22. (4 points) (a) (1 point) State two benefits of a… 22. (4 points) (a) (1 point) State two benefits of a Pay-As-You-Drive system of insurance. (b) (1 point) Describe two ways a Pay-How-You-Drive system of insurance can be useful to either policyholders or insurance companies, other than providing more refined insurance pricing. (c) (1 point) Explain how anti-selection can occur when the introduction of a usagebased insurance (UBI) telematics program is optional in a jurisdiction. (d) (1 point) Explain how premiums will be affected for UBI telematics policies as well as for non-UBI telematics policies when there is anti-selection.  20. (5 points) General insurance companies can be sued by policyholders for acts of bad faith. (a) (0.5 points) Define the term bad faith in a tort context. (b) (0.5 points) Provide an example of a situation in which a general insurer can be alleged to have acted in bad faith. (c) (0.5 points) Identify two defenses to suits alleging bad faith. (d) (1.5 points) Compare the treatment of bad faith claims against insurers in the U.S. court system with their treatment in the Canadian court system with respect to punitive damages. (e) (0.5 points) Identify a type of tort reform that should lessen the financial impact on U.S. insurers found responsible for acting in bad faith. (f) (1.5 points) Explain how the type of tort reform you identified in part (e) would lessen the financial impact on insurers found responsible for acting in bad faith. Use an actual state-enacted tort reform law as the basis for the explanation.   17. (4 points) (a) (1.5 points) Identify three assets that are classified as non-admitted assets in statutory accounting and for each of the three assets identified explain why statutory accounting treats them as non-admitted. Insurers have the option of using one of two methods for the recording of some nonadmitted assets in statutory accounting. One method is to set up the asset in the balance sheet but classify the asset as non-admitted with a direct charge to surplus. (b) (0.5 points) Describe the other method. (c) (0.5 points) Explain why an increase in non-admitted assets decreases statutory surplus. (d) (0.5 points) Identify two direct charges (or credits) to statutory surplus, other than the change in non-admitted assets. (e) (0.5 points) Describe the relationship between invested capital and statutory surplus for a general insurance company. (f) (0.5 points) Describe the accounting treatment of policyholder dividends in statutory accounting with respect to their recognition as a liability and when they are recognized in the statement of income. 15. (5 points) The first essential element of negligence is a legal duty of care owed by a defendant to a plaintiff. (a) (1 point) Identify the three other essential elements of negligence. (b) (1 point) Provide an example of a situation where three of the four essential elements are present, but the fourth is not. Legal duties of care are created by statutes, contracts and common law. (c) (1 point) Contrast the role of a judge in a common law system with the role of a judge in a civil law system. A motorist runs a red light and collides with a truck carrying gasoline. The resulting explosion seriously injures the motorist and the truck driver. Gasoline runs off into a nearby river. (d) (1 point) Evaluate the liability of the motorist and the truck owner. Negligence is the term used for unintentional torts. All other torts are intentional. (e) (1 point) Provide two examples of intentional torts.  14. (5 points) (a) (1 point) Identify two reasons for government involvement in the provision of workers compensation insurance. State governments in the U.S. and provincial governments in Canada have a role in the provision of workers compensation. (b) (1 point) Compare the roles of U.S. state governments with those of Canadian provincial governments in the provision of workers compensation. (c) (0.5 points) Identify the primary reason why the National Flood Insurance Program (NFIP) was created in 1968. (d) (0.5 points) Identify one purpose of the NFIP, other than providing flood insurance. (e) (1 point) Describe two key differences between private-sector insurance and the NFIP. The Biggert-Waters Flood Insurance Reform Act of 2012 made changes to the NFIP that may improve its financial position. (f) (1 point) Explain two of these change 1. (10 points) A U.S. employer just hired you to expand its business across Canada. The key decision makers will reside in the U.S. and do not have Canadian expertise in the delivery of government benefits and the requirements for private group insurance plans. (a) (1 point) Describe the criteria provincial Medicare plans must meet with respect to the Canada Health Act. (b) (2 points) (i) Describe approaches used by different Canadian provinces to fund government sponsored medical benefits. (ii) For each approach, identify a province to which it applies. (c) (1 point) List and compare medical services typically provided for middle income active employees through government benefit plans in Canada and in the U.S. (d) (3 points) Describe the interaction between provincial Medicare plans and private insurance plans including potential concerns regarding Medicare if the private health provider market expands. (e) (3 points) (i) Describe policy provisions typically included in a private group health insurance plan in Canada. (ii) Explain why they are needed. 9. (8 points) At the annual family barbeque, your uncle, knowing your expertise as an actuary, corners you to discuss the latest alternative arrangements for medical insurance for his employees. Hoping for a spot in his will, you gladly comply. (a) (3 points) Describe the managed care continuum and the makeup of existing plans from low to high. (b) (2 points) Between puffs from his cigar, your uncle expresses interest in hearing more about ACOs. (i) Describe an ACO. (ii) Describe the structural requirements of an ACO. (c) (3 points) Your uncle has heard about Patient-Centered Medical Homes (PCMH) from a business associate but doesn’t fully understand how they work. (i) List the key characteristics of PCMHs. (ii) Explain the similarities and differences to HMOs.  Business BUS 172 Share (0)

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