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Concepts Exam Questions And Answers
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Actuarial Department - correct answer ✅Responsible for gathering and interpreting data for determining rates charged to the insurance buying public. Actuaries determine the probability of losses, which are key in determine premium rates. Admitted Insurer - correct answer ✅Insurers that have applied for authority and have been authorized by the State's Commissioner of Insurance to conduct operations and write business in the state. Adverse Selection - correct answer ✅A concept where people in a geographical area who are more susceptible to having losses are the primary people that seek to purchase insurance to cover those losses. Affinity Marketing - correct answer ✅The insurer utilizes an affiliation with specific demographic or occupational groups, such as educators to market and sell its products and services. Aleatory Contract - correct answer ✅A contract where there is an unequal exchange of value.
Concepts Exam Questions And Answers
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Alien Insurer - correct answer ✅An insurer founded in a country outside of the U.S., whether or not it is authorized to do business in a particular state. Apparent Authority - correct answer ✅Authority that is created when an agent exceeds his/her express authority. Avoidance - correct answer ✅Risk management technique where risk is eliminated by avoiding the activity that may cause a loss. Bilateral Contract - correct answer ✅A contract where both parties make a promise to perform a duty or act. There is a breach of contract if either party fails to perform. Binder - correct answer ✅A temporary insurance contract that provides proof that a policy of insurance has been purchased. It serves as a temporary policy until the formal policy has been issued. Claims Department - correct answer ✅Responsible for adjusting claims for policyholders and third-party claimants in the event of a covered loss.
Concepts Exam Questions And Answers
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The insurer specifically utilizes direct mail, newspapers, radio, television and internet advertising to market its products and services to consumers. Domestic Insurer - correct answer ✅An insurer that is founded under the laws of the state it operates in, whether or not it is authorized to do business in that state. Estoppel - correct answer ✅A legal principle that bars a party from denying or alleging a certain fact owing to that party's previous conduct, allegation, or denial. Exclusive Agency - correct answer ✅An agency that represents one company or a group of companies under the same ownership. The insurer owns the rights to the polices and expirations written or obtained by the agent. The agent most often is an independent contractor, but can be an employee of the insurer. The agent may be paid by commission, bonuses or salary, if an employee. Executive Department - correct answer ✅Responsible for leading and managing the operation of the insurance business. The Executive Department sets the vision and direction of the company.
Concepts Exam Questions And Answers
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Express Authority - correct answer ✅Authority that is written, via contract, and gives the agent or producer binding authority. Binding authority allows the agent or producer to transact and approve insurance business on behalf of the insurance company. Facultative agreements - correct answer ✅A reinsurance agreement where the reinsurer and primary or ceding company negotiate coverage for individual or specific risks. Fair Credit Reporting Act (FCRA) - correct answer ✅Protects consumer privacy by ensuring that any data collected by an insurer remains confidential, is accurate and relevant, and is used for a proper and specific purpose. File and Use - correct answer ✅Insurer develops rates and files them with the Department of Insurance. Rates may be used as soon as they are filed. Foreign Insurer - correct answer ✅An insurer that is not founded under the laws of the state it operates in, but is organized in other states within the U.S., whether or not it is authorized to do business in that state.
Concepts Exam Questions And Answers
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Implied Authority - correct answer ✅Authority that the public assumes the agent or producer possesses. Indemnity - correct answer ✅The compensation or payment of a claim or loss. Independent Agency - correct answer ✅An agency that represents multiple companies. The agent owns the business written and the expirations obtained. The agent is an independent contractor and is paid by commissions and bonuses only. Joint Underwriting Associations - correct answer ✅State run pools that provide coverage for individuals declined by the standard market. Insurers must participate in these pools by sharing in the profits or losses based on their total standard market premiums written in the state. Law of Agency - correct answer ✅The relationship that exists between parties during an insurance transaction. One party (the agent or producer) acts on behalf of another party (the insurance company or principal) during the business transaction.
