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2024 FLORIDA 2-15 INSURANCE LICENSE EXAM with questions and answers 2024
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2024 FLORIDA 2-15 INSURANCE LICENSE EXAM with questions and answers 2024
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2024 FLORIDA 2-15 INSURANCE LICENSEEXAM with questions and answers 2024
Insurance Producer - A person required to be licensed under the laws of this state to
sell, solicit, or negotiate insurance
Captive Agent - an insurance agent who represents only one insurance company and
who is, in effect, an employee of that company ... also know as a CAREER AGENT
Independent agents - Agents that sell the insurance products of several companies and
work for themselves or other agents.
Solicitors - Such as telemarketers... They usually perform the first contact with
prospective customers commonly known as cold calling
cold calling - a form of lead generation in which the salesperson approaches potential
buyers without any prior knowledge of the prospects' needs or financial status
Consultants - Researchers and forecasters who provide information about colors and
other trends that are occurring in the consumer marketplace.
Special agent - Are not usually licensed as they don't actually sell insurance they assist
insurance companies as a field representatives
rejected business rule - If an agent turns in an application to his/her standard company
and the company declines to issue the policy standard, the rejected business rule
allows the agent to then go to another company to issue the policy.
Career Agency System - (GA) - Build sales staffs and agents are treated as employees.
They are recruited and trained. A principal of the company supervises agents.
Personal Producing General Agent (PPGA) - The agent supplies his own working space
(home office) ... supervised by regional directors of the PPGA
Independent Agency System - Agents represent several insurers through signed
contracts and are paid on commission or fee basis, not through salary.
direct selling - marketing products to ultimate consumers through face-to-face sales
presentations at home or in the workplace... The middleman is cut out
Mass Marketing - using a single marketing strategy to reach all customers
,Solvency - ability to meet all financial obligations
Consumer Protection - measures to shield buyers of goods and services from unsafe
products and unfair or illegal sales practices
3 primary methods used to regulate the business of insurance - 1. Legislation
2. The court system
3. State insurance departments
Paul v. Virginia - (1869) This decision declared that the privileges and immunities clause
of the US Constitution guarantees citizens visiting, working, or conducting business in
another state the same freedoms and legal protections that would be afforded to
citizens of that state ... STATE WINS
Financial Services Modernization Act of 1999 - an act that overturned the section of the
Banking Act of 1933 that prohibited commercial banks from selling insurance or
performing the functions of investment banks
Southeastern Underwriters Association - Insurance IS commerce, and Congress can
regulate insurance when it is interstate. Antitrust laws apply... FEDERAL GOV WINS
McCarran-Ferguson Act (1945) - Stipulates that insurance companies are to be
regulated at the state level... state wins
FTC (Federal Trade Commission) - prevents the unfair, false, or deceptive advertising
of consumer products and services
Speculative Risk - Risk that involves chance of both loss and gain; not insurable
Pure Risk - Risk that involves the chance of loss only, there is no opportunity for gain;
insurable
Law of Large Numbers - Basic principle of insurance that the larger the number of
individual risks combined into a group, the more certainty there is in predicting the
amount of loss that will be incurred in any given period.
Elements of Insurable Risk - Loss must be: due to chance, definite and measurable,
predictable, cannot be catastrophic, loss exposures to be insured must be large, loss
exposures to be insured must be randomly selected.
Hazard - Any factor that gives rise to a peril.
Peril - Specific event causing loss and giving rise to risk. (Fire is a peril to a burning
building)
,Risk Pooling - Basic principle of insurance whereby a large number contribute to cover
the losses of a few. The risk is transferred from an individual to a group.
Physical Hazard - Individual characteristics that increase the chance of peril. (Blindness
or deafness)
Moral Hazard - Tendencies that people may have that increase risk and the chance of
loss. (Alcohol and drugs)
Morale Hazard - Individual tendencies that arise from an attitude or state of mind
causing indifference to loss. (Driving reckless with no fear of death)
Risk Avoidance - Avoiding as many risks as possible. (Never flying, never driving, never
investing)
Risk Reduction - Taking actions to reduce risk. (Installing a smoke alarm)
Risk Retention - Accepting the risk and confronting it if and when it occurs. (Self-
insurance)
Risk Transfer - The practice of passing on the risk in question to another entity, such as
an insurance company.
Adverse Selection - less favorable insurance risks (people in poor health) to seek or
continue insurance to a greater extent than other risks. Tendency of policymakers to
take advantage of favorable options in insurance contracts.
Multi-line insurers - Companies that write more that one line of insurance
Stock Insurance Company - A private insurance company owned and controlled by a
group of stockholders whose investment in the company provides the safety margin
necessary in issuance of guaranteed, fixed premium, nonparticipation policies. Purpose
is making profit for stockholders.
mutual insurance company - Insurance company characterized by having no capital
stock; it is owned by it's policyowners and usually issues participating insurance.
Participating companies because policyowners participate in policy dividends.
Mutualization - Stock company converts to a mutual company
Demutualizing - Mutual company convert to stock company
Commercial Insurers - Stock and mutual companies; they both write life, health,
property, and casualty insurance.
, Assessment Mutual Company - An insurance company characterized by member-
insureds who are assessed an individual portion of each loss that occurs. No premium
payment is payable in advance.
Not permitted in Florida
Advance premium assessment mutual - Charges a premium in advance, at the
beginning of the policy period.
Not permitted in Florida
Reciprocal Insurance Company - Insurance company characterized by the fact it's
policyholders insure the risks of other policyholders.
Lloyd's of London - An association of individuals and companies that underwrite
insurance on their own accounts and provide specialized coverages.
Not an insurer
Reinsurers - Specialized branch of the insurance industry because they insure insurers.
Reinsurance - Arrangement by which an insurance company transfers a portion of a risk
it has assumed to another insurer.
Limit the loss any one insurer would face should a very large claim become payable.
ceding company - Insurance Company transferring risk
Risk Retentio Group (RRG) - Mutual insurance company formed to insure people in the
same business, occupation, or profession (pharmacy, dentist, engineers)
Fraternal benefit society - Non-profit benevolent organization that provides insurance to
its members. Based on religious, national, or ethnic lines
Home service or Debt Insurance - Industrial insurance
Insurance in small amounts (usually $1,000 to $2,000) with premiums collected weekly
by the selling agent
Reinsurer - An insurance company assuming the risk
Service providers - Organization that provides health coverage by contracting with
service providers to provide medical services to subscribers who pay in advance
through premiums.
HMOs PPOs
Participating Life Insurance - Policy which pays a dividend to its owner based on
financial success of the insurance company
When a stock life insurance company issues both participating and nonparticipating
policies, the company is doing business as a ________________? - MIXED PLAN
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