Chapter 1 - Intro to Insurance

Question 1

An insurer owned by
Stockholders.

Answer 1

Stock Insurance Company

Question 2

An insurer authorized to do business in the state.

Answer 2

Admitted

Question 3

An insurer not authorized
to do business in the state.

Answer 3

Non-Admitted

Question 4

An insurer organized under the laws outside the United States.

Answer 4

Alien Insurer

Question 5

An insurer organized
under the laws of another state within the United States.

Answer 5

Foreign Insurer

Question 6

An insurer organized under
the laws of a state.

Answer 6

Domestic Insurer

Question 7

Protects the public from
overly intrusive collection practices.

Answer 7

Fair Credit Reporting Act (FCRA)

Question 8

An insurer owned by policy holders, or members

Answer 8

Mutual Insurance Company

Question 9

The department that reviews statistical information used to develop the rate.

Answer 9

Actuarial Department

Question 10

The department that selects the risks.

Answer 10

Underwriting Department

Question 11

A type of Producer’s authority that is written.

Answer 11

Express

Question 12

A type of Producer’s
authority that the public assumes.

Answer 12

Implied

Question 13

Created when the producer exceeds the authority expressed in the agency contract

Answer 13

Apparent

Question 14

Requires each consumer to receive a Privacy Notice Annually.

Answer 14

Gramm-Leach-Bliley Act

Question 15

Risk that has a chance for
loss, gain, or neither.

Answer 15

Speculative Risk

Question 16

Uncertainty concerning a loss.

Answer 16

Risk

Question 17

Cause of a potential loss.

Answer 17

Peril

Question 18

The only risk that can be insured and not provide chance for gain.

Answer 18

Pure Risk

Question 19

A physical condition that increases the probability of loss.

Answer 19

Physical Hazard

Question 20

Increases the chance of loss.

Answer 20

Hazard

Question 21

Attitude that increases the probability of loss. Also carelessness.

Answer 21

Morale Hazard

Question 22

Dishonest tendency that increases the probability of loss.

Answer 22

Moral Hazard

Question 23

As the number of units in a group increases, the more likely it is to predict a particular outcome. This is known as the ______ of _______ _________.

Answer 23

Law of Large Numbers

Question 24

The principle that people will seek insurance for risks that are hard to insure.

Answer 24

Adverse Selection