BUSFIN 3300 Exam 3 Detailed Questions And Quality Answers
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Course
BUSFIN 3300
Institution
BUSFIN 3300
Financial Modernization Act of 1999 (Gramm-Leach-Biley) - Correct Answer What drove insurers to become much more diversified?
Mergers - Correct Answer Why has the number of life insurers, and in particular mutual life insurers, declined significantly?
Financial Holding Company (FHC) - Cor...
BUSFIN 3300 Exam 3 Detailed Questions And
Quality Answers
Financial Modernization Act of 1999 (Gramm-Leach-Biley) - Correct Answer What drove insurers to
become much more diversified?
Mergers - Correct Answer Why has the number of life insurers, and in particular mutual life insurers,
declined significantly?
Financial Holding Company (FHC) - Correct Answer an umbrella organization that can own subsidiaries
involved in different parts of the financial industry (similar to a bank holding company)
Repeal of Glass-Steagall Act (this act separated commercial and investment banking by a single bank) -
Correct Answer What allowed banks, insurers, and securities firms to affiliate with each other and start
offering each other's products?
1. Products offered
2. Legal form of ownership
3. Method of distribution
4. Place of incorporation
5. Licensing status - Correct Answer What are the 5 ways to classify an insurer?
Stock Insurer - Correct Answer a corporation owned by stockholders
Earn profit for stockholders by increasing the value of the stock or paying dividends - Correct Answer
What is the objective of a stock insurer?
Mutual Insurer - Correct Answer a corporation owned by the policyholders
1. Advance Premium Mutual
2. Assessment Mutual
,3. Fraternal Insurer - Correct Answer What are the three main types of mutual insurers?
Advance Premium Mutual - Correct Answer A mutual insurer who is owned by the policyowners; there
are no stockholders, and the insurer does not issue assessable policies
Assessment Mutual - Correct Answer A mutual insurer who has the right to assess policyowners an
additional amount if the insurer's financial operations are unfavorable
Fraternal Insurer - Correct Answer a mutual insurer that provides life and health insurance to members
of a social or religious organization
1. Must operate through a lodge system
2. Only members can buy the insurance - Correct Answer What are the two requirements to fraternal
insurance?
Demutilization - Correct Answer the conversion of a mutual insurer into a stock insurer.
Holding Company - Correct Answer a company whose primary business is owning a controlling share of
stock in other companies
Lloyd's of London - Correct Answer not an insurer, but a society of members who underwrite insurance
in syndicates
Reciprocal Exchange - Correct Answer An unincorporated organization in which insurance is exchanged
among the members (called subscribers)
Blue Cross and Blue Shield Plans - Correct Answer nonprofit, community oriented plans that cover
hospital services, physicians' and surgeons' fees, and other medical services
Anthem, Inc. - Correct Answer The largest provider of health insurance in the U.S. and the largest for-
profit organization within the Blue Cross Blue Shield Association
, Highmark - Correct Answer Not-for-profit Blue Cross Blue Shield health care company that also operates
several for-profit subsidiaries
Managed Care Plans - Correct Answer This plan is involved in making healthcare decisions in addition to
financing healthcare
Captive Insurer - Correct Answer an insurer owned by a parent firm for the purpose of insuring the
parent firm's loss exposures
Single Parent (Pure) Captive - Correct Answer an insurer owned by one parent
Association Captive - Correct Answer an insurer owned by several parents
Savings Bank Life Insurance - Correct Answer life insurance that is sold by mutual savings banks, over
the phone, or through websites
No - Correct Answer Is captive insurance the same as self insurance?
Self Insurance - Correct Answer A special form of planned retention by which part or all of a given loss
exposure is retained by the firm
Self insurance requires businesses to pool a sufficient number of its own similar exposures to predict
losses accurately, and the firm must make adequate financial arrangements in advance to pay for losses
when they occur - Correct Answer Why is self insurance different than captive insurance?
Agent - Correct Answer someone who legally represents the principal and has the authority to act on
the principal's behalf
1. Expressed
2. Implied
3. Apparent - Correct Answer What are the three types of agent authority?
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