Big Test

Adverse selection refers to A. Insurer underwriting guidelines that leads to discrimination among consumers. B. Individuals with greater risk being drawn to the purchase of insurance more so that individuals with lower risk. C. Unprofitable underwriting results. D. Insurer marketing practices that run counter to fair trade practices.

B. Individuals with greater risk being drawn to the purchase of insurance more so that individuals with lower risk.

The traditional definition of risk management reflects the traditional concept of risk as A. Uncontrollable. B. Negative. C. Strategic. D. Both positive and negative.

B. Negative.

Which one of the following best identifies the exposure of loss to intangible property? A. Rapid deterioration B. Physical damage C. Wrongful taking D. Physical damage and wrongful taking

C. Wrongful taking

Preprinted forms typically are interpreted as A. Custom forms developed for a specific insured. B. Custom forms for a small group of insureds. C. Contracts of adhesion. D. A description of a unique loss exposure.

C. Contracts of adhesion.

Which one of the following would help an adjuster determine if the policy was in effect at the time of loss? A. Insuring agreement B. Miscellaneous provisions C. Declarations D. Premium notice

C. Declarations

The risk control technique that spreads loss exposure over numerous projects, products, markets, or regions is which one of the following risk management techniques? A. Separation B. Duplication C. Diversification D. Risk transfer

C. Diversification

When organizations invest their assets among a mix of stocks and bonds from companies in different industry sectors they are using the risk management technique of A. Separation. B. Duplication. C. Diversification. D. Risk transfer.

C. Diversification.

The McCarran-Ferguson Act A. Created the framework for the federal regulation of the insurance industry. B. Entrusted the regulation of insurance with the Federal Insurance Office. C. Exempted the insurance industry from federal antitrust and fair trade laws. D. Confirmed state regulation of insurance as being Constitutional.

C. Exempted the insurance industry from federal antitrust and fair trade laws.

Selecting the appropriate risk management technique involves A. Conducting a feasibility study. B. Evaluating loss exposures that are of a purely sentimental value. C. Forecasting the frequency and severity of the future losses. D. Creating a risk assessment questionnaire.

C. Forecasting the frequency and severity of the future losses.

In commercial property insurance, the special-form coverage provides protection against causes of loss that are A. Not specifically excluded. B. Specifically excluded by other provisions within the same policy. C. Unique and complex in nature. D. Generally uninsurable.

A. Not specifically excluded.

Maximum possible loss is a loss severity measure that is most often used when analyzing A. Property loss exposures. B. Liability loss exposures. C. Personnel loss exposures. D. Net income loss exposures.

A. Property loss exposures.

Gramm-Leach-Bliley A. Requires the reciprocity or uniformity of producer licensing laws. B. Established consumer provisions that the NAIC was unable to formulate independently. C. Had no measurable impact on state regulation of insurance. D. Has resulted in sweeping changes in the regulation of insurance at a state level.

A. Requires the reciprocity or uniformity of producer licensing laws.

Many insurers have developed their own company-specific preprinted forms, especially for coverages in which the insurer specializes, or for A. Niche market exposures. B. Catastrophic loss exposures. C. High-volume lines of insurance. D. Infrequently used coverage needs.

C. High-volume lines of insurance.

Separation, duplication, and diversification risk control techniques all A. Cause losses to be less predictable but more manageable. B. Decrease the frequency of losses incurred by an organization. C. Increase the number of loss exposures for an organization. D. Work in combination to transfer the organization's loss exposures.

C. Increase the number of loss exposures for an organization.

The terms "coverage extensions" and "additional coverages" are often used in property coverages. Which one of the following can be used to describe statements introducing such coverage? A. Policy conditions. B. Miscellaneous provisions. C. Insuring agreements. D. Policy definitions.

