Exam (elaborations)
AFSB 151 - Chapter 3 Review Questions
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AFSB 151 - Chapter 3 Review Questions
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AFSB 151 -Chapter 3
Review
Questions and
answers
Identify the primary distribution system used
by sureties. - answer The primary
distribution system used by sureties is
insurance agents and brokers.
Explain the legal difference between an
agent and a broker. - answer The legal
difference between an agent and a broker is
that an agent usually represent the insurer
or surety under contract, and a broker
usually represents an insurance applicant or
insured.
, Identify the major factors the producer
considers when selecting an appropriate
surety for the contractor. - answer These are
the major factors the producer considers
when selecting an appropriate surety for the
contractor:
- The surety's comfort with the type, range,
and complexity of the contractor's projects.
- The surety's financial capacity relative to
the contractor's needs.
- The surety's philosophy and operating plan
relative to the size, type, and complexity of
work and relative to geographic or
operational diversity of contractors in the
surety's target market.
- The ability, creativity, and responsiveness
of a surety's local and home office
underwriters.
- The surety's pricing and risk philosophy
relative to the contractor's.
- The surety's earnings and operational
stability to provide the contractor with a
stable, long-term guarantee.
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