Question 1

All the following are true about fraternal insurers except:

Accepted Answer

A)  they market their product to social organizations 
B)  they are nonprofit and have tax advantages 
C)  they specialize in life insurance 
D)  they typically sell coverage through commercial banks 
A)  they market their product to social organizations 
B)  they are nonprofit and have tax advantages 
C)  they specialize in life insurance 
D)  they typically sell coverage through commercial banks

Question 2

Describe the changes that were brought about by the Gramm-Leach-Bliley Act, and, its overall impact on financial services today.

Accepted Answer

Also known as the Financial Services Ref

Question 3

From the viewpoint of an insurer, the prerequisites of an ideally insurable risk include all the following except:

Accepted Answer

A)  the loss must be capable of being determined and measured 
B)  there must be a large, homogeneous group of exposure units 
C)  the loss should not be subject to catastrophic hazard 
D)  the peril should be such that the probability of loss is high 
A)  the loss must be capable of being determined and measured 
B)  there must be a large, homogeneous group of exposure units 
C)  the loss should not be subject to catastrophic hazard 
D)  the peril should be such that the probability of loss is high

Question 4

Lloyd's of London is the largest mutual insurance company in the world measured by total premiums written.

Accepted Answer

A) True 
 B)False

Question 5

Lloyd's of London is not an insurance company. What is it and how does it provide insurance?

Accepted Answer

Lloyd's of London is not an insurance co

Question 6

Which of the following statements about the insurer death spiral is not correct?

Accepted Answer

A)  The insurance pool is shrinking to those who really need insurance. 
B)  The remaining policyholders are not susceptible to the peril being insured. 
C)  The insurance pool is shrinking to those who are facing high risk. 
D)  The insurance premium that needs to be paid is very high. 
A)  The insurance pool is shrinking to those who really need insurance. 
B)  The remaining policyholders are not susceptible to the peril being insured. 
C)  The insurance pool is shrinking to those who are facing high risk. 
D)  The insurance premium that needs to be paid is very high.

Question 7

The Gramm-Leach-Bliley (GLB) Act:

Accepted Answer

A)  allows banks to acquire insurance companies 
B)  prohibits banks from acquiring insurance companies 
C)  allows banks to form insurance companies 
D)  both A and C 
A)  allows banks to acquire insurance companies 
B)  prohibits banks from acquiring insurance companies 
C)  allows banks to form insurance companies 
D)  both A and C

Question 8

Competition would totally eliminate subsidization in insurance pools if there were no regulator restricting competition between insurance companies.

Accepted Answer

A) True 
 B)False

Question 9

A stock insurer is managed by:

Accepted Answer

A)  an attorney-in-fact 
B)  an agency supervisor 
C)  a fraternal representative 
D)  representatives chosen by shareholders 
A)  an attorney-in-fact 
B)  an agency supervisor 
C)  a fraternal representative 
D)  representatives chosen by shareholders

Question 10

Lloyd's of London:

Accepted Answer

A)  is a large property-liability insurance company with head-quarters in London 
B)  sells stock 
C)  is a marketplace where separate syndicates accept exposures for their own accounts 
D)  sells insurance directly to the public 
A)  is a large property-liability insurance company with head-quarters in London 
B)  sells stock 
C)  is a marketplace where separate syndicates accept exposures for their own accounts 
D)  sells insurance directly to the public

Question 11

Is the insurer death spiral applicable to Tornado Insurance?

Accepted Answer

A)  Yes, only people in a limited number of states are susceptible to tornadoes. 
B)  Yes, Tornado Insurance premiums are extremely high. 
C)  No, the desire to purchase Tornado Insurance is not limited to a small group of consumers. 
D)  No, there is a definite loss capable of causing economic hardship. 
A)  Yes, only people in a limited number of states are susceptible to tornadoes. 
B)  Yes, Tornado Insurance premiums are extremely high. 
C)  No, the desire to purchase Tornado Insurance is not limited to a small group of consumers. 
D)  No, there is a definite loss capable of causing economic hardship.

Question 12

The Norris and Manhart cases resulted in which of the following outcomes?

Accepted Answer

A)  Made insurance intrastate commerce 
B)  Made it illegal to charge men and women different life insurance premiums 
C)  Equalization of pension payments between men and women 
D)  Made it illegal to use gender as an underwriting factor in any type of insurance 
A)  Made insurance intrastate commerce 
B)  Made it illegal to charge men and women different life insurance premiums 
C)  Equalization of pension payments between men and women 
D)  Made it illegal to use gender as an underwriting factor in any type of insurance

Question 13

The United States' Life-Health insurance industry wrote how many billion worth of premiums in 2008?