C. Insuring agreements.

Jill's Dress Cottage recently added an elaborate sprinkler system which cost $9,000. Jill is hoping that she will be able to obtain a discount on her property insurance as a result of making her property safer. Jill's decision to add the sprinkler system is an example of which one of the following risk management techniques? A. Avoidance B. Loss prevention C. Loss reduction D. Separation

C. Loss reduction

Company X sells earth-moving equipment and has a large inventory. The company's risk management professional wants to make sure that the insurance is carefully designed and has coordinated provisions in the various forms to minimize the possibility of gaps and overlaps in coverage. The most appropriate policy for Company X is a A. Manuscript policy. B. Monoline policy. C. Modular policy. D. Self-contained policy.

C. Modular policy.

The basic structure of an insurance policy can be either a self-contained policy or a A. Standalone policy. B. Manuscript policy. C. Modular policy. D. Preprinted policy.

C. Modular policy.

A conscious act or decision not to act that generates the funds to pay for losses or offset the variability in cash flows that may occur defines A. Risk assessment. B. Risk management. C. Risk financing. D. Risk control.

C. Risk financing.

All of the following are examples of the federal government's direct involvement in the insurance industry, EXCEPT: A. The National Flood Insurance Program B. The Terrorism Risk and Insurance Program C. The Insurance Services Office D. The Federal Crop Insurance Corporation

C. The Insurance Services Office

Once a risk management technique has been selected, which one of the following must make technical decisions regarding its implementation? A. The organization's board of directors or board of trustees B. The organization's owner or chief executive officer C. The organization's senior risk management professional D. The organization's chief financial officer

C. The organization's senior risk management professional

Analyzing accidental or business losses based on an organization's historical records relies on A. Informed judgments about missing data. B. Accurate trending and credibility factors. C. The quality of the data contained in the records. D. The risk management professional's expertise and past experience.

C. The quality of the data contained in the records.

When an organization faces little uncertainty regarding future potential losses, it may choose to A. Purchase reinsurance. B. Retain the losses rather than insure them. C. Avoid the losses. D. Purchase insurance.

B. Retain the losses rather than insure them.

Together, risk management professional Richard Harding and his organization's owner, decided to purchase an insurance policy with two million dollar policy limits. This decision was a(n) A. Managerial decision. B. Technical decision. C. Political decision. D. Economic decision.

B. Technical decision.

If a revision of an organization's current risk management program is required, which one of the following is necessary? A. Approval by the state insurance commissioner B. Approval of department managers. C. Restructuring of loss control measures and techniques D. Repeating of some or all of the risk management process

D. Repeating of some or all of the risk management process

An organization has a risk management program in place. Upon renewal it is faced with a significant increase in insurance premiums. The organization's risk manager would best handle this situation by doing which one of the following? A. Implement risk avoidance to eliminate loss exposures. B. Separate loss exposures to decrease loss severity. C. Use noninsurance risk transfer options to property and liability loss exposures. D. Review the risk management program to determine if alternative risk financing options are more appropriate.

D. Review the risk management program to determine if alternative risk financing options are more appropriate.

Which one of the following is true regarding risks? A. Positive risks need not be managed. B. The number and interaction of risks is decreasing. C. Holistic risk management deals only with familiar risks. D. The inability to easily distribute products is an operational risk.

D. The inability to easily distribute products is an operational risk.

An activity that happens frequently and would generate intolerable loss severity is typically A. Avoided. B. Controlled. C. Reinsured. D. Transferred.

A. Avoided.

In implementing selected risk management techniques, working cooperatively with others requires the senior risk management professional to A. Have line authority over employees involved in the implementation of risk control measures. B. Have an alternative risk management plan in place. C. Be alert to the needs of the organization. D. Design the risk management program to fit the preferences of the employees.

C. Be alert to the needs of the organization.

Risk management professional Sherri Stone is attempting to identify net income loss exposures for a large corporation. Which one of the following could Sherri best rely on for this purpose? A. Income statement B. Balance sheet C. Organizational charts D. Statement of cash flows

A. Income statement

The more severe a loss tends to be, the A. More frequently it tends to occur. B. Less frequently it tends to occur. C. More credible estimates of future losses become. D. Less likely it is to predict future catastrophic events.

