Montana State Life Insurance Practice Exam

What might lead the Commissioner to initiate an investigation?

1. The request of an individual policyholder

2. Reason to believe insurance fraud is being committed

3. The complaint of an agent

4. The resignation of a company executive

The correct answer is: Reason to believe insurance fraud is being committed

The initiation of an investigation by the Commissioner is often prompted by a reasonable belief that insurance fraud is being committed. Insurance fraud undermines the integrity of the insurance system and can lead to substantial financial losses for both insurers and consumers. If there are indicators or evidence suggesting that fraudulent activities are occurring, it is the Commissioner's responsibility to protect the interests of the public and the insurance market by launching an investigation. This approach ensures that any illegal activities are addressed promptly to maintain trust in the insurance industry. While individual policyholder requests, complaints from agents, or the resignation of a company executive may raise concerns that warrant attention, they do not inherently provide sufficient grounds for an investigation unless they are linked to suspicions of fraud or other illegal activities. The proactive stance against suspected fraud reflects the regulatory standards upheld by the Commissioner, emphasizing accountability and ethical conduct within the insurance sector.