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