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Which one of the following is a part of the solvency core principle of exiting the market and receivership? Select one: A. The reported financial results are assessed through the financial examination process and a determination is made of the insurer's compliance with legal requirements. B. The regulatory authority takes preventative and corrective measures to reduce the impact of risks identified during on-site regulatory monitoring. C. Insurers are required to maintain reserves and capital at all times and in such forms so as to provide an adequate margin of safety. D. Solvency is defined and a receivership scheme established to ensure the payment of insured obligations of insolvent insurers subject to appropriate restrictions and limitations. - Correct Answers ✅D Benjamin has his home insured with Westfork Mutual under an HO-3 policy for $100,000. He is the named insured on the policy. There are three other residents of the home: Maria, Benjamin's mother; Daniel, his nephew; and Cian, a family friend. An accidental fire causes damage to the home and to personal property of all four occupants. Benjamin reports the loss to Westfork and Fatima, a claim representative, is assigned the claim.
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Which one of the following will most likely be Fatima's principal concern when analyzing coverage for the loss? Select one: A. Whether Maria's, Daniel's, and Cian's property would be covered B. Whether fire is a covered cause of loss under the H0-3 policy C. Whether the limit of insurance is sufficient to cover the damage D. Whether any policy exclusions preclude coverage for the loss - Correct Answers ✅A Premium auditor Ralph became concerned about an increase in hazard from the insured's chemical operations. In an audit Ralph discovered the plant had added a product that could greatly increase the products liability exposure. Due to the misclassification of the current loss exposures, the information discovered by Ralph is most useful to which one of the following insurer functions? A. Risk control B. Marketing and sales C. Claims D. Underwriting - Correct Answers ✅Underwriting
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believes that certain services his company performs could be marketed as a stand-alone product to businesses which are not policyholders. Which one of the following functional areas provides services that insurers often market as a stand-alone product? A. Customer service B. Risk control C. Actuarial D. Special investigation unit - Correct Answers ✅Risk control Allied Insurer has a $450,000 xs $150,000 per risk excess of loss reinsurance treaty with Omega Reinsurer. An insured with a limit of $1,000,000 sustains the following losses: Loss 1:$125,000Loss 2:$500,000Loss 3:$850, How much will Omega Reinsurer pay for Loss 3? - Correct Answers ✅450K Which one of the following is a way in which risk control activities can help insurers meet their profit goals? Select one: A. Eliminating premium audits B. Improving staff credibility
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C. Confirming rating values D. Providing an additional source of revenue - Correct Answers ✅D Which one of the following primary insurers would most likely use a catastrophe risk exchange as an alternative to traditional reinsurance? Select one: A. A primary insurer seeking access to a prearranged line of credit B. A primary insurer looking for coverage in the event of an industry-wide loss C. A primary insurer in need of additional capital to expand into a new market D. A primary insurer with a geographic concentration of loss exposures - Correct Answers ✅D Which one of the following statements is correct regarding rate regulation? Select one: A. Rates should be high enough to pay all claims and expenses related to those rates. B. Rate regulation guarantees that insurance rates are adequate.
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A. Josephine's PAP is primary on non-owned vehicles. B. Josephine's PAP provides no coverage on non-owned vehicles. C. Josephine's PAP is excess over Horace's PAP. D. Josephine's PAP and Horace's PAP will share the loss. - Correct Answers ✅C Which one of the following insurance customers would fit in the middle market group? Select one: A. A nail salon with six employees in a rented location B. A family of five individuals that owns a house and two cars C. A one-location furniture manufacturer with a risk manager on staff D. A pharmaceutical company with manufacturing operations throughout the United States and Canada - Correct Answers ✅C Risk control can assist premium auditing by Select one: A. Reporting the existence of new operations. B. Designing product recall procedures. C. Providing laboratory analyses.
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D. Developing safety management programs. - Correct Answers ✅A Bill is an insurance producer for ABC Insurance Company (ABC). He represents only ABC when marketing insurance products. ABC compensates Bill primarily through salary, and he has no ownership rights to policy expirations. Bill is a producer in the Select one: A. Captive agency marketing system. B. Exclusive agency marketing system. C. Independent agency marketing system. D. Direct writer marketing system. - Correct Answers ✅D Which one of the following statements is true regarding claim department contacts? Select one: A. Insurer claim departments perform market conduct investigations as part of their normal activities. B. Uniform legislation exists for licensing of insurance claim adjusters. C. Consumer complaints are investigated by the state insurance departments.
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A. Covers policies with amounts of insurance less than the line. B. Is typically used only with property insurance. C. Requires primary insurers to share loss exposures that they could safely retain. D. Is designed to split losses according to a set percentage. - Correct Answers ✅B Workers compensation insurance benefits are established by statute. If legislation or a court decision changes these benefits, past losses must be adjusted to Select one: A. Mandatory minimum benefit requirements. B. Current benefit levels. C. A state specific percentage of benefits level. D. Current inflation levels. - Correct Answers ✅B Which one of the following statements is correct? Select one: A. Underwriting managers usually supervise ratemaking activities. B. An actuary is a person who puts a price on risk. C. Every insurance company employs one or more staff actuaries.
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D. Insurers rarely use the services of outside actuarial consultants.
- Correct Answers ✅B All states attempt to ensure that continuous auto insurance coverage is available to consumers by Select one: A. Mandating affordable rates for auto insurance premiums. B. Educating politicians and lawmakers to create an awareness that insurance is a personal need rather than a disposable commodity. C. Restricting the rights of insurers to cancel or nonrenew personal auto insurance policies. D. Suggesting policyholders carry minimum amounts of insurance coverage. - Correct Answers ✅C Insurance pools operate either as a syndicate or through Select one: A. Stock insurers. B. Reinsurance. C. Surplus lines insurers. D. Reciprocal insurers. - Correct Answers ✅B
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premium at a realistic level provides additional cash at policy inception and Select one: A. Stabilizes policyholder surplus. B. Prevents any later collection problems. C. Improves underwriting capacity significantly. D. Reduces the need for reinsurance. - Correct Answers ✅B Trending practices vary by type of insurance. Trending may be based on experience or external indices. Which one of the following statements regarding trending is accurate? Select one: A. Due to the statutory benefits, trending is not applied to workers compensation losses. B. For most types of insurance, trending is applied to premium, losses, and risk control expenses. C. For liability insurance, separate trending of claim severity and claim frequency is common. D. For property insurance, trending usually is restricted to claim frequency. - Correct Answers ✅C
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A key characteristic that distinguishes finite risk reinsurance from other types of reinsurance is that finite risk reinsurance Select one: A. Transfers a limited amount of risk to the reinsurer. B. Includes a profit-sharing commission in addition to a flat ceding commission. C. Applies above a finite dollar amount or line. D. Places a finite limit on each occurrence. - Correct Answers ✅A
