Insurance Chapter 5

Advance Premium Mutual

-Most common mutual -does not issue assessable policies

C

All of the following are property and liability insurance marketing systems EXCEPT A. independent agency system. B. exclusive agency system. C. financial institution distribution system. D. direct writer system.

B

All of the following statements about Lloyd's of London are true EXCEPT A. Lloyd's of London operates as a nonadmitted insurer in most states in the United States. B. Lloyd's of London syndicates are not permitted to write reinsurance. C. Lloyd's of London does not write insurance; insurance is written by syndicates that are members of Lloyd's of London. D. Members of Lloyd's of London write coverage on many diverse loss exposures.

Direct Writer

An insurer in which the salesperson is an employee of the insurer, not an independent contractor. ex) Liberty Mutual salesperson selling insurance

Non-admitted insurer

An insurer not licensed to do business in the state.

C

An unincorporated mutual in which insurance is exchanged among the members with each member insuring the other members and, in turn, being insured by the other members, is called a A.stock insurer. B.health maintenance organization. C.reciprocal exchange. D.fraternal insurer.

A

Brenda works for an insurance company that is owned by its policyowners. The company provides life and health insurance to members of a certain religious faith. The type of company that Brenda works for is called a(n) A. fraternal insurer. B. stock insurer. C. assessment mutual. D. reciprocal exchange.

Independent Agency

Business firm that represents several un-related insurers -Paid commission by number of business produced -Agency owns expiration or renewal rights -Can adjust small claims

Fraternal Insurance

For members of Religous Groups

C

Hal sells property and liability insurance. He is an employee of XYZ Insurance Company and is paid a salary plus a bonus based on the amount of insurance he sells. Hal is a(n) A. independent agent. B. exclusive agent. C. direct writer. D. insurance broker.

Assessment Mutual

Has the right to assess policy owners if financial position is unfavorable

Direct Response

Insurer sells directly to consumer by tv or other media

Surplus lines broker

Liscensed to place business with a non-admitted insurer -any type of insurance for which there is no available market within the state, and coverage's must be placed with a non admitted user

A

One marketing system for life and health insurance and property and liability insurance does not use agents or brokers. Instead, potential customers are solicited by television, radio, print ads, and other media. This marketing system is called A.the direct response system. B. the exclusive agency system. C.personal selling distribution system. D. the direct writer system.

C

Paula is involved in insurance marketing. She represents insurance purchasers rather than insurance companies. She solicits insurance applications and then attempts to place the coverage with the appropriate insurer. Paula does not have the authority to bind the insurance coverage. Paula is a(n) A. exclusive agent. B. independent agent. C. insurance broker. D. direct writer.

Broker

Represent the insured -dos not have the power to bind the insurer

Agent

Represent the principal (carrier) -Power to bind the insurer with property and casualty insurance

Lloyds of London

Society of members who underwrite insurance -Does not write insurance -Covers High end or Unusual things ex: Kentucky Derby Horse Health insurance

C

Some property and liability insurance companies market coverages to individuals who are members of a group under a single program of insurance at reduced premiums. Individual underwriting is used. This type of marketing system is known as a(n) A. independent agency system. B. direct writing system. C. mass merchandising system. D. mixed marketing system.

Exclusive Agency

The agent represents only one insurer or group of insurers under common ownership -Don't own expiration or renewal rights -Salaried -Provide strong support to new agents

I only

Which of the following statements about insurance companies is (are) true? Mutual insurance companies are owned by their policyowners. Stock insurance companies can issue assessable policies. neither I nor II I only both I and II II only

II only

Which of the following statements about the independent agency system is (are) true? Independent agents are paid a higher commission rate on new business than on renewal business. Independent agents, rather than the insurers they represent, own the expiration rights to insurance business they write. II only I only both I and II neither I nor II

stock insurer

a corporation owned by stockholders

Mass Merchandising

a plan for selling individually underwritten property and casualty coverage's to group members. Individual underwriting is used. Rate discounts may be given. Employees typically pay with payroll deduction.

Mutual Insurance

corporation owned by Policy holders -Advance premium mutual -Assessment Mutual -Fraternal insurer

Direct Response System

marketing system in which insurance products are sold directly to consumers without face to face interaction. -Internet -Phone -Ads

Reciprocal Exchange

subscribing members who exchange contracts with each other