Kentucky Health Insurance Practice Exam

The total assessments upon a member insurer cannot exceed what percent of the insurer's premium in the preceding year?

1. 2%

2. 12%

3. 5%

4. 20%

The correct answer is: 2%

The total assessments upon a member insurer must not exceed 2% of the insurer's premium in the preceding year. This limit is established to ensure that member insurers contribute a reasonable amount towards any financial assessments used for covering costs related to losses or insolvencies within the insurance market. Setting a cap at 2% helps maintain a balance that protects insurers from excessive financial burdens, ensuring that they can remain solvent and continue to operate effectively. This regulation also serves to promote stability within the insurance industry by mitigating the risk of significant financial strain that could arise from heightened assessments. Thus, the adherence to this percentage reflects an emphasis on the financial health and sustainability of insurers while also protecting consumers' interests in maintaining a reliable insurance environment.