FINA 446 exam 1
Argot Stock Insurance Company's (Argot) net income is $1,000,000 and its average owners' equity is $16,500,000. Argot's average policyholders' surplus is $20,000,000. Using the GAAP approach, which one of the following is Argot's return on equity? A. 5% B. 6% C. 18% D. 20%
6% (1/16.5)
homeowner losses of $1M and written premium of $3M. earned premiums of $2M. taxes, salaries and expenses are $600k. what is the combined ratio?
70%
Guaranty funds mitigate the effects of insurer insolvency. Which one of the following statements is true regarding state guaranty funds? a. All states use a pre-insolvency assessment method to raise the necessary funds to pay insurer indebtedness. b. In most states, insurers cannot recoup all or part of the assessment through the use of insurance rate increases. c. All states have separate laws governing property-casualty insurance guaranty funds. d. Insurers can recoup part of the assessments through the use of guaranty fund surcharges to self-insured groups.
All states have separate laws governing property-casualty insurance guaranty funds.
Which one of the following statements is true concerning the use of the Internet to market insurance products? A. Consumers who use the Internet for insurance focus chiefly on service rather than price. B. Insurers' costs for underwriting and claim processing services are increased by having an Internet presence. C. Consumers assume that insurance purchased over the Internet will be less expensive than the same product purchased from a producer. D. Consumers' ability to access competitor information is reduced when insurers market products over the Internet.
Consumers assume that insurance purchased over the Internet will be less expensive than the same product purchased from a producer.
Which one of the following cases illustrates how underwriting guidelines ensure that selection decisions provide uniformity and consistency by all the insurer's underwriters? A. Ella, an experienced staff underwriter provides insight for Cromley's Insurance on amusement parks by authoring a section on amusement parks in the underwriting guidelines. B. Cromley is training new underwriters and is using a work sample for a homeowner risk which has a unacceptable roof and an overgrown yard. New underwriters Erin and Filip check the guidelines and make the same underwriting decision to decline the risk. C. Cromley's underwriter, Ciara uses predictive modeling to analyze her risks. She is underwriting Chloe's homeowner application and it falls within the acceptable scores the company has created. D. Cromley's underwriting guidelines provide a section on insuring swimming pools, illustrating the principal considerations for such risks. New underwriter Pedro refers to this section of the quidelines.
Cromley is training new underwriters and is using a work sample for a homeowner risk which has a unacceptable roof and an overgrown yard. New underwriters Erin and Filip check the guidelines and make the same underwriting decision to decline the risk.
Insurer B knows that regulation exists to ensure insurance rates are fair, adequate, and not excessive. However, due to having many insurers in the state where Insurer B operates, the insurer decides to underprice its auto policy in order to increase its market share and entice customers away from its higher priced competitors. This practice by Insurer B could have the effect of
Driving down price levels in the entire auto insurance market in that state.
which one of the following cases illustrates an external constraint for meeting insurer goals? A. Delmond Insurance Company's claims system is antiquated and does not process payments within a day of submission like their competition. B. Mellfor Insurance Company has lost income from a recent increase in workers compensation losses caused by fraud. C. Haltbinger Insurance Company receives a national award for quality customer service. D. Jancy Insurance Company's CEO, Antonia was arrested for embezzling company funds.
Mellfor insurance company has lost income from a recent increase in workers compensation losses caused by fraud
Which one of the following statements regarding licensing of insurers or insurance personnel is true? a. In response to complaints about the length of time regulators took to license a new insurer, regulators developed the National Insurance Producer Registry. b. Licensing standards for risk retention groups are the same as the licensing standards for alien and nonadmitted insurers. c. Producers must be licensed only in their state of domicile in order to transact insurance business in other states. d. Some states permit the insurance commissioner to deny a license to an otherwise worthy applicant if the commissioner believes that no additional insurers are needed in the state.
Some states permit the insurance commissioner to deny a license to an otherwise worthy applicant if the commissioner believes that no additional insurers are needed in the state.
