RMIN Chapter 5

Question 1

what are the major types of private insurers?

Answer 1

-stock insurers
-mutual insurers
-lloyds

Question 2

what are stock insurers?

Answer 2

a corporation owned by stockholders

Question 3

what is the objective of stock insurers?

Answer 3

to earn profit for stockholders by increasing the value of stock and paying dividends

Question 4

what are mutual insurers?

Answer 4

a corporation owned by policyholders

Question 5

how are profits distributed for mutual insurers?

Answer 5

distributed to policyholders by dividends or rate reductions

Question 6

what are the types of mutual insurers?

Answer 6

-assessment mutual
-advance premium mutual
-fraternal insurer

Question 7

what is an assessment mutual ?

Answer 7

insurer has the right to assess policyholders an additional amount if the insurer’s financial operations are unfavorable

Question 8

what is advance premium mutual?

Answer 8

insurer does not issue assessable policies

Question 9

what is fraternal issuer ?

Answer 9

provides life and health insurance to members of a social or religious organization

Question 10

what is Lloyds?

Answer 10

worlds leading market that provides services and physical facilities for its members to write specialized lines of insurance

Question 11

who is NOT an insurer?

Answer 11

Lloyd’s

Question 12

who is a group who underwrites insurance for syndicates?

Answer 12

Lloyds

Question 13

what do Lloyd’s brokers do?

Answer 13

represent policyholders to arrange coverage with syndicates

Question 14

what do Lloyd’s syndicates do?

Answer 14

offer insurance contracts in the market

Question 15

who are Lloyd’s syndicates?

Answer 15

members
managing agents
underwriters

Question 16

who join together and provide capital to form syndicates, receiving profits or bearing losses?

Answer 16

Lloyd’s members

Question 17

who manages the syndicates who typically specialize in certain lines?

Answer 17

Lloyd’s managing agents

Question 18

who works for the syndicates to assess risks and determine premiums?

Answer 18

Lloyd’s underwriters

Question 19

what are the marketing systems?

Answer 19

-insurance agents
-brokers
-surplus line brokers
-managing general agent

Question 20

who legally represents the principal (insurance company) and has the authority to act on the principals behalf?

Answer 20

insurance agents

Question 21

what is legally responsible for all acts of an agent when the agent is acting within the scope of authority ?

Answer 21

the principal

Question 22

what is an agent binding authority ?

Answer 22

provide temporary insurance until the policy is actually written

Question 23

who usually has no authority to issue binders?

Answer 23

life insurance agents

Question 24

what is typically provided by property and casualty agents?

Answer 24

agent binding authority

Question 25

who legally represents the insured and solicits applications and places coverage with the appropriate insurer?

Answer 25

brokers

Question 26

who is paid commission from the insurer?

Answer 26

brokers

Question 27

in general, who does NOT have authority to bind?

Answer 27

brokers

Question 28

what is very important in Commercial Property and Casualty ?

Answer 28

Large Brokerage Firms

Question 29

what are surplus line brokers?

Answer 29

are “wholesalers” who work with retail agents and brokers

Question 30

who is licensed to place business with a “non admitted” insurer?

Answer 30

surplus line brokers

Question 31

what are surplus lines?

Answer 31

refer to any type of insurance for which there is no available market in the state

Question 32

what is a non admitted insurer?

Answer 32

an insurer not licensed to do business in the state

Question 33

what is a managing general agent?

Answer 33

specialty producer that has underwriting authority from an insurer

Question 34

what usually represents several unrelated insurers?

Answer 34

independent agency

Question 35

what type of agency allows agents to be paid a commission which varies by the line of insurance ?

Answer 35

independent agency

Question 36

agents may be authorized to adjust small claims and may provide loss control services to their insurers with what type of agency?

Answer 36

independent agency

Question 37

what type of agency is where the agent represents only one insurer or group of insurers under common ownership?

Answer 37

exclusive agency system (captive agents)

Question 38

what type of agency is does not let agents own the expirations or renewal rights to the policies?

Answer 38

exclusive agency system (captive agents)

Question 39

what are the types of agents?

Answer 39

independent and exclusive/captive

Question 40

who usually represents several unrelated insurers?

Answer 40

independent agents

Question 41

who represents only one insurer or groups of insurers under common ownership?

Answer 41

exclusive/ captive

Question 42

what are other distribution systems?

Answer 42

direct writer and direct response

Question 43

what is a direct writer?

Answer 43

an insurer in which the salesperson is an employee of the insurer not an independent contractor

Question 44

how are direct writers compensated?

Answer 44

“salary plus” arrangement

Question 45

what is group insurance marketing?

Answer 45

methods to sell individual policies

Question 46

who is group insurance marketing sold to?

Answer 46

-employer groups
-labor unions
-trade associations
-college and university alumni

Question 47

who sells group insurance marketing products?

Answer 47

group representatives, employees who receive a salary and incentive payments based on sales

Question 48

how do employees typically pay for group insurance marketing?

Answer 48

pay for insurance by payroll deduction