Property and Casualty Insurance Practice Exam

What does the process of file and use indicate about an insurance company's practices?

1. They can wait for approval to use drafted forms

2. They can begin using forms once they are filed

3. They must check for adequacy before any promotions

4. They do not need to file any forms at all

The correct answer is: They can begin using forms once they are filed

The process of file and use allows an insurance company to use forms immediately upon filing them with the appropriate regulatory authority, rather than waiting for explicit approval. This approach essentially streamlines the process for insurance companies, as they can promptly implement their forms and rate changes without having to endure a lengthy review period. This method is particularly beneficial for insurers as it facilitates quicker responses to market changes and customer needs, ensuring that they remain competitive. In contrast, other options suggest either delaying the use of forms until approval is received, requiring checks on adequacy before promotions, or not filing forms at all, none of which align with the fundamental principle of the file and use process.