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RMIN 4000 Edmunds Exam 2 Questions and Answers 100% correct
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RMIN 4000 Edmunds Exam 2
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RMIN 4000 Edmunds Exam 2major types of private insurers - answer Stock, Mutual, and Lloyd's of London
stock insurers – answer corporation owned by stockholders.
objective is to earn profit for stockholders by increasing the value of the stock and
paying dividends
Mutual insurers - answer a corporation owned by policyholders. profits are distributed to
policyholders by dividends or rate reductions
types of mutual insurers - answer advance premium mutual, assessment mutual, and
fraternal insurer
assessment mutual - answer insurer has the right to assess policyholders an additional
amount if the insurer's financial operations are unfavorable
advance premium mutual - answer insurer does not issue assessable policies
fraternal insurer - answer a mutual insurer that provides life and health insurance to
members of a social or religious organization
Lloyd's of London - answerThe world's leading insurance market that provides services
and physical facilities for its members to write specialized lines of insurance. They
underwrite insurance for syndicates.
Is Lloyd's of London an insurer? - answerNo
Lloyd's of London brokers - answerrepresent policyholders to arrange coverage with
syndicates
syndicates - answeroffer insurance contracts in the market
who makes up a syndicate? - answermembers, managing agents, and underwriters
insurance agent - answerSomeone who legally represents the principal (insurance
company) and has the authority to act on the principal's behalf
Is the principal responsible for acts of an agent? - answerYes, when the agent is acting
within the scope of authority
Agent Binding Authority - answerprovide temporary insurance until the policy is actually
written (typically with P&C, NOT life
, brokers - answersomeone who legally represents the insured, places appropriate
coverage, is paid commission from insurer, and
importance of large brokerage firms - answervery important for commercial P&C, have
knowledge of specialized markets, and provide risk management and loss-control
services
surplus lines broker - answer"Wholesalers" who work with retail Agents and Brokers,
licensed to place business with a "non admitted" insurer
surplus lines - answerany type of insurance for which there is no available market in the
state
non-admitted insurer - answeran insurer not licensed to do business in the state
independent agency distribution - answerrepresent several unrelated insurers, agency
owns expirations and renewal rights
exclusive agency system - answerthe agent represents only one insurer or group of
insurers under common ownership. agents do not own expirations or renewal rights to
policies
direct writer system - answeran insurer in which the salesperson is an employee of the
insurer, not an independent contractor. employees paid on "salary plus"
direct response system - answerInsurer sells directly to the consumer by television or
some other media
what are some methods to sell individual insurance policies to - answeremployer
groups, labor unions, trade associations, college and university alumni, and others
groups like AARP or AAA
group insurance marketing - answerProducts are sold through group representatives
employees who receive a salary and incentive payments based on sales (can pay for
insurance by payroll deduction)
what are the major insurance company operations? - answerratemaking, underwriting,
production, claims settlement, reinsurance, and investments
ratemaking - answerthe pricing of insurance and the calculation of insurance premiums
what is the problem with ratemaking? - answerFirms do not know the cost of their
products in advance
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