Which one of the following statements about insurance distribution systems and channels is true? A. Direct writer marketing systems use sales persons who are independent contractors. B. Exclusive agents are usually free to represent as many or as few insurers as they want. C. Managing general agents (MGAs) serve as employees of direct writer companies. D. Surplus lines brokers can place coverage that is not available through standard market insurers.
Surplus lines brokers can place coverage that is not available through standard market insurers.
In recent years, speed to market for insurance products has become increasingly important to insurance regulators resulting in the National Association of Insurance Commissioners implementing a series of operational efficiencies. Which one of the following has dramatically improved the timeliness of product filings?
The System for Electronic Rate and Forms Filings
Which one of the following statements is correct with respect to marketing plans? A. Their purpose is to analyze customer spending habits and determine how much consumers might be willing to pay for a product. B. Their principal use is with new products; they are not effective for marketing existing products. C. They identify target customers and the resources and strategies to be used to create, price, promote, and sell the product. D. They focus primarily on how a product will be advertised and delivered to potential customers.
They identify target customers and the resources and strategies to be used to create, price, promote, and sell the product.
which of the following would fit in a middle market group? A. A pharmaceutical company with manufacturing operations throughout the United States and Canada B. A nail salon with six employees in a rented location C. A one-location furniture manufacturer with a risk manager on staff D. A family of five individuals that owns a house and two cars
a one location furniture manufacturer with a risk manager on staff
A business manufactures a product that is harmful to the public if used improperly. More than three licensed insurance companies have refused to provide commercial general liability coverage for the business. The producer should contact which one of the following to attempt to arrange coverage?
a surplus lines broker
an agency in new jersey has decided to market personal insurance to accountants. it is offering a 10% discount to all CPAs in the state. this is an example of which one of the following types of group marketing? a. affinity marketing b. franchise marketing c. worksite marketing d. sponsorship marketing
affinity marketing
due to the possibility of an environmental pollution exposure resulting in extensive losses, several insurers in a particular state have joined together to insure the exposure. no single insurer was willing to insure the entire risk. this insurance arrangement is typical of:
an insurance pool
Which one of the following statements is correct regarding considerations involved in the selection of insurance marketing systems and distribution channels? A. Small-business customers have not shown an interest in exploring various distribution channels. B. The direct writer system dominates the medium-to large-sized commercial insurance business. C. Personal insurance customers require the most direct involvement from the producer. D. An insurer can exercise the greatest control over producers in the direct writer system.
an insurer can exercise the greatest control over producers in the direct writer system
state guaranty fund provisions vary by state. which one of the following types of claims is covered by all state guaranty funds?
auto
all corporations are obligated to promote the well-being of society. at the minimum, this obligation demands that the insurer should a. offer affordable and comprehensive coverage b. avoid causing any public harm c. be involved in philanthropic activities d. provide basic risk control and loss mitigation measures
avoid causing public harm
an insurer that targets large middle market and national accounts would most likely use which one of the following distribution systems? a. exclusive agent b. broker c. direct d. internet
broker
which one of the following is the term used to refer to a situation that occurs because people with the greatest probability of a loss are the ones most likely to purchase insurance? a. risk inconsistency b. probable maximum loss c. adverse selection d. spread of risk
c. adverse selection
which one of the following is a financial measure of underwriting performance? a. combined ratio b. retention ratio c. line of business mix d. hit ratio
combined ratio
which one of the following cases is an example why insurance needs to be regulated to maintain insurer solvency? a. comp has discontinued its farm liability product due to losses and shortage of farm liability coverage b. an agent has kept the premium on several large accounts and has not transmitted the funds to the comp c. comp went out of business bc it didnt have enough surplus or reinsurance to cover its hurricane losses d. an agent sold someone a homeowners endorsement that they dont need
company goes out of business because they didnt have enough surplus or reinsurance to cover their hurricane losses
which one of the following cases illustrates an internal constraint for meeting insurer goals? a. company received unfavorable financial rating b. company received national press coverage for its denial of claims during a recent hurricane c. company's website is not interactive and does not provide rate quotes online d. company is a small regional insurer able to respond quicker to a local hurricane than a national insurer
company's website is not interactive and does not provide rate quotes online
the principle method of determining a prospects insurance needs is through
completing a risk management review for the prospect
a producer is usually paid a fee for performing which of the following functions? a. premium collection b. policy issuance c. prospecting d. consulting
consulting
contract language contained in insurance policies is regulated through legislation. legal disputes regarding the language can arise. all of the following are true except: a. state legislation might require insurers to use a standard policy to insure property or liability loss exposure b. courts dont become involved in interpretation of confusing policy provisions c. court decisions can lead insurers to redraft policy language and to modify provisions d. state legislation might mandate that policies be filed and approved by the state to protect PHs
courts dont become involved in interpretation of confusing policy provisions
Jancy Insurance Company (Jancy) has been very successful at writing homeowners insurance for over 10 years. In an effort to grow its personal auto book, Jancy is offering all current homeowners policyholders a 15 percent discount on their personal auto premium. This is an example of which one of the following applications for predictive analytics?
