Exam (elaborations)
Property And Casualty License – Q&A (Passed!!)
- Course
- FLORIDA 2-20
- Institution
- FLORIDA 2-20
Property And Casualty License – Q&A (Passed!!)
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Property And Casualty License – Q&A (Passed!!)Types of risk ✔️Ans - Speculative: chance of loss or gain, not insurable
Pure risk: chance of loss only, insurable
Exposure ✔️Ans - Possibility that a loss will occur
Ex: Auto accident, house fire, employee hurt on job
Peril ✔️Ans - A cause of loss
Ex: house burns down, peril is the fire
Law of large numbers ✔️Ans - Larger the group, more accurately future
losses can be predicted
Direct vs. Indirect Loss ✔️Ans - Direct - physical loss
Indirect - consequence of the direct loss
Ex: loss of rental profit
Types of Hazard ✔️Ans - Physical Hazard - the hazard can be seen
Moral hazard - dishonesty, lack of morals
Morale hazard - carelessness
STARR
methods of handling risk ✔️Ans - Sharing - 2+ people/businesses pay
portion of any loss occurred by a member of the group. Ex. stockholders
Transfer - Insurance process, Insured transfers risk to insurer
Avoidance - eliminating a risk. Ex. not driving to avoid an accident
Retention - person/business pays for loss or portion of loss (deductible)
,Reduction - lessening chance of loss. Ex. Sprinkler system
CANHAM
elements of an insurable risk ✔️Ans - Calculable - able to determine
premiums from loss statistics
Affordable - affordable premium for consumer
Non-catastrophic - coverage limitations
Homogeneous - risk must be similar
Accidental - loss caused due to chance
Measurable - definite (time/place) and measurable loss for proof of loss
Reinsurance ✔️Ans - Insurance company pays another insurance company
to take some of company's risk
Faculative - reinsurer evaluates each risk before allowing transfer
Treaty - reinsurer accepts transfer according to an agreement (treaty)
Stock Insurer
types of insurers ✔️Ans - Owned by stockholders
Dividend not guaranteed
Dividend paid to stockholders (taxed)
Issues non-participating policies
Mutual Insurer
types of insurers ✔️Ans - Owned by policyholders (customers)
Dividend not guaranteed
Dividend paid to policyholders (not taxable)
Issues participating policies
Fraternal Insurer
types of insurers ✔️Ans - Provides insurance + benefits
Must be member for benefits
,Reciprocal Insurer
types of insurers ✔️Ans - Unincorporated
Members pay for loss to any member
Lloyd's Association
types of insurers ✔️Ans - Insurance provided by underwriters, not
companies
Insures unusual risks. (athlete's arm)
Risk Retention Group
types of insurers ✔️Ans - Liability insurance company created for
policyholders from same industry. Ex. car dealers with only car dealer
members
Risk Purchasing Group
types of insurers ✔️Ans - Businesses grouped together to buy liability
insurance
Self-insurance
types of insurers ✔️Ans - Business pays own claims
Reserves funds to cover losses
Certificate of Authority ✔️Ans - State license for insurance company
Admitted/authorized ✔️Ans - State requires the insurance company to have
a COA
Non-admitted/unauthorized ✔️Ans - Insurance company not required to
have COA from the state
Surplus Lines ✔️Ans - Insurance sold by non-admitted/unauthorized
insurers, state approved
Only sold to certain high-risk insureds
Financial Strength Rating ✔️Ans - Report card of company.
Ex. Standard and Poor's, Moody's
, Independent
methods of marketing ✔️Ans - independent contractors for several
companies, not employees
Owns renewals of the policies sold
Exclusive/Captive
methods of marketing ✔️Ans - Represent one company, still independent
contractor.
Insurance company owns the renewals
General/Managing General Agents
methods of marketing ✔️Ans - Hire, train, supervise other agents in a
demographic area
Earn overriding commission
Direct-writing companies
methods of marketing ✔️Ans - Products sold by employees
Compensated by salary, commission, or both
Insurance company owns renewals
Types of Agent Authority ✔️Ans - Express - what agent's contract with the
company says
Implied - not written, activities agents normally do to sell insurance
Apparent - activities an agent does that a reasonable person would assume as
authority (in the eyes of the public)
CLOAC
elements of a legal contract ✔️Ans - Consideration - giving something of
value.
Insured: statements made on the application and premium
Insurer: promises to pay claim (based on policy)
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