B. Less frequently it tends to occur.

Edna, who participates in a homeowners' reciprocal exchange knows that the members of the exchange insure members' loss exposures. A policy issued by the reciprocal insurer specifies the attorney-in-fact's authority to implement its powers on behalf of Edna and the other members of the exchange. Information regarding the powers of the attorney-in-fact is most likely to be found in Edna's policy's A. Declarations. B. Insuring agreement. C. Conditions. D. Miscellaneous provisions.

D. Miscellaneous provisions.

A self-contained policy can be either a package policy or a A. Modular policy. B. Multi-line policy. C. Manuscript policy. D. Monoline policy.

D. Monoline policy.

Which one of the following is an example of the development of new loss exposures? A. An organization conducting operations at new locations. B. An organization using existing products for research purposes. C. An organization changing from one risk management technique to another. D. An organization implementing new risk control measures.

A. An organization conducting operations at new locations.

Insurance policy rating information and policy premium are found in which one of the following categories of insurance policy provisions? A. Declarations B. Insuring agreements C. Conditions D. Miscellaneous provisions

A. Declarations

Determining the effect of available risk management techniques involves which one of the following? A. Reviewing flowcharts B. A forecast of the frequency and severity of the future losses C. Reviewing organizational charts D. Funding of current and future losses

B. A forecast of the frequency and severity of the future losses

The major strength of flowcharts is that they A. Identify key employees who are critical to the ongoing success of the organization. B. Add another dimension to loss exposure identification by highlighting interdependencies within an organization. C. Are process-oriented. D. Indicate loss frequency and loss severity.

B. Add another dimension to loss exposure identification by highlighting interdependencies within an organization.

The financial statement that is a statement of an organization's financial condition as of a particular date is the A. Income statement. B. Balance sheet. C. Annual report. D. Statement of cash flows.

B. Balance sheet.

Burt Wilson is a risk manager and has been hired by Cathy's Candies. Burt is extremely interested in learning about the candy making and distribution processes so that he can better identify and analyze the organization's loss exposures. Which one of the following tools will be most beneficial to Burt in his attempt to identify key processes at Cathy's Candies locations? A. A planning tree. B. An organizational chart. C. A flowchart. D. An organizational blueprint.

C. A flowchart.

Because manuscript forms do not have the same history of court interpretations with regard to policy analysis, substantial delays in claim adjusting or strained relations between the insured and the insurer can occur. To reduce the likelihood of such problems, most manuscript forms are A. Individually composed with unique language according to the needs of the insured. B. Created by the insurer with no input from the insured. C. Adapted from wording previously developed and used in standard forms. D. Created by the insured according to strict insurer requirements.

C. Adapted from wording previously developed and used in standard forms.

Which one of the following statements about modular policies is true? A. More forms are required to meet a wide number of needs than if self-contained policies are used. B. Well coordinated modular policies typically offer a limited policy framework for policy analysis. C. Adverse selection problems can be reduced when the same insurer provides several lines of insurance for an individual insured. D. Insurers often give a package discount when only one coverage is included in the same policy.

C. Adverse selection problems can be reduced when the same insurer provides several lines of insurance for an individual insured.

Insuring agreements can be classified into two broad categories. These are limited and A. Modified. B. Unlimited. C. Comprehensive. D. Specific.

C. Comprehensive.

In a court of law, during policy analysis, which one of the following types of policies or forms is most difficult to interpret? A. A standard form B. A monoline policy C. A package policy D. A manuscript policy

D. A manuscript policy

The selection of the appropriate risk management techniques requires an in-depth understanding of the A. Benefits and costs of each alternative technique. B. Technical decisions needed to support a given technique. C. Activity and results standards. D. Flowcharts and organizational charts.