Concepts Exam Questions And Answers
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Law of Large Numbers - correct answer ✅A concept utilized by insurers to predict losses and calculate premiums. As the number of homogeneous units in a group increase, it is more likely to predict losses for that group. Lloyds of London - correct answer ✅A group of Underwriters called Syndicates that specialize in insurer specific risks. This is not an insurance company. Loss - correct answer ✅Damage to property causing a reduction in value or physical harm to a person resulting in injury. Loss Exposure - correct answer ✅Damage to property causing a reduction in value or physical harm to a person resulting in injury. Mandatory Rates - correct answer ✅Certain states require that mandatory rates be used for particular lines of insurance. Marketing/Sales/Distribution Department - correct answer ✅Responsible for branding, marketing, soliciting and selling the actual insurance products/policies.
Concepts Exam Questions And Answers
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Insurance Commissioners coordinate their activities, share resources and share best practices. It also promotes uniformity among states. Non-Admitted Insurer - correct answer ✅Insurers that may have applied for authorization, but have been declined or are awaiting approval from the state. Non-admitted insurers are not authorized to conduct operations and write business in the state. Open Competition - correct answer ✅States do not require an approval process, but rely on competition amongst insurers to produce fair and equitable rates. Parole Evidence Rule - correct answer ✅A written contract may not be altered without the written consent of both parties. Peril - correct answer ✅The actual cause of a loss. Physical Hazard - correct answer ✅A physical condition that increases the likelihood or probability of loss.
Concepts Exam Questions And Answers
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Prior Approval - correct answer ✅Insurer develops its own rates, but cannot use them until they have been approved by the Department of Insurance. Principle of Indemnity - correct answer ✅This states that a person should not profit from a loss, but be placed back to the same financial condition they experienced prior to the loss. Pure Risk - correct answer ✅A condition where there is no change for gain - there is only a chance for nothing to occur or for a loss to occur. In risk management, pure risks can be managed through insurance. Reasonable Expectations Doctrine - correct answer ✅What a reasonable and prudent person/policy owner would expect.
- correct answer ✅Reciprocal Exchange Reduction - correct answer ✅Minimizing the chance or severity of a loss, but not eliminating it completely.
Concepts Exam Questions And Answers
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Risk Management - correct answer ✅The process of evaluating and identifying the chance, likelihood or probability for a loss to occur and implementing techniques to eliminate or mitigate the effects of loss. Risk Retention Groups - correct answer ✅Group owned insurer that assumes the liability of its members. Members are entities that have similar exposures. Risk Sharing Plan - correct answer ✅Plan where insurers share risks among themselves that are not able to obtain coverage in the standard market. Self-Insurance - correct answer ✅Companies that fund their own losses without using insurance companies. These companies must have the financial resources to pay losses and usually use a Third- Party Administer to adjust claims. Sharing - correct answer ✅Risk management technique where investments of many people may be pooled using a corporation or partnership.
Concepts Exam Questions And Answers
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Speculative Risk - correct answer ✅A condition where there is a chance for loss, gain or neither loss, nor gain. Stock Insurance Company - correct answer ✅Insurance company that is owned by its stockholders/shareholders. It may pay dividends to its stockholders/shareholders. Surplus and Excess Lines Insurance - correct answer ✅Markets where risks that cannot obtain coverage through admitted insurers purchase coverage. These are typically hard to insure risks. The McCarran-Ferguson Act of 1945 - correct answer ✅Determined that individual states have the power to regulate insurance and not the federal government. Tort Law - correct answer ✅Torts are defined as wrongful acts that result in civil liability. Torts result in injuries or damage, which are the basis of claims brought by third parties. Transfer - correct answer ✅Risk management technique that moves the risk from one party to another, typically through insurance.
Concepts Exam Questions And Answers
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Void Contract - correct answer ✅A contract that cannot be enforced by law, because it doesn't contain the four elements of a legal contract. Voidable Contract - correct answer ✅A valid contract that may be set aside by one of the parties - an insurer may void or revoke coverage for misrepresentation or fraud. Waiver - correct answer ✅The relinquishment of a known right, claim or privilege. Warranties - correct answer ✅Statements in the insurance application that are guaranteed to be true.
