Question 1

The field of insurance is dominated by relatively few companies.

Accepted Answer

A) True 
 B)False  True

Question 2

The largest line of coverage now sold by life insurers is that of annuities.

Accepted Answer

A) True 
 B)False  True

Question 3

Match the descriptions with their terms:
-A nonprofit society using a lodge system to sell life and health insurance to members is a/an _________________.

Accepted Answer

A)  American Agency System 
B)  assessable policy 
C)  attorney-in-fact 
D)  direct response 
E)  direct writer
F) exclusive agent
G) factory mutual
H) farm mutual
I) fraternal carrier
J) general agent
K) general insurance
L) general writing mutual
M) Guaranty funds
N) interinsurance exchange
O) involuntary coverage
P) life and health insurance
Q) Lloyd's Association
R) Lloyd's of London
S) mass merchandising
T) mutual company
U) participating and deviating
V) personal coverages
W) private insurance
X) stock company
Y) surplus line market
Z) Syndicates 
A)  American Agency System 
B)  assessable policy 
C)  attorney-in-fact 
D)  direct response 
E)  direct writer
F) exclusive agent
G) factory mutual
H) farm mutual
I) fraternal carrier
J) general agent
K) general insurance
L) general writing mutual
M) Guaranty funds
N) interinsurance exchange
O) involuntary coverage
P) life and health insurance
Q) Lloyd's Association
R) Lloyd's of London
S) mass merchandising
T) mutual company
U) participating and deviating
V) personal coverages
W) private insurance
X) stock company
Y) surplus line market
Z) Syndicates I

Question 4

Direct distribution of property-liability insurance is becoming more common.

Accepted Answer

A) True 
 B)False

Question 5

The channel of distribution involving the least use of intermediaries between the insurer and the consumer is

Accepted Answer

A)  the American Agency System, 
B)  mass merchandising, 
C)  direct writing, 
D)  direct response, 
E)  commercial banks. 
A)  the American Agency System, 
B)  mass merchandising, 
C)  direct writing, 
D)  direct response, 
E)  commercial banks.

Question 6

Match the descriptions with their terms:
-The two main branches of insurance are property-liability insurance and _________________.

Accepted Answer

A)  American Agency System 
B)  assessable policy 
C)  attorney-in-fact 
D)  direct response 
E)  direct writer
F) exclusive agent
G) factory mutual
H) farm mutual
I) fraternal carrier
J) general agent
K) general insurance
L) general writing mutual
M) Guaranty funds
N) interinsurance exchange
O) involuntary coverage
P) life and health insurance
Q) Lloyd's Association
R) Lloyd's of London
S) mass merchandising
T) mutual company
U) participating and deviating
V) personal coverages
W) private insurance
X) stock company
Y) surplus line market
Z) Syndicates 
A)  American Agency System 
B)  assessable policy 
C)  attorney-in-fact 
D)  direct response 
E)  direct writer
F) exclusive agent
G) factory mutual
H) farm mutual
I) fraternal carrier
J) general agent
K) general insurance
L) general writing mutual
M) Guaranty funds
N) interinsurance exchange
O) involuntary coverage
P) life and health insurance
Q) Lloyd's Association
R) Lloyd's of London
S) mass merchandising
T) mutual company
U) participating and deviating
V) personal coverages
W) private insurance
X) stock company
Y) surplus line market
Z) Syndicates

Question 7

A mutual insurer is owned by policyholders and is organized as a nonprofit corporation.

Accepted Answer

A) True 
 B)False

Question 8

Match the descriptions with their terms:
-A type of insurer using exclusive agents to sell insurance and to serve as the insurer's main contact with customers is called a/an _________________.

