Chapter One Exam

Insurance is NOT characterized as which of the following?

As the number of insureds increase the number of losses decrease

A reciprocal insurer typically has an administrator who manages the premiums collected from the group's members. This administrator is called an...

Attorney-in-fact

An __________ agent is an insurance agent who represents only ONE insurance company

Captive

Which of the following types of insurance limits the exposures it writes to those of its owners?

Captive

For insurance purposes, similar objects which are exposed to the same group of perils are referred to as

Homogeneous exposure units

Which of the following is a syndicate established by a group of insurers to share underwriting duties

Lloyd's organization

Dividends from the mutual insurance company are paid to whom

Policyholders

Which of the following outlines the authority given to the producer on behalf of the insurer

Producer contract

What type of risk involved the potential for loss with no possibility for gain?

Pure risk

Which of these statements is NOT a characteristic of the law of large numbers?

Rates can be calculated to compensate for losses

Which of the following is an unincorporated association whose members provide coverage for one another?

Reciprocal

ABC company is attempting to minimize the severity of potential losses within its company. The company is engage in risk...

Reduction

Which of the following is NOT an objective of the National Association of Insurance Commissioners?

Regulate state insurance commissioners

What is the accounting measurement of an insurance company's future obligations to its policy owners?

Reserves

An insurable risk requires

The chance of loss be calculable

A hold-harmless clause is an example of risk...

Transfer

Which reinsurance contract between two insurers involves an automatic sharing of the risks assumed

Treaty reinsurance

A(n) __________ agent may represent several insurers

independent

Which of the following financial products creates an instant estate, no matter when the date of death?

life insurance

Which of the following types of risk is insurable

pure

Dividends from a stock insurance company are normally sent to

shareholders

A stock insurance company is owned by its

stockholders/shareholders

Purchasing insurance is an example of risk

transference