Chapter 1 - P&C General Portion

What is a fiduciary who handles insurer funds in a trust capacity called?

Agent

Who represents an insurance company?

An agent

What is the date the Fair Credit Reporting Act became law?

April 25, 1971

What is the date the Fair Credit Reporting Act became law?

April 25th, 1971

Agent James Jackson represents only one insurance company, and he does not own the expirations of the policies he sells. What type of method does this describe?

Captive

The intentional suppression of information refers to which of the following:

Concealment

In regard to an insurance contract, which part generally defines or indicates the value that each party gives the other?

Consideration

What report contains information on a consumer's habits and lifestyle?

Consumer Report

Advertisements for insurance, in magazines or by parcel post, are examples under what type of marketing system?

Direct Response

Mr. Harmon bought insurance because of a phone call he received. What marketing technique was used to sell him insurance?

Direct Response Marketing

The legal right to stop someone from reasserting a right that was previously waived, refers to which term:

Estoppel

What units are used to determine rates charged for insurance?

Exposure Units

What type of authority is written in a contract?

Express

An agreement that an insurer grants to a producer, is what type of authority?

Express Authority (binding authority)

The implied authority of an agent is normally influenced by the _______authority of the agent.

Expressed

The requirement that agents must account for all insurance funds collected, and without the expressed consent of the insurance company is not permitted to commingle those funds with their own funds is known as:

Fiduciary responsibility

What type of authority is NOT stated in an agent's contract, but is necessary for the agent to sell insurance?

Implied Authority (involves training an agent)

What is the most common way to transfer risk?

Insurance

Which principal states: When the larger number of exposures are considered, the predictability of a loss improves.

Law of Large Numbers

What are voluntary unincorporated associations of underwriters that often accept risks offered to them, even though they are not insurance companies?

Lloyd's Associations

Which of the following best describes a producer who appoints and supervises other producers, earns a commission override on the business of those producers and has the overall responsibility for producers in a given territory?

Managing General Agent

Which of the following is managed by a Board of Trustees?

Mutual Companies

What association is composed of all the U.S. Commissioners?

NAIC (National Association of Insurance Commissioners)

When an applicant applies for insurance and submits a premium, this is known as what?

Offer

Mr. Smith's home was destroyed by a hurricane. This describes which of the following terms.

Peril

The principle which states that an insured should not profit from an insurance transaction, is the _________ of ___________.

Principle of

What group is funded by its members, and it provides payments for claims for insolvent insurers?

Property and Casualty Insurance Guaranty Association

The risk of loss may be classified as:

Pure risk and speculative risk

What are unincorporated groups of individuals termed as subscribers called?

Reciprocal Insurers

Removing ice from a sidewalk is an example of what kind of risk management?

Reduction

What is it called when an insurer shares a risk with another insurer?

Reinsurance

When an insurance company agrees to automatically assume a portion of a risk written by another insurance company, it is known as a(n):

Reinsurance treaty

What kind of risk is gambling?

Speculative

Who assumes control over an insurance company's funds and management if it becomes insolvent?

The Guaranty Corporation

What is the main purpose of Fitch and Weiss?

To determine an insurance company's financial integrity

Insurance is designed to:

To restore an insured's loss

The principal of insurance is an example of what kind of risk management?

Transfer

Surplus Lines refers to coverage that must be purchased from what type of company?

Unauthorized

The Law of Large numbers means that insurance companies:

Use the Law of Large numbers to predict losses

The release of a known right, claim or privilege is known as what? Ex: If information was omitted on an application and an insurer issued a policy, it would be ruled by a court that the questions were not asked or read to the applicant.

Waiver

When the actions of one party may purposefully give up a known right, it is referred to as a(n):

Waiver

Reinsurance is an...

agreement between insurance companies under which one insurer transfers some or all of its risk to another insurer.

Failing to disclose information or withholding information is an example of _______?

concealment

Floods, hurricanes, and fire cause loss, which are examples of _______.

perils

The Property and Casualty Insurance Guaranty Corporation protects

policyholders against an insurer being insolvent or impaired.

Transferring all or part of a risk to another party, describes what term?

transfer