aqua; border: solid; border-width: 1px; border-radius: 10px; padding: 2px 10px 2px 10px; margin: 10px;">'''mini BattleQuiz 1]'''</span> <span style="color: red;">'''You must be <u>logged in</u> or this will not work.'''</span> | |
| − | == | + | [https://www.battleacts6us.ca/FC.php?selectString=**&filter=both&sortOrder=natural&colorFlag=allFlag&colorStatus=allStatus&priority=importance-high&subsetFlag=miniQuiz&prefix=Porter&suffix=3-Roles-Fed§ion=all&subSection=all&examRep=all&examYear=all&examTerm=all&quizNum=all<span style="font-size: 20px; background-color: lightgreen; border: solid; border-width: 1px; border-radius: 10px; padding: 2px 10px 2px 10px; margin: 10px;">'''Full BattleQuiz]'''</span> <span style="color: red;">'''You must be <u>logged in</u> or this will not work.'''</span> |
Revision as of 20:22, 24 March 2019
Porter Chapter 3, Federal and Other Influences on Insurance Regulation, covers several historical court decisions and Acts of Congress that have influenced the federal role.
Study Tips
Porter Chapter 3 is an example of syllabus material where your best bet is to take a leap of faith and recognize the following:
- historically this chapter has appeared on 1 exam out of 5 (frequency = 20%)
- historically this chapter has accounted for roughly 1 point when it appears on an exam (severity = 1.0 / 70.0 pts = 1.4%)
That means if you skipped this chapter entirely, the overall impact on you score would be roughly 20% x 1.4% = 0.3%. This equates to about 0.25 pts on the exam. Now, one-quarter of a point could mean the difference between passing and failing, but the real issue is the opportunity cost. If you spend more time here, you have to spend less time elsewhere. Is there an opportunity to spend that time in a more valuable way studying or reviewing something else? That's a matter of judgment.
Alice's advice is that instead of studying the whole of chapter 3 in Porter, just memorize these 2 things:
- characteristics of the 'business of insurance'
- exceptions to the McCarran-Ferguson Act
This will take you 10 minutes and is a good use of your time because if a question on this chapter shows up on the exam, it will almost certainly be one of those two.
Alice's Fun Fact: This study tip is almost as long as the actual content of this wiki article. :-)
BattleTable
Based on past exams, the main things you need to know (in rough order of importance) are:
- characteristics of the business of insurance
- exceptions to the McCarran-Ferguson Act
reference part (a) part (b) part (c) part (d) parts (e) & (f) E (2017.Fall #4) business of insurance:
- characteristicsSEUA decision: 1
- rationale for decisionMcCarran-Ferguson Act:
- exceptionsrate regulation:
- regulator difficulties 2Baribeau.Regs E (2016.Spring #6) McCarran-Ferguson Act:
- exceptionsbusiness of insurance:
- characteristicsFIO:
- Act that created it 1Baribeau.Regs
- 1 These questions really belong in Porter.2-Devlpt but Alice couldn't be bothered moving them. (Blame Alice!)
- 2 This is general knowledge that you would already have from Exam 5 on ratemaking & reserving.
Full BattleQuiz You must be logged in or this will not work.
In Plain English!
When we talk about whether insurance should be regulated at the federal or state level, we assume we know the meaning of the term insurance. Common forms of insurance are auto policies and product warranties, but what makes these "insurance" and other things "not insurance".
Question: identify characteristics of the business of insurance
- SPECIFIC to insurance industry
- SPREADING of risk (or transfer of risk)
- CONTRACT between insurer & insured
These characteristics arose from the legal case Group Life & Health Co v Royal Drug (1979), and I found a surprisingly easy to understand summary of that case here. Basically the original court ruling said that state rather than federal regulation applied because the case involved the business of insurance. The case was then decided on the basis of state regulation, noting that the federal Sherman Antitrust Act wouldn't apply. The Court of Appeals overturned the ruling on the basis that the case did not involve the business of insurance and that the Sherman Act did apply.
This dovetails nicely into the other important topic from this chapter:
Question: identify exceptions to the McCarran-Ferguson Act
- FEDERAL govt may regulate insurance if
- - states are NOT regulating insurance
- - Sherman Act applies (boycott, intimidation by insurer)
- - if Congress passes an applicable law (supersedes state law)
To finish this chapter, here are a few other examples of federal regulation:
- 1933: Securities Act (disclosure & reporting requirements for publicly tranded companies, see also the wikipedia article Securities Act of 1933)
- 1968: National Flood Insurance Act (discussed further in the wiki article Horn.Flood in the subsection Intro to NFIP)
- 1981: Risk Retention Act (discussed further in the wiki article GAO.Report in the subsection Intro to Risk Retention Groups)
mini BattleQuiz 1 You must be logged in or this will not work.
Full BattleQuiz You must be logged in or this will not work.
