Question 1

The role of the court is to promote the consumer's interest, while the role of the insurance commissioner is to promote the insurer's interest.

Accepted Answer

A) True 
 B)False

Question 2

Insurance companies that have funny TV commercials:

Accepted Answer

A)  make the insurance market more efficient 
B)  attract more attention of regulators 
C)  waste money of the insured 
D)  make themselves less reputable 
A)  make the insurance market more efficient 
B)  attract more attention of regulators 
C)  waste money of the insured 
D)  make themselves less reputable

Question 3

Which of the following insurance applicants have not had problems buying insurance in recent years?

Accepted Answer

A)  Politicians 
B)  Directors of Firms 
C)  Medical Doctors 
D)  Hospitals 
A)  Politicians 
B)  Directors of Firms 
C)  Medical Doctors 
D)  Hospitals

Question 4

Why is it more difficult to choose a good life insurance policy than to choose a good auto insurance policy?

Accepted Answer

A)  People don't like thinking about death or dying, and thus cannot be objective in the selection process. 
B)  Most people rarely need life insurance, while auto insurance is required by law. 
C)  Life insurance policies are not standardized, while many non-life policies are. 
D)  Both B and C are correct. 
A)  People don't like thinking about death or dying, and thus cannot be objective in the selection process. 
B)  Most people rarely need life insurance, while auto insurance is required by law. 
C)  Life insurance policies are not standardized, while many non-life policies are. 
D)  Both B and C are correct.

Question 5

The lack of availability of life insurance is a serious problem in the U.S.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following statements about the courts is correct?

Accepted Answer

A)  Courts mostly deal with insurance companies denying coverage. 
B)  Courts mostly deal with insurance companies not paying on legitimate claims. 
C)  Courts mostly deal with insurance companies not providing sufficient coverage. 
D)  Courts mostly deal with insurance companies not paying on fraudulent claims. 
A)  Courts mostly deal with insurance companies denying coverage. 
B)  Courts mostly deal with insurance companies not paying on legitimate claims. 
C)  Courts mostly deal with insurance companies not providing sufficient coverage. 
D)  Courts mostly deal with insurance companies not paying on fraudulent claims.

Question 7

New York's insurance law makes it illegal to make false statements or rumors about insurance companies.

Accepted Answer

A) True 
 B)False

Question 8

Insurance regulators:

Accepted Answer

A)  make the insurance market more efficient 
B)  have been forced to intervene in the market periodically 
C)  assist consumers in choosing the right insurance company 
D)  mainly deal with low-risk insurance applicants 
A)  make the insurance market more efficient 
B)  have been forced to intervene in the market periodically 
C)  assist consumers in choosing the right insurance company 
D)  mainly deal with low-risk insurance applicants

Question 9

FAIR plans guarantee insurance to all applicants.

Accepted Answer

A) True 
 B)False

Question 10

All of the following firms provide financial ratings of insurance companies except:

Accepted Answer

A)  A.M. Best 
B)  Standard & Poor's 
C)  Moody's 
D)  NASD 
A)  A.M. Best 
B)  Standard & Poor's 
C)  Moody's 
D)  NASD

Question 11

Which of the following Latin terms means "to stand by decisions," and conveys the idea that court decisions set precedents?

Accepted Answer

A)  res ipsa loquitor 
B)  stare decisis 
C)  ab initio 
D)  in hoc stare 
A)  res ipsa loquitor 
B)  stare decisis 
C)  ab initio 
D)  in hoc stare

Question 12

Which of the following is the best driver to maintain an adequate supply of insurance at affordable prices?

Accepted Answer

A)  Regulations 
B)  Excluding high-risk applicants 
C)  Excluding low-risk applicants 
D)  Competition among insurers 
A)  Regulations 
B)  Excluding high-risk applicants 
C)  Excluding low-risk applicants 
D)  Competition among insurers

Question 13

Insurance companies offer identical and perfectly substitutable products.

Accepted Answer

A) True 
 B)False

Question 14

Why do regulators care whether high-risk drivers have insurance?