cross selling
Samuelson Insurance has developed special programs to market personal insurance to members of college alumni and professional associations. This is an example of which one of the following types of market segmentation? A. Geographic B. Psychographic C. Demographic D. Behavioristic
demographic
insurer advisory organizations provide valuable services to participants in the insurance markets, including which one o the following services? a. promoting ethical behavior b. licensing producers c. developing rating systems d. advertising insurance products
developing rating systems
which one of the following methods of premium collection is generally used for personal insurance policies and small commercial accounts? a. account current basis bill b. direct bill c. agency bill d. item basis bill
direct bill
Rhonda is a personal lines insurance producer. Under the terms of her agency contracts, the insurers forward policies promptly to Rhonda's customers and send a premium invoice with the policy. Insureds are instructed to remit premium payments to their insurer. The insurers calculate Rhonda's commissions and forward those commission payments to her monthly. Rhonda is operating under which one of the following payment procedures?
direct bill basis
which of the following premium collection methods is used in the majority of personal insurance sales?
direct bill process
Erin has recently graduated from college and relocated to Chicago. She has purchased a car and rented an apartment and now needs to purchase insurance. Erin is looking for minimum coverages and the lowest price available. Which one of the following is likely the best distribution system to meet Erin's needs? A. Financial institution B. Direct writer Internet search C. Regional broker D. Independent agent
direct writer internet search
Which one of the following statements is correct regarding discrimination and insurance rating? a. Discrimination is essential to insurance rating. b. Charging higher life insurance premiums for older individuals is unfair discrimination. c. Rate regulation prohibits discrimination. d. Two drivers in the same rating territory should be charged the same auto insurance rates.
discrimination is essential to insurance rating
which of these is an insurer considered to be in its state of domicile? a. domestic b. foreign c. alien d. nonadmitted
domestic
Many states require that a policy be submitted for approval before it is used. However, if a specified period elapses and the policy has not been disapproved, the policy is considered approved. The purpose of such approval is to A. Protect consumers from insurer fraud. B. Avoid a perfunctory review of policy content. C. Protect policyholders against intentionally misleading or deceptive policies. D. Encourage prompt review of the policy.
encourage a prompt review of the policy
Tania receives an application for homeowner's insurance for a home valued at $500,000 from Patrick, the producer for Keithly Insurance Company. Since Tania's underwriting authority is $350,000 on property risks, she must refer it to Lachlan, her underwriting supervisor. Which one of the following additional functions for underwriting profitability does this case illustrate?
enforcing underwriting guidelines
Activities of the legal and compliance function may include A. Deciding under what conditions the insurer is willing to provide insurance products and services to customers. B. Collecting evidence of possible fraud. C. Providing the infrastructure that supports all of an insurer's internal and external communications. D. Ensuring that organizational standards are met and the procedures are followed.
