Study 3 Trivia Time

Question 1

Which type of insurer operates for the benefit of its members only, where they share risk and maintain low expenses?

a) Stock company
b) Lloyd’s market
c) Captive insurer
d) Mutual insurer

Answer 1

d) Mutual insurer

A mutual insurance company is a form of cooperative enterprise that is owned by policyholders and operates for the benefit of the policyholders only

Question 2

All insurance companies operate at the head office level, branch level, and street level, and contain the following departments: administration, actuarial, underwriting, and claims

True or False

Answer 2

True

Question 3

Reinsurance is insuring again by transferring to another insurance company all or part of a liability assumed
True or False

Answer 3

True

Reinsurance is also used to inc insurer’s capacity to write business, maintain a proper reserve/liability balance, reduct the effect of a catastrophic loss, provide stability in a fluctuating market, and enable an insurer to cease operations

Question 4

Proportional and non-proportional reinsurance are the only two types of reinsurance
True or False

Answer 4

False

Reinsurance may be transacted PROPORTIONALLY, NON-PROPORTIONALLY, on a TREATY BASIS, or on a CASE-BY-CASE (FACULTATIVE BASIS)