A. Benefits and costs of each alternative technique.

Avoidance can be called abandonment when the organization A. Decides to eliminate an existing loss exposure. B. Transfers the loss to another entity. C. Modifies the loss exposure to eliminate its inherent loss potential. D. Decides not to incur a loss exposure in the first place.

A. Decides to eliminate an existing loss exposure.

Which one of the following categories of insurance policy provisions outlines what is covered and where and when coverage applies? A. Declarations B. Insuring agreements C. Conditions D. Miscellaneous provisions

A. Declarations

The numbers and edition dates of all attached forms and endorsements are found in the policy A. Declarations. B. Insuring agreements. C. Conditions. D. Miscellaneous provisions.

A. Declarations.

In a policy's insuring agreement, the insurer promises to pay to the insured, to pay on behalf of the insured, and to A. Defend the insured. B. Pay for all losses. C. Educate the insured regarding policy language. D. Provide full coverage for any exposure.

A. Defend the insured.

Most profit-seeking private organizations choose risk management techniques with the A. Greatest positive effects on the organizational value or rate of return. B. Least cost to the organization. C. Smallest opportunity cost to the organization. D. Highest credibility factors for future loss predictions.

A. Greatest positive effects on the organizational value or rate of return.

Business risk losses can be avoided by A. Halting, or by never engaging in a particular business. Correct: The best way to avoid a business risk is by never assuming is or engaging in the business. B. Inserting provisions into business contracts with suppliers, customers, or joint ventures. C. Using caution in engaging in a particular business activity. D. Subcontracting to another organization an activity that the organization may or may not perform profitably.

A. Halting, or by never engaging in a particular business.

Which one of the following is one of the general rules of policy interpretation applying to endorsements? A. Handwritten alterations tend to reflect true intent more accurately than do pre-printed endorsements. B. An endorsement is invalid if it conflicts with the terms in the policy to which it is attached. C. Certain states require state-specific endorsements be included in every policy which results in fewer endorsements for each policy. D. A computer printed endorsement supersedes a handwritten one.

A. Handwritten alterations tend to reflect true intent more accurately than do pre-printed endorsements.

Homer Benson runs a family owned business that prides itself on its earnings stability rather than upon achieving maximum profitability in a given time period. The family business sometimes pays a significant amount for loss control measures or safety devices rather than absorbing the losses. Having this mindset, it is likely that Homer might do which one of the following, which might compromise the organizations overall rate of return? A. Insure against losses that would be better to retain B. Form a captive to handle loss exposures C. Retain losses D. Use hedging to finance losses

A. Insure against losses that would be better to retain

The number of losses that occur within a specified period defines A. Loss frequency. B. Loss severity. C. Law of large numbers. D. Maximum possible loss.

A. Loss frequency.

Which one of the following is also known as the amount subject? A. Maximum possible loss (MPL) B. Aggregate loss C. Probable maximum loss (PML) D. Total loss

A. Maximum possible loss (MPL)

One of the primary purposes of exclusions is to eliminate coverage for loss exposures that are considered uninsurable by private insurers. In addition to the peril of war, which one of the following is a loss exposure that most private insurers consider to be uninsurable? A. Normal wear and tear of property B. Environmental pollution C. Professional malpractice D. Loss of admissions (i.e. to a concert or other attended event)

A. Normal wear and tear of property

Jane Redman is a risk management professional who has considered the feasibility of applying various risk control and risk financing techniques to a particular manufacturing loss exposure. Janes next step is to establish and apply criteria to A. Select the appropriate risk management techniques that support her organizations goals. B. Identify risk mitigation measures. C. Calculate credibility factors. D. Evaluate the financial consequences of the maximum possible loss.

