Question 1

The text suggests that insurance consumers should:

Accepted Answer

A)  inform themselves about the company, policy, etc. to protect their own self-interest 
B)  rely on government regulation to protect their interest, since insurance companies and policies cannot be understood by the public 
C)  rely on attorneys and the lawsuit process to protect themselves 
D)  rely on self-regulation of insurance companies and the insurer's goodwill to protect their interest 
A)  inform themselves about the company, policy, etc. to protect their own self-interest 
B)  rely on government regulation to protect their interest, since insurance companies and policies cannot be understood by the public 
C)  rely on attorneys and the lawsuit process to protect themselves 
D)  rely on self-regulation of insurance companies and the insurer's goodwill to protect their interest

Question 2

The insurance market's structure has no major flaws.

Accepted Answer

A) True 
 B)False

Question 3

The A.M. Best Company can help you to determine which of the following about your insurer?

Accepted Answer

A)  Its reputation for settling claims 
B)  Its customer service rating 
C)  How many complaints have been filed against it 
D)  Its financial strength rating 
A)  Its reputation for settling claims 
B)  Its customer service rating 
C)  How many complaints have been filed against it 
D)  Its financial strength rating

Question 4

Which of the following is true about the supply and demand curves for insurance?

Accepted Answer

A)  The demand for insurance is very elastic and sensitive to price. 
B)  As price declines, the demand for insurance increases dramatically. 
C)  The supply of insurance increases dramatically with a decrease in the price. 
D)  Insurers will tend to reduce supply if the price is artificially increased or decreased. 
A)  The demand for insurance is very elastic and sensitive to price. 
B)  As price declines, the demand for insurance increases dramatically. 
C)  The supply of insurance increases dramatically with a decrease in the price. 
D)  Insurers will tend to reduce supply if the price is artificially increased or decreased.

Question 5

Which of the following statements about the insurance market is not correct?

Accepted Answer

A)  Compulsory insurance laws make the insurance market more efficient. 
B)  The insurance market has many buyers and sellers. 
C)  Insurance companies do not hold constrictive rights to their clients. 
D)  The insurance market consist of buyers , sellers, and regulators. 
A)  Compulsory insurance laws make the insurance market more efficient. 
B)  The insurance market has many buyers and sellers. 
C)  Insurance companies do not hold constrictive rights to their clients. 
D)  The insurance market consist of buyers , sellers, and regulators.

Question 6

Most markets involve two parties. How many does the insurance market have?

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
A)  1 
B)  2 
C)  3 
D)  4

Question 7

In choosing an insurance company, the most important factor is:

Accepted Answer

A)  how many dollars it pays for claims 
B)  the amount of liquid assets the insurer has 
C)  its financial strength 
D)  the state in which it is domiciled 
A)  how many dollars it pays for claims 
B)  the amount of liquid assets the insurer has 
C)  its financial strength 
D)  the state in which it is domiciled

Question 8

Which of the following statements about insurance laws is not correct?

Accepted Answer

A)  Insurance laws are generally fairly flexible. 
B)  There are insurance laws that deal with fair prices for insurance. 
C)  There are insurance laws that deal with the solvency of insurance companies. 
D)  Insurance laws protect the rights of the insured. 
A)  Insurance laws are generally fairly flexible. 
B)  There are insurance laws that deal with fair prices for insurance. 
C)  There are insurance laws that deal with the solvency of insurance companies. 
D)  Insurance laws protect the rights of the insured.

Question 9

Explain briefly why increasing or decreasing price artificially can decrease the supply of insurance.

Accepted Answer

When insurance prices are decreased, com

Question 10

The individual consumer must ultimately deal with several issues to make an efficient purchase in the insurance market. Which of the following generally should not be a major consideration?

Accepted Answer

A)  The type of policy covering the exposure(s) 
B)  The maximum amount of insurance coverage 
C)  The commission the agent will receive from the sale 
D)  The insurance agent's expertise 
A)  The type of policy covering the exposure(s) 
B)  The maximum amount of insurance coverage 
C)  The commission the agent will receive from the sale 
D)  The insurance agent's expertise

Question 11

When choosing the right amount of life insurance to purchase, the consumer should first consider:

Accepted Answer

A)  how much money she can afford for monthly premiums 
B)  her financial goals and reasons for buying it in the first place 
C)  how many assets she already owns 
D)  none of the above 
A)  how much money she can afford for monthly premiums 
B)  her financial goals and reasons for buying it in the first place 
C)  how many assets she already owns 
D)  none of the above

Question 12

Health care providers and officers of corporations have had trouble obtaining liability insurance in recent years.