ensuring that organizational standards are met and the procedures are followed
which marketing system would be most appropriate for an insurer that wants to be the only company represented by its agents but not have the agents as employees? a. exclusive agency b. regional brokerage c. direct writer d. independent agency network
exclusive agency
Unfair claims settlement practices laws patterned after the NAIC Model Unfair Claims Settlement Practices Act typically prohibit which one of the following? A. Attempting to settle a claim for an amount less than the claimant demands B. Requiring insureds to cooperate in the investigation of a loss C. Failing to approve or deny a claim within a reasonable time after receipt of a proof-of-loss D. Cancelling an insurance policy as a result of information learned while adjusting a loss
failing to approve/deny a claim within a reasonable time after receipt of proof of loss
regulation exists to make sure that insurance rates are _________________, _______________, and _______________
fair, adequate, not excessive
which one of the following is correct regarding the internal constraints insurers face? a. larger insurers can be more nimble and respond quickly to emerging trends b. while insurer inefficiency is undesirable, it is not believed to be a factor that leads to insolvency c. financial constraints can affect insurer's ability to achieve profit goals d. the insurance business is relatively simple and does not require specialized expertise
financial constraints can affect insurers ability to achieve profit goals
an insolvent insurer:
had inadequate assets to cover its liabilities and charged too little in premiums to fund its claim payments
which is the following is the responsibility of the underwriting department of an insurer? a. help insurer avoid problem of adverse selection b. calculating insurance rates and developing rating plans c. reviewing commercial insureds records to obtain accurate info on rating variables d. working with insureds to help prevent losses and reduce the effects of those losses that cannot be prevented
helping insurer avoid adverse selection
all states have property casualty insurance guaranty funds that pay unpaid claims of insolvent insurers licensed in the particular state. which one of the following types of claims is covered by all state funds? a. life insurance claims b. title insurance claims c. homeowners insurance claims d. health insurance claims
homeowners insurance claims
Readability legislation has influenced the drafting of commercial as well as personal insurance policies. However, readability tests do not necessarily measure A. Policy form and style. B. How well the policies can be understood. C. The size of the print. D. How well the policies can be read.
how well the policies can be understood
Which one of the following statements is correct? A. All insurance producers perform the same functions, which are specified in state insurance regulations. B. Insurance producers are prohibited from accepting referrals from strategic partners, such as banks or real estate brokers. C. Cold calling, or cold canvas, is generally not used by insurance producers because it is an ineffective method of prospecting. D. In the exclusive agent and direct writer marketing systems, insurers might assist producers with prospecting.
in the exclusive agent and direct writer marketing systems, insurers might assist producers with prospecting
An insurance company must have adequate policyholders' surplus if it wishes to A. Avoid adverse selection. B. Produce profitable business. C. Generate premiums that exceed losses. D. Increase its written premium volume.
increase its written premium volume
given the complexity of commercial insurance, which one of the following is best suited for its distribution? a. independent agencies b. internet c. direct response d. group marketing
independent agencies
insurer Y is small but has a specialty insurance market for high value vehicles. in competing with a larger insurer with a broader market, insurer Y is likely to have which one o the following advantages?
insurer Y can be more nimble, allowing it to respond quickly to an emerging trend or change
the difference between underwriting gain/loss and operating gain/loss is that operating gain/loss includes:
investment income
which one of the following statements is correct regarding the investment function within an insurer? A. An insurer that assumes high underwriting risks must assume greater investment risks than one that assumes only moderate underwriting risks. B. Because liability losses tend to be larger than property losses, liability policies do not support investments. C. Investment income enables an insurer to reduce the premium that it must charge for the underwriting risks it assumes. D. An insurer's decision to use short-term versus long-term investments generally does not vary by type of loss exposure.
investment income enables an insurer to reduce the premium that it must charge for the underwriting risk it assumes
Which one of the following is true concerning the direct response distribution channel to market insurance? A. It relies heavily on advertising. B. Commission costs are generally increased. C. It relies heavily on producer interaction. D. There is less contact between the insurer and the customer with its use.
it relies heavily on advertising
when an insurer is selecting a market segment to target, which one of the following is an important factor of the external environment the insurer should consider? a. distribution channels b. product mix c. laws and regulations d. technical resources
laws and regulations
which one of the following statements is correct with regard to the regulation of insurance policies? a. most states have adopted "speed to market" laws that allow policy wording to be used prior to regulatory approval b. legislation might require that certain standard mandatory provisions appear in certain types of insurance policies. c. legislation requiring insurance policies to meet a readability test is an effective way to measure understandability d. insurers in a given state cannot be required by law to use standardized policy wordings, because this would eliminate competition
legislation might require that certain standard mandatory policy provisions appear in certain types of insurance policies
which of the following will draft a manuscript policy or endorsement that is worded to address the specific needs of the insured?
