Financial examinations are conducted at least once every five years by:

Question

Options

• Ainsurance regulatory information department
• Bdomiciliary state insurance department
• CEvolution of insurance department
• DFinancial insurance strength department

• A
  5% (2)
• B
  79% (30)
• C
  13% (5)
• D
  3% (1)

Explanation

Option B is correct because, under insurance regulation frameworks (consistent with NAIC model laws), an insurer's domiciliary state - the state where the company is incorporated or chartered - holds primary regulatory authority and is responsible for conducting financial examinations at minimum once every five years to assess solvency and financial condition.

Why the distractors are wrong:

• A (insurance regulatory information department) - Not a real regulatory body; this may be confused with IRIS (Insurance Regulatory Information System), which is an NAIC analytical tool, not an examining authority.
• C (Evolution of insurance department) - This is a fabricated entity with no basis in insurance law or regulation.
• D (Financial insurance strength department) - Also fabricated; no such department exists in insurance regulatory structures.

Memory tip: Link "domiciliary" to "domicile" (home). The insurer's home state department watches over and examines its home company - just as a landlord inspects their own property, not a neighbor's.

No community discussion yet for this question.