PROPERTY AND CASUALTY TEST

oral or written statements trying to injure a person or entity is prohibited especially when it is critical of the financial status of a person or insurer

defamation

what are the 3 categories by their state or incorporation ror where their corporate charter was organized

domestic foreign alien

officially tied the financal services modernization act of 1999 removed the barriers between commercial banking, investment banking, and insurance.

Gramm-Leach-Billey Act

Oily rags stored in the insured's garage is an example of: Select one: a. Risk. b. Peril. c. Hazard. d. Loss

Hazard

What increases the chance of a peril occurring? Select one: a. Hazards b. Warranty c. Deductible d. Peril

Hazards

A mutual insurance company is: I. A full-fledged insurance organization operated on a non-profit basis. II. Owned by policyholders. III. Controlled by trustees and officers.

I, II, AND III

An agent's authority to represent the principal may be: I. Implied. II. Specific or expressed. III. Apparent. Select one: a. I only. b. I and II. c. I, II and III. d. III only.

I, II, AND III

Which of the following are defined as part of the consideration of an insurance contract? I. Statements made in the application by the insured. II. Payment of the premium. III. Assumption of responsibility by the insurer.

II AND III

The uncertainty or chance of a loss occuring

Risk

states that anyone that has committed a felony must receive writted authority from a regulatory official Commissioner deputy, etc. before working in insurance that affects interstate commerce caled a what waiver

The violent crime control and law enforcement act of 1994 AND 1033 WAIVER

ALL of the following are TRUE of appointed Property and Casualty Agents EXCEPT: Select one: a. They act on behalf of the insurer. b. They act on behalf of the insured. c. They are authorized to solicit contracts of insurance. d. Their actions and knowledge are binding on the insurance company.

They act on behalf of the insured

this principle states that the larger the homogenous group an insurer covers the prediction for his losses for that group is more statistically accurate

law or large numbers

Insurance is our most common form of risk management. In a policy contract what is one party is transferring the risk of financial loss to an insurance company

managing risk

insurance companies selltheir porducts and make their product avaiblable to the publish in several formats

marketing distribution system

Distributing misleading or false information and orally deceiving the public with regard to a policy's terms and benefits is illegal

misrepresentation

dishonest acts and frad such as lying in an application or claims for or having a conviction of arson or murder

moral hazard

recklessness and irresponsibility or blatant lack of concern for handing risks in a prudent manner such as driving while intoxicated or without seatbelt

morale hazard

causes of loss or actualevents from which decreases are suffered that are covered by the policy like the premature death of a working spouse disease accidental injury or wind hail fire burglary or flood

peril

what are the 3 hazards

physical moral morale

physical condition or status that increases the chance for a loss like high blood pressure, blindness, being a smoker and other such tangible onditions

physical hazard

$ loss / claim no $ gain

pure

offering an accepting any incentives for buying a policy including money, unauthorized discounts, or money back, special favors or personal services are all illegal acts

rebates

decrease the possibility or significance of loss when the loss cannot e avoided

reduction

ethe three most common ways to avoid adverse selection are

restriction of coverage higher rates declination`

bearing the loss yourself if the loss occurs

retention

The department of insurance and commissioner can do what to a producer's license

revoke, non-renew, suspend, or refuse to issue

establishing a homogenous group with which to share the risks for similar losses so that losses are less per individual

sharing

$ loss / claim $ gain

speculative not insurrable

shifting the loss from a risk to another party by contract is a common form of transferring risks

transfer

when a producer influences a consumer to replace a present policy with a different one. This is only acceptable if the producer gave the consumer better coverage or a better deal

twisting

changing rates based on marital status, race, color, national origin, creed or ancestry within the same mortality class is illegal

unfair discrimination

Pure Risks are

Insurable

What are the 5 ways of handling risk?

- avoidance -retention - sharing - reduction - transfer

An applicant for a license must:

- be at least 18 years of age - reside in or work mainly from an office located in LA - Complete pre-licensing education required to prepare for state required exam -paid their fees and submitted an application $50 -succesffully pass their exame with 70% or higher

What are the 6 elements of insurable risks?