Accepted Answer

A)  American Agency System 
B)  assessable policy 
C)  attorney-in-fact 
D)  direct response 
E)  direct writer
F) exclusive agent
G) factory mutual
H) farm mutual
I) fraternal carrier
J) general agent
K) general insurance
L) general writing mutual
M) Guaranty funds
N) interinsurance exchange
O) involuntary coverage
P) life and health insurance
Q) Lloyd's Association
R) Lloyd's of London
S) mass merchandising
T) mutual company
U) participating and deviating
V) personal coverages
W) private insurance
X) stock company
Y) surplus line market
Z) Syndicates 
A)  American Agency System 
B)  assessable policy 
C)  attorney-in-fact 
D)  direct response 
E)  direct writer
F) exclusive agent
G) factory mutual
H) farm mutual
I) fraternal carrier
J) general agent
K) general insurance
L) general writing mutual
M) Guaranty funds
N) interinsurance exchange
O) involuntary coverage
P) life and health insurance
Q) Lloyd's Association
R) Lloyd's of London
S) mass merchandising
T) mutual company
U) participating and deviating
V) personal coverages
W) private insurance
X) stock company
Y) surplus line market
Z) Syndicates

Question 9

Match the descriptions with their terms:
-An insurer that is among the earliest known types of insurers in the world is _________________.

Accepted Answer

A)  American Agency System 
B)  assessable policy 
C)  attorney-in-fact 
D)  direct response 
E)  direct writer
F) exclusive agent
G) factory mutual
H) farm mutual
I) fraternal carrier
J) general agent
K) general insurance
L) general writing mutual
M) Guaranty funds
N) interinsurance exchange
O) involuntary coverage
P) life and health insurance
Q) Lloyd's Association
R) Lloyd's of London
S) mass merchandising
T) mutual company
U) participating and deviating
V) personal coverages
W) private insurance
X) stock company
Y) surplus line market
Z) Syndicates 
A)  American Agency System 
B)  assessable policy 
C)  attorney-in-fact 
D)  direct response 
E)  direct writer
F) exclusive agent
G) factory mutual
H) farm mutual
I) fraternal carrier
J) general agent
K) general insurance
L) general writing mutual
M) Guaranty funds
N) interinsurance exchange
O) involuntary coverage
P) life and health insurance
Q) Lloyd's Association
R) Lloyd's of London
S) mass merchandising
T) mutual company
U) participating and deviating
V) personal coverages
W) private insurance
X) stock company
Y) surplus line market
Z) Syndicates

Question 10

Match the descriptions with their terms:
-An insurance company without capital other than advance premiums deposited by its owners is a reciprocal, also called a/an ________________.

Accepted Answer

A)  American Agency System 
B)  assessable policy 
C)  attorney-in-fact 
D)  direct response 
E)  direct writer
F) exclusive agent
G) factory mutual
H) farm mutual
I) fraternal carrier
J) general agent
K) general insurance
L) general writing mutual
M) Guaranty funds
N) interinsurance exchange
O) involuntary coverage
P) life and health insurance
Q) Lloyd's Association
R) Lloyd's of London
S) mass merchandising
T) mutual company
U) participating and deviating
V) personal coverages
W) private insurance
X) stock company
Y) surplus line market
Z) Syndicates 
A)  American Agency System 
B)  assessable policy 
C)  attorney-in-fact 
D)  direct response 
E)  direct writer
F) exclusive agent
G) factory mutual
H) farm mutual
I) fraternal carrier
J) general agent
K) general insurance
L) general writing mutual
M) Guaranty funds
N) interinsurance exchange
O) involuntary coverage
P) life and health insurance
Q) Lloyd's Association
R) Lloyd's of London
S) mass merchandising
T) mutual company
U) participating and deviating
V) personal coverages
W) private insurance
X) stock company
Y) surplus line market
Z) Syndicates

Question 11

Match the descriptions with their terms:
-An insurance market consisting of risks that have been rejected by domestic insurers is called a/an _________________.

Accepted Answer

A)  American Agency System 
B)  assessable policy 
C)  attorney-in-fact 
D)  direct response 
E)  direct writer
F) exclusive agent
G) factory mutual
H) farm mutual
I) fraternal carrier
J) general agent
K) general insurance
L) general writing mutual
M) Guaranty funds
N) interinsurance exchange
O) involuntary coverage
P) life and health insurance
Q) Lloyd's Association
R) Lloyd's of London
S) mass merchandising
T) mutual company
U) participating and deviating
V) personal coverages
W) private insurance
X) stock company
Y) surplus line market
Z) Syndicates 
A)  American Agency System 
B)  assessable policy 
C)  attorney-in-fact 
D)  direct response 
E)  direct writer
F) exclusive agent
G) factory mutual
H) farm mutual
I) fraternal carrier
J) general agent
K) general insurance
L) general writing mutual
M) Guaranty funds
N) interinsurance exchange
O) involuntary coverage
P) life and health insurance
Q) Lloyd's Association
R) Lloyd's of London
S) mass merchandising
T) mutual company
U) participating and deviating
V) personal coverages
W) private insurance
X) stock company
Y) surplus line market
Z) Syndicates