Accepted Answer

A)  Regulators are silly and have nothing better to do. 
B)  Otherwise insurance companies would lose too much money. 
C)  Excluding high-risk drivers is a violation of the Constitution. 
D)  The societal costs associated with the accidents caused by high-risk drivers is at least somewhat reduced by having them pay an insurance premium, even if it is too low for the associate risk. 
A)  Regulators are silly and have nothing better to do. 
B)  Otherwise insurance companies would lose too much money. 
C)  Excluding high-risk drivers is a violation of the Constitution. 
D)  The societal costs associated with the accidents caused by high-risk drivers is at least somewhat reduced by having them pay an insurance premium, even if it is too low for the associate risk.

Question 15

Consumers that have done some research to gather insurance information:

Accepted Answer

A)  make the insurance market less efficient 
B)  probably will get better subsequent information from insurance companies 
C)  probably will just get "razzle-dazzle" from insurance companies 
D)  probably wasted their time 
A)  make the insurance market less efficient 
B)  probably will get better subsequent information from insurance companies 
C)  probably will just get "razzle-dazzle" from insurance companies 
D)  probably wasted their time

Question 16

What is the purpose of an automobile insurance plan? How does an auto plan generally work?

Accepted Answer

The purpose of an automobile insurance p

Question 17

Which of the following is not a source of consumer protection in the insurance industry?

Accepted Answer

A)  Insurance commissioners 
B)  Laws 
C)  Politicians 
D)  Courts 
A)  Insurance commissioners 
B)  Laws 
C)  Politicians 
D)  Courts

Question 18

Which of the following statements about FAIR plans is correct?

Accepted Answer

A)  The success of FAIR plans is unclear. 
B)  FAIR plans are a good solution to the problem of unavailability of property insurance. 
C)  FAIR plans show that the provision of property insurance by the private market is a success. 
D)  FAIR plans benefit property owners in the suburbs. 
A)  The success of FAIR plans is unclear. 
B)  FAIR plans are a good solution to the problem of unavailability of property insurance. 
C)  FAIR plans show that the provision of property insurance by the private market is a success. 
D)  FAIR plans benefit property owners in the suburbs.

Question 19

Given the following choices, the best advice for purchasing automobile insurance is:

Accepted Answer

A)  always buy full coverage 
B)  always buy the cheapest policy 
C)  choose the largest deductible you can reasonably afford 
D)  never buy auto insurance from a stock company 
A)  always buy full coverage 
B)  always buy the cheapest policy 
C)  choose the largest deductible you can reasonably afford 
D)  never buy auto insurance from a stock company

Question 20

Stare decisis means:

Accepted Answer

A)  to stand by decisions 
B)  to stand for decisiveness 
C)  to let the thing speak for itself 
D)  to stare indecisively 
A)  to stand by decisions 
B)  to stand for decisiveness 
C)  to let the thing speak for itself 
D)  to stare indecisively

Exam 9: Insurance Markets: Economics and Issues

The role of the court is to promote the consumer's interest, while the role of the insurance commissioner is to promote the insurer's interest.

Insurance companies that have funny TV commercials:

Which of the following insurance applicants have not had problems buying insurance in recent years?

Why is it more difficult to choose a good life insurance policy than to choose a good auto insurance policy?

The lack of availability of life insurance is a serious problem in the U.S.

Which of the following statements about the courts is correct?

New York's insurance law makes it illegal to make false statements or rumors about insurance companies.

Insurance regulators:

FAIR plans guarantee insurance to all applicants.

All of the following firms provide financial ratings of insurance companies except:

Which of the following Latin terms means "to stand by decisions," and conveys the idea that court decisions set precedents?

Which of the following is the best driver to maintain an adequate supply of insurance at affordable prices?

Insurance companies offer identical and perfectly substitutable products.

Why do regulators care whether high-risk drivers have insurance?

Consumers that have done some research to gather insurance information:

What is the purpose of an automobile insurance plan? How does an auto plan generally work?

Which of the following is not a source of consumer protection in the insurance industry?

Which of the following statements about FAIR plans is correct?

Given the following choices, the best advice for purchasing automobile insurance is:

Stare decisis means:

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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