Hawaii Insurance License Practice Exam

How often must the Insurance Commissioner examine an insurer?

1. Every year

2. Every 5 years

3. Every 10 years

4. Every 3 years

The correct answer is: Every 5 years

The appropriate frequency for the Insurance Commissioner to examine an insurer is generally every five years, as stated in many state regulations, including those applicable in Hawaii. This period allows for a thorough evaluation of the insurer's operations, financial stability, compliance with regulations, and overall performance in the market. Such examinations are crucial for maintaining the integrity of the insurance industry and ensuring that policyholders are protected. Conducting examinations too frequently, such as annually, could burden both the regulatory body and the insurers with excessive demands on resources and time without yielding significantly more beneficial insights. Conversely, if examinations were spaced out too widely, such as every ten years, there might be insufficient oversight to detect and rectify any issues that could endanger policyholder interests or the financial stability of the insurer. Therefore, a five-year cycle strikes a balance between adequate oversight and efficiency in regulatory processes.