- loss must be unexpected - it has to be measured - there has the be a large homogenous group - the loss must not be completely disastrous - must not be mandatory - predictable frequencies

What are the 7 types of insurers

- stock comapnies - mutual companies - fraternal benefit societies - reciprocal insurers - self- insurers - Lloyds underwriters - reinsurance - suplus lines

What are the duties of the commissioner

-Issuing or revoking licenses and certificates of authority -Hire employees and examiners and examine the records of any insurer or producer -Subpoena witnesses and conduct hearings for alleged violations of Insurance Code -Giving out cease and desist orders and impose penalties for violations of the insurance Code

What are the 10 unfair trade practices

-misrepresentation -false advertisig -twisting -churning -defamation -boycott, coercion, or intimidation -false financial statemets -unfair discrimination -rebates

How long are temporary licenses available and what reasons do you need?

180 days/ 6 months; - death - disability - active military services

If you have a P & C license you must submit how many hours of CE and what specifics?

24 hours; 3 hours must be in flood 3 hours must be in ethics

If any court, judge, jurisdiction or governmental agency in LA or anywhere takes any administrative action against a producer the produce must report this within how many days

30 days

How long does a producer has toe notify the department that their mailing, work or home address changed?

30 days, business or personal

Each of the following possesses a valid insurable interest EXCEPT: Select one: a. A father concerned about insuring the residence of his son. b. A person who owns a home. c. Bank holding a mortgage on someone else's home. d. A condominium unit owner. Feedback

A father concerned about insuring the residence of the son

Which of the following terms means that the purchaser of insurance MUST be in a position to lose money or something of value if the contingency insured against should happen? Select one: a. Insurable interest b. Adhesion c. Indemnification d. Executory

A. Insurable interest

Which of the following is the CORRECT term when a contract is prepared by one party and submitted to the other party on a take-it or leave-it basis and where there is no bargaining power on the wording of the contract? Select one: a. Adhesion. b. Aleatory. c. Conditional. d. Valued contract.

Adhesion

Which of the following statements is TRUE? Select one: a. Agents can bind coverage. b. Agents and brokers represent insurance companies. c. Brokers cannot bind coverage. d. Agents in the field of Property and Causalty issue conditional receipts.

Agent can bind coverage

Insurance companies incorporated under the laws of foreign countries are: Select one: a. Domestic companies. b. Foreign companies. c. Alien companies. d. None of the above.

Alien companies

An insurance company that is licensed to do business in Louisiana is called: Select one: a. An authorized company. b. A fraternal company. c. Permitted company. d. Domestic company.

An authorized company

What part of an insurance contract would identify the nature of the coverage provided by the insurer? Select one: a. Endorsements. b. Insuring clause c. Conditions. d. Exclusions.

B. INSURING CLAUSE

ALL of the following are methods of handling risk EXCEPT: Select one: a. Risk transfer. b. Risk retention. c. Risk elimination d. Risk reduction.

C. Risk Elimination

ALL of the following are TRUE about insurable risk EXCEPT: Select one: a. The law of large numbers should apply. b. The loss must not be catastrophic in nature. c. The loss must not be definite and definable. d. The loss must be large enough to create hardship.

C. The loss must not be definite and definable

The leagal term for the order to STOP

Cease and desist

An insurer must first get what from the commissioner to sell insurance products in this state

Certificate of Authority

What permits an insurer to transact insurance in Louisiana? a. Certificate of authority b. Agents agreements. c. An official appointment. d. Show cause hearing.

Certificate of authority

ALL of the following are essential elements in an insurance contract EXCEPT: elect one: a. Counter-offer. b. Agreement. c. Consideration. d. Competent parties.

Counter Offer

A stock insurance company is: Select one: a. Any insurance company incorporated in and having its home office in Louisiana. b. An insurance company incorporated in some other state, but having its executive or home office in Louisiana. c. An insurance company owned and controlled by the policyholder and directly managed by a board of trustees or directors who are chosen by the policyholder. d. An insurance company with a stated amount of capital stock owned by stockholders who compose the company.

