Chapter 1 - Overview of the Insurance Industry
Which type of insurer is owned by its policyholders?
A mutual company
Who do solicitors represent?
Agents
Who is a representative of an insurer?
An agent
Who manages a reciprocal?
An attorney-in-fact
Define insurance producer.
An individual who sells insurance products to the public
An alien insurer is authorized in _______ and its principal office is located _______ this country.
Any state;Outside
In order to represent an insurer, an agent must be _______ by that company
Appointed
What are the primary duties of an underwriter?
Assess risks, approve or deny applications, determine premiums, and protect the insurer against adverse selection
When does the "Notice to the Applicant" regarding the Fair Credit Reporting Act need to be given?
At the time of application
When does the notice to the applicant regarding the Fair Credit Reporting Act need to be given?
At the time of application
What is implied authority?
Authority not specifically defined in the contract but considered to be an extension of regular duties
Direct writers employ _____ agents
Captive
The insurer seeking reinsurance is the _____ insurer, while the insurer assuming the risk is the _______.
Ceding;Reinsurer
What are the two basic types of reinsurance?
Facultative and automatic
Which type of reinsurance allows the reinsurer to reject the risk?
Facultative reinsurance
True or False: A foreign insurer is authorized in a state, but its principal office is in another country.
False. A foreign insurer has its principal office in another state.
True or False: An independent agency may place business with only one insurer.
False. An independent agency may place business with multiple insurers.
True or False: The producer issues the insurance policy.
False. producers solicit appointments, complete applications, collect premiums, and submit applications for approval.
Where does a domestic insurer have its principal or home office?
In the state where it is headquartered
An exclusive or captive agency employs _______ agents who agree to market products of _______ insurer.
Independent;One
What does the Fair Credit Reporting Act allow?
It gives a consumer or applicant the right to dispute credit reporting information
What right is provided by the Fair Credit Reporting Act?
It gives a consumer or applicant the right to dispute credit reporting information
Who issues participating insurance policies?
Mutual Companies
If a person needs to obtain coverage for a substandard or unusual risk, he would use a ______ broker.
Surplus Lines
What list has been created to prevent unwanted telemarketing solicitations?
The Do Not Call List
Who is the field underwriting agent?
The agent who determines which risks are desirable and submits them to the underwriting department for approval
If requested by an applicant, what credit information must be provided to the applicant?
The information report, the source of information, and how to challenge the information
Who do agents represent?
The insurer that sponsors them
When must the applicant be notified that consumer/credit background checks will be performed?
Within three days following a request for information
Once put on the Do Not Call List, numbers must be removed from a firm's list within ______ days
31
Numbers are listeed on the Do Not Call List for ____ years.
5
Who is a representative of the consumer?
A Broker
Authorized insurers are knowns as ________ companies, while unauthorized insurers are known as _______ companies.
Admitted;Non-Admitted
Who are the owners of a stock company?
Stockholders
Explain the concept of actual or express authority
When an agent's authority is defined in the agent's contract
Define the term reinsurance.
When an insurer seeks insurance from another insurer
What is apparent authority?
When the public merely perceives an agent as having a type of authority
What general name is used to describe agents, brokers, and consultants?
Producer
An unincorporated organization in which members insure one another is know as a ______.
Reciprocal
What term describes a business that assumes the total risk of potential losses?
Self Insured
Who do Brokers represent?
Themselves and the policyowner/insured
Which type of reinsurance does not allow the reinsurer to reject the risk?
Treaty or automatic reinsurance
