Insurance Company Organization and Regulation

Which of the following is always a correct statement about an insurance company organized as a stock company? Page 24

All of the following are characteristics of mutual insurance companies except: Page 24

Reciprocate, as in a reciprocal insurance company, means: Page 24

Which of the following manages an insurance company organized as a reciprocal? Page 24

All of the following are correct statements about Lloyd’s associations except: Page 24

All of the following are correct statements about fraternal benefit societies as insuring organizations except: Page 24

Which of the following best describes the purpose of risk retention groups? Page 25

When part or all of a risk of loss is borne without the benefit of insurance coverage, which of the following has taken place? Page 25

Insurance coverage that is not ordinarily available from private insurers is sometimes called: Page 25

Which of the following is not provided by the federal government? Page 25

All of the following are correct statements about insurance provided at the state level except: Page 25

Which of the following is not one of the four broad categories or lines of insurance? Page 26

A multi-line insurance company: Page 26

Risks that will suffer financial loss because something owned is damaged or destroyed is covered by: Page 26

Which of the following best describes liability risk? Page 26

What is the primary difference between personal and commercial lines of property/casualty coverage? Page 27

All of the following are duties of an insurance agent except: Page 28

Insurance agent Inez signs each new policy prepared by her company before its delivery to an insured. Which of the following best describes this action? Page 28

When seeking acceptable business for an insurer, who is responsible for field underwriting each risk? Page 28

Agent Aaron wants to protect himself against legal liability arising from making unintentional errors or omissions in his practice. Which of the following should Aaron purchase? Page 29

When an agent is authorized to act on behalf of his or her principal, which of the following relationships exists? Page 30

When an agent acts under the powers granted by the principal, which of the following is correct? Page 30

Which of the following types of authority is specifically given to an agent, in writing, by the principal? Page 30

Which of the following best describes implied authority? Page 30

Which of the following best describes apparent authority? Page 30

Which are the four basic distribution systems used to market insurance? Page 30

Another term for exclusive agency is: Page 31

Which of the following insurance distribution systems has no agents? Page 31

An agent who represents more than one company is called a(n): Page 31

In the insurance business, how does a solicitor differ from an agent? Page 31

Highly specialized lines of insurance are referred to as: Page 31

Which of the following is a general term used to describe anyone who sells insurance? Page 32

Which of the following statements best describes the work performed by insurance consultants and the way in which they are compensated? Page 32

All of the following are correct statements about loss ratio except: Page 32

The premium that an insurance company actually earns by providing insurance protection for a designated period of time is termed: Page 33

Which of the following best describes the insurance underwriting process? Page 33

The person in the policy issue process who computes the premium to be charged to a new insurance applicant is called the: Page 33

Which of the following departments is responsible for seeing that an insurance company’s insureds are adequately indemnified for their losses? Page 33

Which of the following departments in an insurance company determines the rates to be charged for various types of insurance? Page 33

An insurance company’s purchase of insurance to cover its own exposure to loss is called: Page 34

All of the following are correct statements about the National Association of Insurance Commissioners except: Page 36

Which of the following best describes the difference between admitted and nonadmitted insurance companies? Page 36

Which of the following represents the three types of insurance companies formed as corporations? Page 36

Which of the following is a correct statement about the financial health of insurance companies? Page 37

When may a person begin to sell insurance? Page 38

Which of the following terms represents a person holding a special relationship of trust to another? Page 39

Falsely advertising the terms or benefits of a policy is termed: Page 39

Agent Jones convinces a client to cancel a current policy and purchase another, and this purchase is to the insured’s detriment. Which of the following illegal practices has taken place? Page 39

Offering a benefit other than those specified in an insurance policy is the illegal act of: Page 39

State approval of policy forms, endorsements, and rates used by insurers doing business in the state is known as: Page 39

In which of the following states may a company begin using forms and rates as soon as they have been filed? Page 40

In order for insurance rates to be approved by a state, the rates must meet all of the following requirements except: Page 40

Insurance rates must be adequate to pay all of the following except: Page 40