D. AN INSURANCE COMPANY WITH A STATED AMOUNT OF CAPITAL STOCK OWNED BY STOCKHOLDERS WHO COMPOSE THE COMPANY

A peril can be defined as: Select one: a. Condition increasing the chance of loss. b. One time event definite in time and place. c. Transfer of pure risk. d. Cause of a loss.

D. Cause of a loss

ALL of the following would guard against adverse selection EXCEPT: Select one: a. Rating-up substandard risks. b. Common policy exclusions. c. Endorssement waiving a specific condition from the coverage. d. Inclusion of a deductible.

D. INCLUSION OF A DEDUCTIBLE

Which of the following would constitute ACCEPTANCE of an offer for insurance? Select one: a. Silence on the part of either party. b. Issuance of a counter-offer by the insurer. c. Completion of an application by a prospective insured. d. Issuance of a binder by the agent.

D. Issuance of a binder by the agent

ALL of the following is TRUE regarding a reciprocal insurance company EXCEPT: Select one: a. If funds are insufficient to pay claims, the subscribers can be assessed for additional revenue. b. It is managed by an attorney-in-fact. c. Each subscriber assumes part of the risk of all other subscribers. d. Members are grouped into syndicates.

D. Members are grouped into syndicates

Which of the following BEST describes risk? Select one: a. Chance for gain or loss. b. Decrease of economic value. c. Original cause of loss. d. Uncertainty of loss.

D. Uncertainty of loss

Restoring an insured to the economic position enjoyed prior to a loss is: Select one: a. Insurance b. Indemnification c. Insured. d. Uncertainty.

Indemnification

The tansfer of risk from one party to another for a price BEST defines: a. Pure risk. b. Speculative risk. c. Insurable interest. d. Insurance.

Insurance

group of investors (called a syndicate) willing to back the risk of a policy in exchange for receiving a premium with people who want insurance

Lloyds

Specutlative risks are

Not insurable

A non-admitted insurer is: Select one: a. Required to participate in the Property and Casualty Guaranty Association. b. Not licensed to transact business in Louisiana. c. Not licensed to transact business outside Louisiana. d. A member of the Louisiana Automobile Insurance Plan.

Not licensed to transact business in Louisiana

An insurance contract is a unilateral contract which means that: Select one: a. Both parties must give up something of value. b. Contract provisions are not required. c. Both parties must perform with utmost good faith. d. Only the insurer makes an enforceable promise.

Only the insurer makes an enforceable promise

A deductible in an insurance contract is an example of which means of handling risk? Select one: a. Retention. b. Control. c. Avoidance. d. Transfer.

RETENTION

Company X has 5,000 policyholders. Company Y has 25,000 policyholders. Company Y is able to make more acurate predictions concerning the number of claims it will have to pay than Company X because of: Select one: a. The ability to make accurate predicitons and law of large numbers. b. As the number of risks increases, the ability to make accurate predictions increases also. c. Law of large numbers. d. Quantity accumulation.

The ability to make accuratet predictions and law of large numbers

Which of the following conditions is NOT required to be met before coverage is procured through the surplus lines market? Select one: a. The coverage must be procured through a licensed surplus lines broker. b. The coverage must be unavailable from any admitted insurer. c. An effort must be made to first place the coverage through an admitted insurer. d. The price for the coverage must be higher in the surplus market than what is charged by admitted insurers.

The price for the coverage must be higher in the surplus market than what is charged by admitted insurers.

What is the voluntary abandonment or extinguishment by a party of a legal right or advantage? Select one: a. Waiver b. Estoppel c. Representation d. Warranty

WAIVER

lower or poorer risks more prone to losses than normal risks

adverse selection

staying away from a risk altogether

avoidance

(related to twistig) using misrepresentation to replace a competitor's policy with one from a company represented by the producer to get the larger first-year commission, even if it is not in the best interests of the consumer

churning

Any advertising print multimedia internet or otherwise cannot deceive the public in anyway and misrepresenting terms benefits advantages, dividends, financial strength or misrepresenting the intent of a policy loans or assignments or saying an insurance policy is the same as a share of stock are all prohibited acts

false advertising

illegal acts intended to stop fair trade or monopolize insurance business are prohibited

false financial statements

a situation increasing the odds of a loss or a circumstance that increases risks or exposure to risks

hazard