A. Select the appropriate risk management techniques that support her organizations goals.

Cold Coolers, Inc., has its main warehouse in St. Louis. It also stores inventory in two warehouses in other cities to reduce the distance between their warehouses and retail locations. Cold Coolers is using which one of the following risk management techniques? A. Separation B. Duplication C. Diversification D. Risk transfer

A. Separation

The principal advantage of pre-loss funding is that A. The money needed to fund losses can be saved over several budget periods. B. It is convenient. C. It does not tie up funds before they are actually needed. D. It is the least expensive form of funding.

A. The money needed to fund losses can be saved over several budget periods.

Loss history data quality is reduced when A. Access to information collected about losses is restricted. B. An organization's operations change in some fundamental way. C. The data is not organized by loss date. D. There are too few losses.

B. An organization's operations change in some fundamental way.

Which one of the following is a positive risk for a start-up business? A. Distribution inefficiencies B. Attracting investor interest C. Inability to obtain raw materials D. Fire damaging the production facility

B. Attracting investor interest

Which one of the following documents would a risk management professional review to identify an organization's property values that are exposed to accidental loss? A. Income statement B. Balance sheet C. Organizational charts D. Statement of cash flows

B. Balance sheet

A risk management professional analyzes loss exposures along five dimensions, including which one of the following dimensions? A. Aggregate losses B. Data credibility C. Loss reserves D. Risk control measures

B. Data credibility

The property casualty insurance policy provisions that indicate who or what is covered, and where and when coverage applies, are found in the A. Definitions. B. Declarations. C. Insuring agreements. D. Miscellaneous provisions.

B. Declarations.

To identify loss exposures, the risk manager of an organization must be able to A. Select the appropriate risk management technique. B. Logically classify all possible loss exposures. C. Treat accident or hazard loss exposures. D. Create a risk management plan.

B. Logically classify all possible loss exposures.

Which one of the following risk control techniques is generally used to reduce the frequency of a particular loss? A. Avoidance B. Loss prevention C. Loss reduction D. Separation

B. Loss prevention

As a risk manager, Xavier Donahue, must identify loss exposures for Alpha Publishing. Alpha Publishing has two locations, including office space and a book binding plant. Which one of the following methods of identifying loss exposures will likely reveal loss exposures that may otherwise be unidentified and help Xavier develop relationships throughout the organization? A. Loss histories B. Personal inspections C. Flowcharts D. Risk assessment questionnaires

B. Personal inspections

All of the following statements are true regarding the regulation of the insurance industry, EXCEPT: A. Insurance is the only major financial services industry that is not federally regulated. B. The current state insurance regulatory system dates back to 1951. C. New Hampshire formed the first state agency charged with regulating insurance. D. The National Association of Insurance Commissioners is a trade association.

B. The current state insurance regulatory system dates back to 1951.

Why are manuscript policies not generally considered contracts of adhesion? A. Courts automatically interpret ambiguous policy provisions in the insureds favor. B. The insurer and insured develop policy language together. C. The wording of the policy is adapted from previously developed forms. D. The manuscript policy has numerous court interpretations.

B. The insurer and insured develop policy language together.

One purpose of exclusions is to eliminate coverages that are not needed by the typical purchaser of a given line of insurance. Elimination of such coverages avoids the situation of A. Litigated coverage for most insureds. B. Increasing the likelihood of overlapping coverages or duplications of coverages. C. All insureds having to share the costs of covering loss exposures that relatively few insureds have. D. Insuring uninsurable exposures.

C. All insureds having to share the costs of covering loss exposures that relatively few insureds have.

Frank's insurer, in settling a claim on Frank's behalf, has asked Frank to attend hearings which require him to take several days off from his job and to travel considerable distances. If Frank refuses to cooperate with the insurer, his is in violation of his policy's A. Supplemental coverages. B. Insuring agreements. C. Conditions. D. Coverage provisions.

C. Conditions.

Which one of the following situations is likely to result in a need for a revision to a corporation's risk management program? A. Changes in economic conditions. B. Existing loss exposures have not been reviewed to adjust for inflation rate fluctuations. C. Different risk management techniques have become more appropriate. D. Changes in senior management.