line underwriter
Which one of the following correctly describes a typical element of an insurance product marketing plan? A. Marketing goals outline the proposed target market including detailed sales projections and how success will be measured. B. Production planning determines the procedures involved in actually producing the proposed new product. C. The product proposal and sales goals focus on detailed sales projections and estimated annual profits from the new product. D. Situational analysis focuses on the company's internal environment and how it will affect the proposed new product.
marketing goals outline the proposed target market including detailed sales projections and how success will be measured
insurers have become insolvent despite regulatory reviews. a goal of insurance regulation is to: a. establish and maintain state guaranty funds for insolvencies b. educate consumers on insolvencies c. eliminate all insolvencies d. minimize the number of insolvencies
minimize the number of insolvencies
Alva, an underwriter with Worthley Insurance Company wants to write homeowners business in a new subdivision, Creek Flow. Worthley's rates are not competitive unless Alva uses a lower protection class code than the one currently indicated for the Creek Flow subdivision. Alva is A. Misclassifying loss exposures. B. Twisting. C. Discriminately unfairly. D. Failing to apply underwriting rules.
missclassifying loss exposures
Which one of the following is considered an unfair underwriting practice under state regulation of insurance? a. Varying forms and programs by states b. Varying rates among differing exposures c. Discriminating in risk selection d. Misclassifying loss exposures
missclassifying loss exposures
in order to offer a large commercial business a less expensive general liability policy, underwriter told the producer he would categorize the substandard exposure as a highly protected exposure. this would result in a premium credit and a lower rate. UW has committed the unfair underwriting trade practice of: a. twisting b. missclassifying loss exposures c. misrepresentation d. rebating
missclassifying loss exposures
regarding the selection role of the state insurance commissioner, which one of the following statements is true? a. few commissioners are appointed b. most commissioners are appointed c. incumbent insurance commissioners select their replacements based on specific qualifications d. all states have the option of electing insurance commisioners
most commissioners are appointed
Daniel is an insurance underwriter with over 20 years of experience. He has worked with reinsurers, surplus lines brokers, retention plans, and various captive arrangements. With which one of the following customer groups is Daniel most likely working? A. Middle markets B. National accounts C. Small businesses D. Individuals
national accounts
Millwright Insurance Company is a small mutual insurer. Benjamin, the CEO of Millwright, has allocated funds for belonging to an insurance industry professional and trade organization. Which one of the following organizations would help Millwright by providing governmental affairs representation and analysis of pertinent information? A. Risk and Insurance Management Society B. National Association of Mutual Insurance Companies C. National Association of Professional Insurance Agents D. Council of Insurance Agents and Brokers
national association of mutual insurance companies
juan has a poor driving record and has been unable to obtain auto liability coverage from private insurers. auto liability coverage is mandatory in his state. since affordability is a concern, Juan wants auto liability coverage only. which one of the following is an option for juan to obtain coverage? obtain coverage through: a. risk retention group b. fraternal organization c. states reinsurance pool d. states residual market
obtain coverage through his states residual market
which said that insurance is NOT interstate commerce? a. paul v virginia b. southeastern underwriters association case c. mccarran-ferguson act d. gramm-leach-bliley act
paul v virginia
you are likely to see syndication of all the following tools except: a. large property schedules b. excess and surplus lines business c. reinsurance placements d. personal auto accounts
personal auto accounts
a proprietary insurer is concerned about meeting their insurer goal of earning a profit. CEO has asked for suggestions from her management staff to meet this goal. which one of the following suggestions from her staff will most effectively achieve this goal? a. products be priced competitively in the market and appropriately for their risk b. writing all auto business in their geographic area c. increase all personal lines writings and write all applicants d. offering high quality insurance at a price the customer can afford
products be priced competitively in the market and appropriately for their risk
underwriting guidelines serve which one of the following purposes? a. allow for the development of insights and experience b. avoid duplication of effort c. provide rates for individual risks d. provide for flexible and unstructured decisions
provide rates for individual risks
An insurer whose financial rating is threatened can implement remedial measures. Which one of the following actions taken by an insurer could result in a financial rating improvement? A. Purchasing stock to insulate current capital B. Reducing claim reserves C. Purchasing more reinsurance D. Increasing new business
purchasing more reinsurance
if an insurer is insolvent, the state insurance department places the insurer in a. bankruptcy proceedings b. the states guaranty fund c. financial recovery d. receivership
receivership
the only unincorporated insurers permitted in most states are:
reciprocal insurance exchanges
which of the following methods of prospecting is more likely to be used by an experienced producer than a new insurance producer? a. cold canvas b. interactive web sites c. referrals from present clients d. direct mail
referrals from present clients
which of the following groups is responsible for determining whether insurance rates are high enough to prevent destructive competition?
