PSI Life Exam Practice Test

What authority does the insurance commissioner possess regarding compliance issues?

1. Can ignore compliance violations

2. Can issue compliance orders

3. Can only suggest compliance practices

4. Has no power related to compliance

The correct answer is: Can issue compliance orders

The insurance commissioner holds the authority to issue compliance orders, which is a crucial mechanism for ensuring that insurance companies adhere to established laws and regulations. This power is integral to the commissioner’s role in maintaining the integrity of the insurance market and protecting consumers. By issuing compliance orders, the commissioner can mandate that a company take specific actions to rectify violations or to align its operations with legal requirements. This authority allows the commissioner to enforce regulations effectively, ensuring accountability among insurers. Such orders help maintain a fair playing field and protect policyholders by ensuring that companies operate in accordance with the law. The other options reflect misunderstandings of the commissioner's role. Ignoring compliance violations would undermine regulatory authority. Simply suggesting compliance practices does not carry the weight necessary to enforce accountability. Finally, having no power related to compliance would contradict the fundamental purpose of the commissioner's office, which is to oversee and regulate the insurance industry to ensure compliance with laws designed to protect consumers.