Montana State Life Insurance Practice Exam

How often does the Commissioner perform an examination of an insurer?

1. Every year

2. Once every 5 years

3. Once every 10 years

4. Every 2 years

The correct answer is: Once every 5 years

The Commissioner conducting an examination of an insurer once every five years aligns with standard regulatory practices. These examinations are crucial for ensuring that insurance companies comply with state laws and maintain adequate financial practices to protect policyholders. The five-year timeframe allows for a thorough review of an insurer's financial condition, operations, and compliance with regulations without overwhelming both the regulators and the insurers. This balance helps ensure that insurers remain solvent and capable of fulfilling their obligations to policyholders while also providing regulatory oversight that is consistent and manageable. Reliance on a five-year cycle reflects a structured approach to regulation that acknowledges both the necessity of oversight and the operational realities of the insurance industry.