regulators
the most difficult time for an insurer to change distribution systems is when:
renewing an existing book of business
which one of the following is a method used by state regulators to ensure solvency of admitted insurers? a. Liquidating insolvent insurers according to the NAIC model act b. Reviewing information shared by the states about problem insurers c. Requiring pre-assessment systems for state guaranty funds d. Requiring each insurer to meet minimum financial requirements
requiring each insurer to meet minimum financial requirements
all states attempt to ensure that continuous auto insurance coverage is available to customers by: a. mandating affordable rates for auto insurance premiums b. suggesting PH carry minimum amounts of coverage c. educating politicians and lawmakers to create an awareness that insurance is a personal need rather than a disposable commodity d. restricting the rights of insurers to cancel or non-renew personal auto policies
restricting rights of insurers to cancel or non-renew personal auto policies
the CEO of a company 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. special investigation unit c. actuarial d. risk control
risk control
A commercial insurer has historically targeted small businesses. It is considering expanding its market to middle market organizations. To succeed, the insurer will need to develop a level of expertise in which one of the following areas? A. Auditing B. Risk financing alternatives C. Claims handling D. Regulatory controls
risk financing alternatives
Donna is an insurance producer. She makes an appointment with a potential policyholder to review the prospect's loss exposures. She asks the prospect to complete a questionnaire to assist her in this effort. Donna is conducting a
risk management review
the development of sales goals and projected outcomes is part of which one of the following marketing activities? a. advertising and promotion b. market fulfillment c. sales fulfillment d. marketing plan
sales fulfillment
uniformity approach to financial regulation has been facilitated by the NAIC accreditation program. As part of the peer review process, the program subjects state insurance regulators to a comprehensive review o determine whether the state has met minimum baseline standards of: a. claim handling practices b. underwriting compliance c. solvency regulation d. rate promulgation regulation
solvency regulation
which of the following is correct: a. licensing requirements for insurance brokers are standardized among all the states b. insurance agents are not subject to licensing requirements in most states c. public adjusters, who represent insureds for a fee, are not subject to licensing requirements d. some states require that insurance consultants who give advice or opinions about policies to be licensed
some states require insurance consultants who give advice or opinions about insurance to be licensed
maja, who has 29 years of experiance as a professional liability underwriter, works in the home office of R insurance comp. her primary responsibilities involve formulating underwriting policy and revising underwriting guides for various lines of professional liability insurance that will be used by a personnel in the company's field offices. maja is function as: a. line underwriter b. staff underwriter c. chartered unerwriter d. field underwriter
staff underwriter
which one of the following has the legal authority to regulate insurers? a. the SEC b. insurance advisory organizations c. the NAIC d. state and federal gov
state and federal gov
state insurance departments enforce insurance laws enacted by the:
state legislature
the major source of funding for state insurance departments comes from
state premium taxes
which of the following is true of surplus lines carriers? a. surplus lines carriers are more likely to become insolvent than admitted carriers b. surplus lines carriers are slower to adjust to market changes than admitted carriers c. surplus lines carriers tend to follow a focused differentiation strategy d. surplus lines carriers tend to grow rapidly in soft markets
surplus lines carriers tend to follow a focused differentiation strategy
a nonadmitted insurer is typically a: a. foreign insurer b. surplus lines insurer c. reciprocal insurer d domestic insurer
surplus lines insurer
which of the following is true of surplus lines stamping offices? a. surplus lines stamping offices sell surplus lines insurance b. surplus lines stamping offices facilitate remittance of surplus lines tax c. surplus lines stamping offices exist in states that handle a small portion of surplus lines premium d. surplus lines stamping offices keep surplus lines carrier competitive with the standard market
surplus lines stamping offices facilitate remittance of surplus lines tax
which of these statements is true of the NAIC? a. the naic is an administrative body empowered to make federal regulations in the USA b. the NAIC imposes uniform regulations enforced by state regulators throughout all states c. the NAIC cannot create regulations itself, but its model laws and regulations are very influential with state legislatures and regulators
the NAIC cannot create laws itself, but its model laws and regulations are v influential with state legislatures and regulators
diversifying risk is an emerging goal for property-casualty insurers because of: A. Worsening economic conditions. B. The failure of the residual market insurance mechanism. C. The increase in catastrophe losses that have occurred over the past decade. D. A societal trend of increased litigation to recover injury awards.
