Chapter Two: Difference Between Private and Government

A producer representing the insured is a(n):

Broker Agents represent the insurer; brokers represent the insured.

Agents are appointed to work on behalf of:

Insurance companies

LMO Insurer is incorporated in New Hampshire, conducts business in all of the Eastern Seaboard states and in Germany. How is LMO Insurer classified in Germany?

Alien An insurer's domicile of incorporation is the state or district in which it became an incorporated company. LMO Insurer is incorporated in the state of New Hampshire, so it is an alien insurer in Germany.

Which of the following terms means the ways insurance products are marketed and sold to the public?

Distribution system Distribution systems are the ways insurance products are marketed and sold to the public.

ABC insurer is incorporated in Texas. Which of the following is true?

ABC insurer is alien in Great Britain. ABC insurer is incorporated in Texas, so it is a domestic in Texas, foreign in Louisiana and alien in Great Britain.

All producers under the _________ are captive agents and employees of the insurer.

Career agency system All producers under the career agency system are captive agents and employees of the insurer.

A domestic insurer is:

An insurance company conducting business in the state in which it is incorporated. An insurer's domicile of incorporation is the state or district in which it became an incorporated company. An insurer that conducts business in the state it was incorporated is a domestic insurer.

What must an insurer have to be admitted?

Certificate of authority Admitted, or authorized, insurers must have a certificate of authority to transact insurance in a particular state.

There are three types of private insurers. Which of the following is a true statement about the different insurers?

An insurer that conducts business in countries that it was not incorporated in is an alien insurer. An insurer that conducts business in states other than the state in which it was incorporated is a foreign insurer. An insurer that conducts business in countries that is was not incorporated in is an alien insurer. Conducting business in the state where it was incorporated is a domestic insurer.

All of the following statements regarding unauthorized insurers are true, EXCEPT:

Excess and surplus lines insurers must apply for a certificate of authority to become admitted. Authorized insurers are also referred to as admitted or licensed insurers. Unauthorized, (non-licensed or nonadmitted) do not have licensure because they have not yet applied, have applied and been denied licensure, or are excess and surplus lines insurers. Even though excess and surplus lines insurers are considered unauthorized insurers in a state, they are permitted to conduct insurance business in that state.

Jake is an insurance agent who owns the renewals on his clients' policies. What type of agent is Jake?

Independent agent Independent agents may work for many insurers and have control and ownership over their clients' accounts.

Agents who own the policies they sell and can work for multiple insurers are known as:

Independent agents Independent agents have control of and own the policies they sell and may work for multiple insurers.

XYZ insurer is incorporated in the District of Columbia, but is authorized to sell life and health insurance in Maryland, New York, Pennsylvania and West Virginia. Which of the following is true?

XYZ insurer is domestic in the District of Columbia, foreign in Pennsylvania and West Virginia. An insurer is domestic in the state, region or district in which it was incorporated, foreign in a state, region or district it was not incorporated, and alien in a country in which it was not incorporated.

LMO Insurer is incorporated in New Hampshire, conducts business in all of the eastern seaboard states and in Germany. How is LMO Insurer classified in Germany?

Alien An insurer's domicile of incorporation is the state or district in which it became an incorporated company. LMO Insurer is incorporated in the state of New Hampshire, so it is an alien insurer in Germany.

An alien insurer is:

An insurance company conducting business in a foreign country An insurer's domicile of incorporation is the state or district in which it became an incorporated company. An alien insurer is any insurer that conducts business in a country in which it wasn't incorporated.

An excess and surplus lines insurer is categorized as a(n):

Unauthorized insurance company Even though excess and surplus lines insurers are considered unauthorized insurers in a state, they are permitted to conduct insurance business in that state.

Which of the following is NOT an independent rating service?

NAIC The NAIC (National Association of Insurance Commissioners) is an organization of state insurance commissioners who promote the standardization of insurance regulation.

A foreign insurer is:

An insurance company conducting business in a state in which it wasn't incorporated An insurer's domicile of incorporation is the state or district in which it became an incorporated company. A foreign insurer is any insurer that conducts business in a state or district in which it wasn't incorporated. Be sure you are not tempted to confuse foreign and alien insurers.

Which of the following agents owns policies sold, and is permitted to work for multiple insurers?

Independent agent Independent agents have control of and own the policies they sell, and may be appointed to work for multiple insurers.