C. Different risk management techniques have become more appropriate.

Risk management professional, Betty Garret has noticed that the insurance premiums for the organization have increased. She has decided to discuss this with the chief executive officer and is prepared to suggest that it might be financially prudent to retain some of the loss exposures that the organization is currently insuring. If this recommendation is accepted, Betty would need to revise the organization's risk management program due to which one of the following? A. Development of new loss exposures B. Significant changes in the organization's existing loss exposures C. Different risk management techniques may now be more appropriate D. Fluctuating economic conditions

C. Different risk management techniques may now be more appropriate

Which one of the following is an example of a limited insuring agreement in commercial property insurance? A. Special form coverage B. Open perils coverage C. Named perils coverage D. Cause of loss coverage

C. Named perils coverage

Which one of the following statements is correct with respect to insurance policy exclusions? A. Its purpose is to eliminate coverage, not to clarify the coverage granted. B. Its use does not help insurers manage moral and morale hazards. C. One of its purposes is to eliminate coverages requiring special treatment. D. Its use has little or no impact on the policy premium an insurer must charge.

C. One of its purposes is to eliminate coverages requiring special treatment.

When an organization's risk management professional negotiates the purchase of insurance, the risk management professional should be prepared to explain and justify technical decisions made regarding the purchase, to A. Information technology personnel. B. The organization's insurance advisor. C. Other managers in the organization. D. The accounting department.

C. Other managers in the organization.

Each of the risk control techniques of duplication, separation, and diversification A. Cause losses to be less predictable but more manageable. B. Decrease the frequency of losses incurred by an organization. C. Reduce the severity of loss associated with the organization's loss exposures. D. Work in combination to transfer the organization's loss exposures.

C. Reduce the severity of loss associated with the organization's loss exposures.

Which one of the following is a common risk management benefit the entire economy would realize as a consequence of a risk management program? A. Reduced technological obsolescence B. Reduced political turmoil C. Reduced waste of resources D. Reduced segregation

C. Reduced waste of resources

In the risk management process, monitoring results and revising the risk management program requires the risk management professional to A. Revise the program annually. B. Review technical and managerial decisions. C. Regularly reevaluate the risk management program. D. Conduct a risk management audit every two years.

C. Regularly reevaluate the risk management program.

If an organization's leadership decides to insure a particular loss exposure, the organization must A. Hire a risk management professional. B. Use funded retention. C. Select an appropriate insurer. D. Implement the risk management program in phases.

C. Select an appropriate insurer.

Which one of the following is a potential weakness of a risk assessment questionnaire? A. Often the risk assessment questionnaires are lengthy and time-consuming to complete. B. Expertise in risk management is needed in order to successfully complete the questionnaire. C. The structure of the questionnaire may not stimulate the user to do anything more than fill in the blanks to answer the questions posed. D. Questionnaires often use ambiguous terminology and technical jargon.

C. The structure of the questionnaire may not stimulate the user to do anything more than fill in the blanks to answer the questions posed.

Why might a risk management program be revised? A. Existing exposures have become more significant. B. New loss exposures have developed. C. Other risk management techniques might be more effective. D. All of the above

D. All of the above

Which one of the following statements is true regarding endorsements and other related documents? A. Endorsement provisions do not differ from basic policy provisions because of the need for standardized language. B. Because of statutory and regulatory constraints, an insurance policy cannot incorporate other documents into the policy. C. The insurer does not usually keep completed insurance applications because the declarations page contains the information provided in the application. D. An insurance policy may refer to an insurer's rating manual, making the rules and rates contained in the manual part of the policy.

D. An insurance policy may refer to an insurer's rating manual, making the rules and rates contained in the manual part of the policy.

The sum of all expenses incurred by an organization because of the possibility of accidental loss is called the A. Pure premium. B. Cost of residual uncertainty. C. Net premium. D. Cost of risk.

