State X's premium tax rate is 2 percent. State Y's premium tax rate is 3 percent. State X insurers are required to pay the 3 percent rate on business written in State Y.
State X requires insurers from State Y to pay a 3 percent premium tax on business written in State X, even though the premium tax rate is only 2 percent in State X. This practice is known as a
A) tax tariff.
B) guaranty fund assessment.
C) risk-based capital requirement.
D) retaliatory tax law.
Question 2
ABC Insurance Company would like to purchase a bank. For many years, ABC was not permitted under federal law to enter into banking operations.
Which of the following legislative acts eliminated the prohibition that prevented banks, insurers, and investment firms from entering into one another's markets?
A) The McCarran-Ferguson Act
B) The Tax Reform Act
C) The Consolidated Omnibus Budget Reconciliation Act
D) The Financial Modernization Act (Gramm-Leach-Bliley Act)
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