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