the increase in catastrophe losses that have occurred over the past decade
which of the following is an external constraint that may prevent insurers from meeting their established goals? a. the insurers expertise b. insurers financial resources c. insurers competition d. insurers size
the insurers competition.
which one of the following situations would have the greatest impact on the profitability goal of cintriell insurance company? A. Cintriell receives a complaint from a state insurance department filed by Ida, a policyholder concerning delay in settling her homeowner's claim. B. Emilia, the new workers compensation claims manager for Cintriell consistently underestimates indemnity loss reserves. C. Charlotte, an independent agent, has written homeowner policies through Cintriell but now has reduced her writings because of poor access to Cintriell's policy data. D. Cintriell is not active in any loss control activities and did not participate in the widely advertised buckle up for safety campaign.
the new workers compensation claims manager consistently underestimates indemnity loss reserves
Which one of the following statements is true with regard to distribution channels for selling insurance? A. Mass marketing plans offer insurers' policies to a small number of targeted individuals based upon their demographic characteristics. B. "Franchise marketing" is also known as affinity marketing. C. The objective of group marketing is to sell insurance products and services over the Internet. D. The objective of insurance portals is to deliver leads to the firms whose products they offer through their sites.
the objective of insurance portals is to deliver leads to the firms whose products they offer through their sites
taunton insurance company files its nw auto policy with the state insurance department in a state with a prior approval law that includes a deemer provision. the new policy includes several revisions in definitions and policy provisions. taunton does not hear from the insurance department for several months. which one of the following is true? a. the policy is approved when it passes a specified period and it has not been disapproved. b. the policy is disapproved when it passes a specified period and has not been approved. c. taunton should wait on a decision from the state insurance department before using the new policy form. d. taunton must follow up with the state insurance department for a decision
the policy is approved when it passes a specified period and it has not been disapproved
since betty is the daughter of perry's fiance rita, producer perry has agreed to insure better even though he recently rejected an insurance applicant who had similar characteristics to betty. he based this decision on the fact that he knew betty's driving habits and felt betty was more mature than the applicant he had previously refused to insure. perry is guilty of which one of the following unfair trade practices? a. misrepresentation b. twisting c. dishonesty or fraud d. unfair discrimination
unfair discrimination
insurer A is raising its auto rates in order to compete more effectively with other insurers in the state. bc of delays in creating new rates, insurer A used the the new rates without state department of insurance approval but later filed the proper information that would be subject to regulatory review. insurer a apparently operates in a state with: a. no filing laws b. use and file laws c. file and use laws d. flex rating laws
use and file laws
all of the following are e&s risks ecept: a. distressed risks b. unique risks c. high limits risks d. new and emerging risks e. works comp risks
workers compensation risks
leah decides to purchase her personal automobile insurance through a program offered by her employer. leah's employer offers her a discounted premium which is deducted from her paycheck. leahs employer is using which type of distribution channel? a. affinity marketing b. worksite marketing c. mass marketing d. direct response marketing
worksite marketing
