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Life Insurance > Insurance companies – Lesson 2 > Flashcards

Insurance companies – Lesson 2 Flashcards

0
Q

What is an admitted insurer?

A

Any insurer approved to transact business in California is an admitted one, without regard to location.

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1
Q

Who is an admitted insurer?

A
  1. Domestic
  2. Foreign
  3. Alien
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2
Q

Who writes the insurance code?

A

The state legislature

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3
Q

What type of an insurance company issues participating policies?

A

Mutual

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4
Q

What is the retention limit?

A

The maximum amount a company is willing to retain on a risk.

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5
Q

What is a foreign insurer?

A

An insurer organized under the laws of any jurisdiction outside the State of California, whether or not admitted.

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6
Q

An insurer admitted to do business in California may elect not to participate in a guaranty Association. True or false?

A

Falls

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7
Q

An independent agent is:

A

Someone who has appointments with several insurers and represents the insurers.

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8
Q

A managing general agent is a licensed insurance agent:

A
  1. Has to power to appoint, supervise, or terminate the appointment of local agents in a specified territory.
  2. Has management contract with one or more admitted insurers.
  3. Has the power to accept or decline risk.
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9
Q

When an insurance company reinsurers a risk, the ceding company relinquishes all responsibility for the payment of any potential loss. True or false?

A

False

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10
Q

Agents may possess three types of authority: Express, implied, and apparent. Give an example of an apparent authority.

A

An agent uses the application forms and literature of an insurer with whom he no longer has an appointment.

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11
Q

Description of a reciprocal:

A

An unincorporated association of subscribers who agree to ensure one another.

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12
Q

An insurance agent has a fiduciary duty to:

A
  1. The insurer
  2. The applicant
  3. The client
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13
Q

The insurance commissioner should complete an audit of each insurer doing business in California at least:

A

Once every five years

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14
Q

Who does a solicitor represent?

A

A property and casualty agent/broker.

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15
Q

What are the functions of an actuary?

A
  1. Prepare annual statements
  2. Determine dividends
  3. Determine premiums and make sure they are adequate
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16
Q

When a mutual insurer becomes a stock insurer, it is referred to as:

A

Demutualization

17
Q

Who offers insurance coverage?

A
  1. Federal government
  2. State governments
  3. Private companies
18
Q

The insurance commissioner’s position is an appointed or elected position?

A

Elected by the public

19
Q

The commissioner has a right to try to rehabilitate a financially impaired company. This right is to:

A

Protect the policyholders

20
Q

An insurance agent is:

A

Licensed to transact property/casualty insurance.

21
Q

What is an exclusive agent?

A

Is appointed by one company.

22
Q

An agency relationship can be defined as:

A

A situation where one party (agent) has the authority to act for another (the principal) in dealing with third parties.

23
Q

An agent, as a fiduciary, should:

A
  1. Have a good business reputation.
  2. Qualified to transact insurance business.
  3. Act in good faith.
24
Q

Mutual insurers are corporations owned by whom?

A

Policy owners

25
Q

Policies issued by mutual insurers are referred to as what?

A

Participating policies

26
Q

Stock insurers are corporations organized for the purpose of making a profit for whom?

A

Stockholders

27
Q

The type of policy issued by stock companies is called what?

A

Non-participating

28
Q

Do policyholders in a stock Insurer share the companies profits?

A

No, dividends are paid to the stockholders.

29
Q

In a mutual company, any surplus is return to whom and in what form?

A
  1. Policy owner

2. In the form of dividend

30
Q

Surplus can be defined as excess earned or saved by the insurance company. Earned surplus is generated by:

A

Mortality, interest, and expenses

31
Q

Who are Reinsurer?

A

Insurance companies that assume part of a risk written by a primary carrier which is referred to as the ceding company.

32
Q

The body of law regulating the insurance industry is what?

A

Insurance code

33
Q

The interpretation of policy provisions is not a primary objective of insurance regulation. True or false?

A

True

34
Q

What is one of the major concerns of the commissioner regarding insurance company transacting business in the state of California?

A

The solvency of the insurance company.

35
Q

Records must be delivered to the commissioner within how many days following a written demand?

A

30 days

36
Q

An exclusive agent is also known as what?

A

Captive agent

37
Q

A person who is not appointed by an insurer, but rather for compensation acts on behalf of a client to transact insurance other than life and health insurance is known as what?

A

A broker

38
Q

A person who has an agency agreement with more than one insurance company is known as what?

A

Independent agent

39
Q

It normally takes how many years for the insurance company to be able to recapture the costs of issuing a policy?

A

Three years

Life Insurance (19 decks)

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