LOMA 291 Exam with Complete
Solutions 100% Pass
Market conduct examination - Answer-A formal investigation of an insurer by one or
more state insurance departments of an insurer's nonfinancial operations to determine
whether those operations comply w applicable laws and regulations
Comprehensive examination - Answer-A full scope examination of all nonfinancial
aspects of an insurer's operations conducted by a state insurance department
Target examination - Answer-A limited scope market conduct examination of one or
more specific areas of an insurer's nonfinancial operations by state insurance regulators
to ensure those operations are in accordance w state insurance laws and regulations
Accidental death benefit - Answer-A supplementary life insurance policy benefit under
which the insurer pays an amount of money in addition to the basic death benefit if the
insured dies as a result of an accident
Claim investigation - Answer-The process of obtaining the additional information
necessary to make an appropriate claim decision
Special investigative unit - Answer-A group of individuals who are responsible for
detecting, investigating and resolving claims, particularly those involving insurance
fraud; often composed of representatives of the claim, legal and internal audit functions,
as well as independent investigators
Model Unfair Claims Settlement Practices Act - Answer-A national association of
insurance commissioners model act that specifies a number of actions that are
considered unfair claims practices if committed by an insurer in conscious disregard of
the law or so frequently as to indicate a general business practice
Marketing plan - Answer-A written document that states the marketing goals for a
product or product line, and describes the strategies and the implementation and control
efforts the company intends to use to achieve these goals
Financial design - Answer-The combination of all the financial features of a profuct
Distribution - Answer-The collection of activities and resources involved in making
products available for customers to buy
,Promotion - Answer-The collection of activities that companies use to make customers
aware of their offerings and to influence customers to purchase and distributors to sell a
product
Advertising - Answer-Any paid form of no personal communication or promotion about a
company or it's products or services that an identified sponsor generates and transmits
through any type of media
institutional advertising (image advertising) - Answer-Advertising that seeks to promote
a general image of the company rather than to explain a specific product
Product adverting - Answer-Any advertising used to promote a specific product or
service
Publicity - Answer-Any form of non paid communication about a person, place, thing or
cause
Positioning - Answer-The process by which a company establishes and maintains in
customers' minds a distinct place or position for itself and its products
Market segmentation - Answer-The process of dividing large diverse misses into smaller
submarkets that are more alike and need similar products or marketing mixes
Consumer market - Answer-Individuals who buy products or services for personal or
family use
Organizational market - Answer-People, groups or formal organizations that purchase
products and services for business purposes
Single-Variable Segmentation - Answer-A method of segmenting a market using only
one characteristic, such as income level
Multi variable segmentation - Answer-A method of segmenting a market that uses more
than one characteristic to determine a segment
Stakeholders (constituents) - Answer-A party that has an interest in how a company
conducts its business
Dividend - Answer-Compensation that a company may pay to owners upon a vote by thr
company's board of directors
Reinsurance - Answer-Insurance that one insurance company, the direct writer,
purchases from another insurance company, the reinsurer, to transfer all or part of the
risk on insurance policies that the direct writer issued
,Inside directors - Answer-A member of the board of directors who also holds a position
within the company
Outside directors (independent directors) - Answer-A member of the board of directors
who does not bold a position within the company
Ombudsman Program - Answer-An independent, impartial and confidential professional
who provides ethical guidance on specific problems
Line function - Answer-A department or other organizational unit that produces or
administers products or services
Ex. Product development, marketing, distribution & sales, underwriting & new business,
customer service, reinsurance administration, claims
Support functions (staff function) - Answer-A department or other organizational unit
that provides support services to line functions or to other support functions but does
not produce or administer products
Ex. Accounting & financial reporting, audit, corporate communications, legal &
compliance, finance, HR, IT, treasury, risk management
Vertical organization - Answer-An organization w a long chain of command and a
narrow span of control
Flat Organization - Answer-An organization w a short chain of command and a wide
span of control. Also called a horizontal organization
Organization by product - Answer-An organizational structure which arranged a
company's major divisions according to the company's product lines
Ex. Annuities & Life Insurance, Property & Casualty Insurance
Organization by territory - Answer-An organizational structure which arranged a
company's major divisions according to the geographic areas in which it operates
Ex. Americas, Asia Pacific, Europe
Organization by customer group - Answer-An organizational structure which arranges a
company's major divisions according to the customer group each unit serves
Ex. Group products (commercial), Individual Business (personal)
Organization by distribution channel - Answer-An organizational structure which
arranges a company's major divisions according to the distribution channels that deliver
products to customers
, Required return - Answer-The return an investor needs to earn in order to make the
investment, given the risk of the investment; typically found by adding the risk free rate
of return to the risk premium
Risk free rate - Answer-The return on a risk free investment (the least risky investment
opportunity available)
Risk premium - Answer-The component of investment return that compensates the
investor for taking on the risk associated w a specific investment; the rate of return
required in addition to the risk free rate for the investor to make the investment
Investment risk - Answer-The possibility that an investor will fail to earn some or all of
an expected return or will lose all or part of the original investment
Market risk (financial market risk) - Answer-A risk of unexpected outcomes due to
fluctuations in the market values in a given financial market
Interest rate risk - Answer-The risk that unpredictable movements or stagnation in
market interest rates will cause assets to lose value or liabilities to gain value
Default risk - Answer-The risk that a borrower will fail to repay their debt
Liquidity risk - Answer-The risk of being unable to quickly convert an asset to cash for
its underlying value
Pricing risk - Answer-The risk that an insurer's actual experience with pricing factors
such as operating costs or mortality rates will be significantly worse than expected,
causing the insurer to lose money on its products
Business risk - Answer-The risk that changes in a company's external environment will
affect its operations
Operational risk - Answer-A broad category of risks resulting from external events or
poor internal processes and controls, people or systems
Business process risk - Answer-An operational risk resulting from inefficient or failed
internal processes, controls, people, technology or systems
Event risk - Answer-An operational risk from catastrophic events such as earthquakes,
hurricanes, political unrest, airplane crashes, fraud, technology failures, etc
Control function - Answer-Management activity directed toward ensuring that an
organization's mission and objectives are accomplished effectively, efficiently and
according to plan