D. Cost of risk.

To an insured organization, which one of the following is an example of a cost of risk associated with an asset or activity? A. Insured losses B. Insurer claim handling expenses C. Fees for registering stock on exchanges D. Cost of sprinkler systems Correct. Cost of sprinkler systems is an example of a cost of risk associated with an asset or activity.

D. Cost of sprinkler systems

The principal disadvantage of pre-loss funding is that it A. Spreads out the funding over several budget periods B. Requires the use of borrowed funds. C. Does not fund liability losses. D. Creates an opportunity cost for the organization.

D. Creates an opportunity cost for the organization.

Avoidance can be called proactive avoidance when the organization A. Decides to eliminate an existing loss exposure. B. Transfers the loss to another entity. C. Modifies the loss exposure to eliminate its inherent loss potential. D. Decides not to incur a loss exposure in the first place.

D. Decides not to incur a loss exposure in the first place.

The maximum possible loss (MPL) is usually estimated for a specific cause of loss and for A. A specific dollar amount. B. Liability loss exposures only. C. High severity or catastrophic events. D. Each location.

D. Each location.

In which of the following ways can a risk management technique generate cash inflows? A. Through securing insurance coverage B. From paying for retained losses C. Through guaranty association funds D. From investment income funded reserves

D. From investment income funded reserves

A personal inspection is a method of identifying loss exposures that involves a first-hand assessment of an organization's critical locations, as well as the organization's A. Financial statements. B. Underlying accounting records. C. Competitors. D. Key suppliers and customers.

D. Key suppliers and customers.

A personal inspection is a method of identifying loss exposures that involves a first-hand assessment of an organization's critical locations, as well as the organization's A. Financial statements. B. Underlying accounting records. C. Competitors. D. Key suppliers and customers. Correct: A personal inspection identifies an organization's key suppliers and customers. This acquaints the risk management professional with how an organization operates.

D. Key suppliers and customers.

The term data credibility is used in risk management to mean the A. Accuracy of the data. B. Data assertions used are reasonable and mathematically accurate. C. Level of confidence that rates are actuarially accurate. D. Level of confidence that available data are accurate indicators of future losses.

D. Level of confidence that available data are accurate indicators of future losses.

Major Corporation delivers its products nationally using its own fleet of vehicles that are specially designed to encapsulate and protect the cargo they are carrying. What risk management technique is being used? A. Avoidance B. Retention C. Separation D. Loss reduction

D. Loss reduction

Auto insured Tom was surprised when he was invited to his mutual auto insurer's election of its board of directors. Tom would most likely find information relating to this type of election in his policy's A. Insuring agreement. B. Declarations. C. Conditions. D. Miscellaneous provisions.

D. Miscellaneous provisions.

Insurance regulators A. Monitor claims paying ability through the evaluation of agent and broker conduct. B. Monitor financial strength through third-party financial rating services. C. Monitor insurer solvency to safeguard the financial interests of stockholders. D. Monitor insurer solvency through the periodic financial examinations.

D. Monitor insurer solvency through the periodic financial examinations.

A nonstandard form drafted or adapted by one insurer is sometimes called a A. Company standard form. B. Filed form. C. State specific form. D. Proprietary form.

D. Proprietary form.

Insurance policies sometimes incorporate the insurer's rating manual or the insurer's rules and rates. This is done by referring to the rating manual in which one of the following? A. The policy declarations B. The policy conditions C. The policy endorsements D. The policy language

D. The policy language

Which one of the following is an advantage of the use of manuscript forms? A. It reduces the paperwork necessary for insurance policies. B. The insurer does not have to keep a duplicate of each insured's entire policy. C. They are typically interpreted as contracts of adhesion. D. They can be specifically drafted or selected to cover unique loss exposures.

D. They can be specifically drafted or selected to cover unique loss exposures.