Question 12

Match the descriptions with their terms:
-Some mutuals are both _________________; that is, they plan both to cut the initial rate somewhat below stock company levels and to pay a dividend, if warranted.

Accepted Answer

A)  American Agency System 
B)  assessable policy 
C)  attorney-in-fact 
D)  direct response 
E)  direct writer
F) exclusive agent
G) factory mutual
H) farm mutual
I) fraternal carrier
J) general agent
K) general insurance
L) general writing mutual
M) Guaranty funds
N) interinsurance exchange
O) involuntary coverage
P) life and health insurance
Q) Lloyd's Association
R) Lloyd's of London
S) mass merchandising
T) mutual company
U) participating and deviating
V) personal coverages
W) private insurance
X) stock company
Y) surplus line market
Z) Syndicates 
A)  American Agency System 
B)  assessable policy 
C)  attorney-in-fact 
D)  direct response 
E)  direct writer
F) exclusive agent
G) factory mutual
H) farm mutual
I) fraternal carrier
J) general agent
K) general insurance
L) general writing mutual
M) Guaranty funds
N) interinsurance exchange
O) involuntary coverage
P) life and health insurance
Q) Lloyd's Association
R) Lloyd's of London
S) mass merchandising
T) mutual company
U) participating and deviating
V) personal coverages
W) private insurance
X) stock company
Y) surplus line market
Z) Syndicates

Question 13

Governments collect more premiums in personal insurance lines than do private insurers.

Accepted Answer

A) True 
 B)False

Question 14

The fastest growing lines of property and liability insurance are liability coverages.

Accepted Answer

A) True 
 B)False

Question 15

Farm mutuals often offer assessable policies.

Accepted Answer

A) True 
 B)False

Question 16

A federal program insures the solvency of private insurers, in a way similar to banks and other financial institutions.

Accepted Answer

A) True 
 B)False

Question 17

Initially, a direct distribution system is more expensive for a company than an indirect one.

Accepted Answer

A) True 
 B)False

Question 18

Match the descriptions with their terms:
-A party appointed to take charge of a reciprocal insurer is a/an _________________.

Accepted Answer

A)  American Agency System 
B)  assessable policy 
C)  attorney-in-fact 
D)  direct response 
E)  direct writer
F) exclusive agent
G) factory mutual
H) farm mutual
I) fraternal carrier
J) general agent
K) general insurance
L) general writing mutual
M) Guaranty funds
N) interinsurance exchange
O) involuntary coverage
P) life and health insurance
Q) Lloyd's Association
R) Lloyd's of London
S) mass merchandising
T) mutual company
U) participating and deviating
V) personal coverages
W) private insurance
X) stock company
Y) surplus line market
Z) Syndicates 
A)  American Agency System 
B)  assessable policy 
C)  attorney-in-fact 
D)  direct response 
E)  direct writer
F) exclusive agent
G) factory mutual
H) farm mutual
I) fraternal carrier
J) general agent
K) general insurance
L) general writing mutual
M) Guaranty funds
N) interinsurance exchange
O) involuntary coverage
P) life and health insurance
Q) Lloyd's Association
R) Lloyd's of London
S) mass merchandising
T) mutual company
U) participating and deviating
V) personal coverages
W) private insurance
X) stock company
Y) surplus line market
Z) Syndicates

Question 19

Match the descriptions with their terms:
-_________________ are established to reimburse policyholders for any losses caused by bankrupt insurers.

