Cook

Question 1

Voluntary market characteristics

Answer 1

Limiting coverage (compliance level)
Limited medical payments coverage
High deductibles for collision
Significantly higher premium

Question 2

Residual Market Programs

Answer 2

Automobile insurance plans
JUAs
Others

Question 3

Automobile Insurance Plans (Assigned Risk Plan)

Answer 3

All auto insurers in a state assigned portion of high risk drivers based on market share

Question 4

Assigned Risk Plan characteristics

Answer 4

Demonstrate unable to obtain insurance within certain number of days
Minimum limits of insurance offered at least equal to compulsory requirement
Ineligibiles (no license, felony within 36 months, habitual violators)

Question 5

Joint Underwriting Association

Answer 5

Uses servicing insurers; Agents/brokers submit applications to JUA or servicing insurer. JUA sets rate and approves form

Question 6

Difference between Assigned Risk and JUA

Answer 6

JUA shares losses amongst pool; servicing insurers compensated for service based on proportion of market share

Question 7

Reinsurance facilities for high risk drivers

Answer 7

Insurers accept all applicants with license
If insurer does not wish to retain, can assign to reinsurance facility while continuing to service it
Losses shared by market share

Question 8

Maryland state fund

Answer 8

Insures high risk drivers

Private insurers subsidize losses and charge surcharge to own insureds

Question 9

Automobile insurance rate regulation

Answer 9

Purchasing insurance a right, not a privilege

Desire of companies to make profit conflicts with perceived right

Question 10

FAIR Plans

Answer 10

Provides coverage when insurers in voluntary market cannot offer coverage at reasonable rate
Candidates tend to be susceptible to damage caused by riots and civil commotion
Must apply through authorized agent or broker

Question 11

Policy issuing syndicate

Answer 11

FAIR plan – issues policies, staff handle UW, processing, claims handling

Question 12

Servicing organization in FAIR

Answer 12

Voluntary insurers handle maintenance of contract, and perform services in return for portion of premium

Question 13

FAIR plan qualifications

Answer 13

Property must be ineligible in voluntary market and inspected by FAIR plan administrator
Must meet certain basic safety levels under conditions under owner’s control (ex: fireworks factory as neighbor)

Question 14

Uninsurable properties under FAIR

Answer 14

Vacant / open to trespass
Poorly maintained / unrepaired fire damage
Subject to unacceptable physical hazards
Violates law of public building
Not built in accordance with building and safety codes

Question 15

Difference in condition policy

Answer 15

More coverage than FAIR plan (limited number of perils such as vandalism, riot, windstorm)

Question 16

Beachfront and Windstorm Plan eligibility

Answer 16

Must be ineligible for voluntary coverage
Must be located in designated coastal areas (some states – within certain distance from shore)
Mobile homes may be eligible if they meet certain construction / tie-down requirements

Question 17

Uninsurable properties under Beachfront and Windstorm Plan

Answer 17

Poorly maintained
Unrepaired damage
Subject to poor housekeeping
Violate law or public policy