State RegulationsPA specificDifficulty 2/5
During a departmental financial examination, an insurer's officer objects, arguing that the Pennsylvania Insurance Department may examine the company's books only after obtaining a court order. What is wrong with that objection?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
40 P.S. § 72 and 40 P.S. § 112 give the Insurance Commissioner direct statutory authority to examine an insurer's books, records, accounts, and affairs to determine its financial condition. The examination power of the Pennsylvania Insurance Department is self-executing: it does not depend on a prior court order or on a finding of impairment. Requiring judicial pre-approval would defeat the statute's purpose of early financial surveillance.
Why the other options are wrong
- A) The examination power exists precisely to detect trouble early; it is not confined to insurers already declared impaired.
- B) Outside accountants may assist, but the examining authority rests with the Pennsylvania Insurance Department under 40 P.S. § 72.
- C) The objection misstates the law; the solvency statutes confer direct examination authority on the Commissioner without a court order.
Memory hook
The Commissioner's examiners come by statutory right — no court paper needed first.