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NEW QUESTION: 1
The Health Maintenance Organization (HMO) Model Act, developed by the National Association of Insurance Commissioners (NAIC), represents one approach to developing solvency standards. One drawback to this type of solvency regulation is that it
A. Assumes that the amount of premiums an HMO charges always directly corresponds to the level of the risk that the HMO faces
B. Fails to adjust the solvency requirement to account for the size of an HMO's premiums and expenditures
C. Fails to mandate a minimum level of capital and surplus that an HMO must maintain
D. Uses estimates of future expenditures and premium income to estimate future risk
Answer: A

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