Accepted Answer

A)  96.5 
B)  223.6 
C)  518.1 
D)  641.6 
A)  96.5 
B)  223.6 
C)  518.1 
D)  641.6

Question 14

On average, women live longer than men. If an applicant's gender is ignored in determining life insurance prices:

Accepted Answer

A)  men will subsidize women 
B)  women will subsidize men 
C)  no subsidization will occur because only group longevity results are valid 
D)  morale hazard will increase significantly 
A)  men will subsidize women 
B)  women will subsidize men 
C)  no subsidization will occur because only group longevity results are valid 
D)  morale hazard will increase significantly

Question 15

Which of the following statements is false?

Accepted Answer

A)  Assessment mutuals provide primarily fire and windstorm insurance. 
B)  A stock insurance company is a profit-making venture in both life and property insurance. 
C)  Dividends are paid to stockholders of stock companies. 
D)  In stock companies, non-insured stockholders bear none of the risk of loss. 
A)  Assessment mutuals provide primarily fire and windstorm insurance. 
B)  A stock insurance company is a profit-making venture in both life and property insurance. 
C)  Dividends are paid to stockholders of stock companies. 
D)  In stock companies, non-insured stockholders bear none of the risk of loss.

Question 16

The Gramm-Leach-Bliley Act (1999) allows banks, security dealers, and insurance companies to combine together to form financial services holding companies.

Accepted Answer

A) True 
 B)False

Question 17

The items in an insurance pool must be similar to reduce subsidization.

Accepted Answer

A) True 
 B)False

Question 18

The United States' Property-Liability insurance industry wrote how many billion worth of premiums in 2008?

Accepted Answer

A)  25.4 
B)  97.4 
C)  317 
D)  439.8 
A)  25.4 
B)  97.4 
C)  317 
D)  439.8

Question 19

Of all evaluation criteria to determine whether a risk classification is appropriate, simplicity is the most important one.

Accepted Answer

A) True 
 B)False

Question 20

What are the basic differences between a stock and a mutual insurance company?

Accepted Answer

The main difference between a stock and

Exam 7: Insurable Perils and Insuring Organizations

All the following are true about fraternal insurers except:

Describe the changes that were brought about by the Gramm-Leach-Bliley Act, and, its overall impact on financial services today.

From the viewpoint of an insurer, the prerequisites of an ideally insurable risk include all the following except:

Lloyd's of London is the largest mutual insurance company in the world measured by total premiums written.

Lloyd's of London is not an insurance company. What is it and how does it provide insurance?

Which of the following statements about the insurer death spiral is not correct?

The Gramm-Leach-Bliley (GLB) Act:

Competition would totally eliminate subsidization in insurance pools if there were no regulator restricting competition between insurance companies.

A stock insurer is managed by:

Lloyd's of London:

Is the insurer death spiral applicable to Tornado Insurance?

The Norris and Manhart cases resulted in which of the following outcomes?

The United States' Life-Health insurance industry wrote how many billion worth of premiums in 2008?

On average, women live longer than men. If an applicant's gender is ignored in determining life insurance prices:

Which of the following statements is false?

The Gramm-Leach-Bliley Act (1999) allows banks, security dealers, and insurance companies to combine together to form financial services holding companies.

The items in an insurance pool must be similar to reduce subsidization.

The United States' Property-Liability insurance industry wrote how many billion worth of premiums in 2008?

Of all evaluation criteria to determine whether a risk classification is appropriate, simplicity is the most important one.

What are the basic differences between a stock and a mutual insurance company?

Introduction to Enterprise Risk Management and Insurance

Risk Identification

Risk Assessment and Pooling

Risk-Handling Techniques: Loss Control, Risk Transfer, and Loss Financing

Risk-Handling Techniques: Diversification and Hedging

Fundamentals of Insurance

Insurance Functions

Insurance Markets: Economics and Issues

Insurance Regulation

Insurance Contracts

The Personal Auto Policy

Homeowners Insurance

Professional Financial Planning

Life Insurance Policies

Standard Life Insurance Contract Provisions and Options

Annuities

Health Insurance and Disability Income

Employee Benefits

Social Security

Unemployment and Workers Compensation Insurance

Commercial Property Insurance

Commercial Liability Insurance

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