Accepted Answer

A)  American Agency System 
B)  assessable policy 
C)  attorney-in-fact 
D)  direct response 
E)  direct writer
F) exclusive agent
G) factory mutual
H) farm mutual
I) fraternal carrier
J) general agent
K) general insurance
L) general writing mutual
M) Guaranty funds
N) interinsurance exchange
O) involuntary coverage
P) life and health insurance
Q) Lloyd's Association
R) Lloyd's of London
S) mass merchandising
T) mutual company
U) participating and deviating
V) personal coverages
W) private insurance
X) stock company
Y) surplus line market
Z) Syndicates 
A)  American Agency System 
B)  assessable policy 
C)  attorney-in-fact 
D)  direct response 
E)  direct writer
F) exclusive agent
G) factory mutual
H) farm mutual
I) fraternal carrier
J) general agent
K) general insurance
L) general writing mutual
M) Guaranty funds
N) interinsurance exchange
O) involuntary coverage
P) life and health insurance
Q) Lloyd's Association
R) Lloyd's of London
S) mass merchandising
T) mutual company
U) participating and deviating
V) personal coverages
W) private insurance
X) stock company
Y) surplus line market
Z) Syndicates

Question 20

Leading states for chartering property-liability insurers include all but one of the following:

Accepted Answer

A)  Massachusetts, 
B)  Vermont, 
C)  Pennsylvania, 
D)  New York, 
E)  Texas. 
A)  Massachusetts, 
B)  Vermont, 
C)  Pennsylvania, 
D)  New York, 
E)  Texas.

Exam 22: Risk Management and the Insurance Industry

The field of insurance is dominated by relatively few companies.

The largest line of coverage now sold by life insurers is that of annuities.

Match the descriptions with their terms: -A nonprofit society using a lodge system to sell life and health insurance to members is a/an _________________.

Direct distribution of property-liability insurance is becoming more common.

The channel of distribution involving the least use of intermediaries between the insurer and the consumer is

Match the descriptions with their terms: -The two main branches of insurance are property-liability insurance and _________________.

A mutual insurer is owned by policyholders and is organized as a nonprofit corporation.

Match the descriptions with their terms: -A type of insurer using exclusive agents to sell insurance and to serve as the insurer's main contact with customers is called a/an _________________.

Match the descriptions with their terms: -An insurer that is among the earliest known types of insurers in the world is _________________.

Match the descriptions with their terms: -An insurance company without capital other than advance premiums deposited by its owners is a reciprocal, also called a/an ________________.

Match the descriptions with their terms: -An insurance market consisting of risks that have been rejected by domestic insurers is called a/an _________________.

Match the descriptions with their terms: -Some mutuals are both _________________; that is, they plan both to cut the initial rate somewhat below stock company levels and to pay a dividend, if warranted.

Governments collect more premiums in personal insurance lines than do private insurers.

The fastest growing lines of property and liability insurance are liability coverages.

Farm mutuals often offer assessable policies.

A federal program insures the solvency of private insurers, in a way similar to banks and other financial institutions.

Initially, a direct distribution system is more expensive for a company than an indirect one.

Match the descriptions with their terms: -A party appointed to take charge of a reciprocal insurer is a/an _________________.

Match the descriptions with their terms: -_________________ are established to reimburse policyholders for any losses caused by bankrupt insurers.

Leading states for chartering property-liability insurers include all but one of the following:

Introduction to Risk

Risk Identification and Evaluation

Property and Liability Loss Exposures

Life, Health, and Loss of Income Exposures

Risk Management Techniques: Noninsurance Methods

Insurance As a Risk Management Technique: Principles

Insurance As a Risk Management Technique: Policy Provisions

Selecting and Implementing Risk Management Techniques

Risk Management and Commercial Propertypart I

Risk Management and Commercial Propertypart II

Risk Management and Commercial Liability Risk

Workers Compensation and Alternative Risk Financing

Risk Management for Auto Ownerspart I

Risk Management for Auto Ownerspart II

Risk Management for Homeowners

Loss of Life

Loss of Health

Retirement Planning and Annuities

Employee Benefits: Life and Health Benefits

Employee Benefits: Retirement Plans

Financial and Estate Planning

Functions and Organization of Insurers

Government Regulation of Risk Management and Insurance

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