Accepted Answer

A) True 
 B)False

Question 13

In most states the insurance commissioner is:

Accepted Answer

A)  republican 
B)  democrat 
C)  appointed 
D)  elected 
A)  republican 
B)  democrat 
C)  appointed 
D)  elected

Question 14

One of the reasons why there is not sufficient supply for high-risk insurance applicants is:

Accepted Answer

A)  consumers will not buy insurance if prices are increased 
B)  the existence of joint underwriters associations 
C)  regulators have limited the premiums that insurers can charge for such customers 
D)  the number of insurance contracts written by an insurer is totally regulated 
A)  consumers will not buy insurance if prices are increased 
B)  the existence of joint underwriters associations 
C)  regulators have limited the premiums that insurers can charge for such customers 
D)  the number of insurance contracts written by an insurer is totally regulated

Question 15

Which of the following is a primary reason that insurance consumers are not well-informed?

Accepted Answer

A)  Insurers have not made much effort to inform consumers. 
B)  The rewards of making informed decisions are not worth the cost of obtaining the needed information. 
C)  State insurance regulators do not provide the needed information. 
D)  Insurance prices are so low that most consumers do not care to be informed. 
A)  Insurers have not made much effort to inform consumers. 
B)  The rewards of making informed decisions are not worth the cost of obtaining the needed information. 
C)  State insurance regulators do not provide the needed information. 
D)  Insurance prices are so low that most consumers do not care to be informed.

Question 16

Which of the following statements about insurance commissioners is not correct?

Accepted Answer

A)  Insurance commissioners interpret the state's insurance laws. 
B)  Insurance commissioners enforce the state's insurance laws. 
C)  Insurance commissioners have limited powers when it comes to protecting the insured. 
D)  Every state has an insurance commissioner. 
A)  Insurance commissioners interpret the state's insurance laws. 
B)  Insurance commissioners enforce the state's insurance laws. 
C)  Insurance commissioners have limited powers when it comes to protecting the insured. 
D)  Every state has an insurance commissioner.

Question 17

Briefly explain the role of the courts and the law in providing consumer protection relative to insurance products.

Accepted Answer

A great amount of consumer protection is

Question 18

When the consumer purchases insurance, several key decisions are made. What are these key decisions?

Accepted Answer

When a consumer makes a purchase decisio

Question 19

Which of the following statements about the numbers of buyers and sellers in the insurance market is correct?

Accepted Answer

A)  The market share of the four largest sellers is bigger than those found in other industries, which are considered competitive. 
B)  The insurance market has a sufficient numbers of buyers, but not a sufficient number of sellers. 
C)  The insurance market has a sufficient numbers of sellers, but not a sufficient number of buyers. 
D)  The market share of the four largest sellers is comparable to those found in other industries, which are considered competitive. 
A)  The market share of the four largest sellers is bigger than those found in other industries, which are considered competitive. 
B)  The insurance market has a sufficient numbers of buyers, but not a sufficient number of sellers. 
C)  The insurance market has a sufficient numbers of sellers, but not a sufficient number of buyers. 
D)  The market share of the four largest sellers is comparable to those found in other industries, which are considered competitive.

Question 20

CFP stands for:

Accepted Answer

A)  Chartered Financial Planner 
B)  Certified Financial Planner 
C)  Casualty Finance Professional 
D)  Claims and Financial Planner 
A)  Chartered Financial Planner 
B)  Certified Financial Planner 
C)  Casualty Finance Professional 
D)  Claims and Financial Planner

Exam 9: Insurance Markets: Economics and Issues

The text suggests that insurance consumers should:

The insurance market's structure has no major flaws.

The A.M. Best Company can help you to determine which of the following about your insurer?

Which of the following is true about the supply and demand curves for insurance?

Which of the following statements about the insurance market is not correct?

Most markets involve two parties. How many does the insurance market have?

In choosing an insurance company, the most important factor is:

Which of the following statements about insurance laws is not correct?

Explain briefly why increasing or decreasing price artificially can decrease the supply of insurance.

The individual consumer must ultimately deal with several issues to make an efficient purchase in the insurance market. Which of the following generally should not be a major consideration?

When choosing the right amount of life insurance to purchase, the consumer should first consider:

Health care providers and officers of corporations have had trouble obtaining liability insurance in recent years.

In most states the insurance commissioner is:

One of the reasons why there is not sufficient supply for high-risk insurance applicants is:

Which of the following is a primary reason that insurance consumers are not well-informed?

Which of the following statements about insurance commissioners is not correct?

Briefly explain the role of the courts and the law in providing consumer protection relative to insurance products.

When the consumer purchases insurance, several key decisions are made. What are these key decisions?

Which of the following statements about the numbers of buyers and sellers in the insurance market is correct?

CFP stands for:

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

Insurable Perils and Insuring Organizations

Insurance Functions

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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