Ins 21 Dump

1. Insurance as a transfer and sharing of cost of losses, what wud be more appropriate of the following: It’s an insurance policy for the payment of premiums. 2. What of the following are ideally insurable loss exposures:  Loss exposures which are definite in time and measurable  Large exposures of similar but independent exposures  Loss exposures which are economically feasible to insure  Loss exposure of small dollar value 3. All of the following are private insures except  Stockholders  Mutual insures  Guaranty funds  Reciprocal insurers  4. All of the following are state insurance programs except: Workers compensation Unemployment program FAIR Plans Crop insurance 5. What exactly does the state insurance regulation do and options were: Protects the consumer from paying a premium that is not excessive (this is right) 6. An example was given saying a particular person faces a covered loss and the process of the insurance company covering the loss is an act of which principle Indemnity Utmost good faith Transfer of unequal amounts Adhesion 7. A person buying a series of insurances’ was told insurance is not just for safety but also means of Reduced social burden Source of investment funds Providing support for credit 8. A man who is a doctor recently had a fire accident at his clinic. Which insurance should he have purchased to get additional living expenses?

Commercial general liability Business income insurance Professional liability Property insurance 9. According to an insurer a claimant is one who is? Make a claim to the insured charging responsibility The insured who makes a claim Litigation defendant 10. NAIC is solely developed for: MODEL LAW (one of the options will have this) 11. Question on why we have IRIS Financial ratios (answer will have this as one of its options) 12. Ratemaking is the process by which insurers use to calculate the rates that determine the premium to charge for insurance coverage which is accurately done by Actuary Insurer Independent adjusters Agents 13. One of the following statements about E&S is true they are: They E&S insurance is transacted by a licensed broker to other admitted insurers They are characterized by poor loss experience They are a form of insurance available by licensed insurers They require to be file their rates with the state insurance regulation 14. To find the total gain of operation what is the other parameter required when we have net underwriting gain as 2,000,000. Net investment income Net investment gain or loss Loss ratio Combined expenses 15. Non-admitted assets example would be: Furniture and equipment Stock Bond Money in transit

16. What of these would be present in a balance sheet? Admitted assets Revenues Expenses Net income 17. Capacity ratio is given by Written premiums by its policy holder surplus Earned premiums by its unearned premiums Written premiums by its policy holder surplus 18. Problem: Given: Earned premium: $ 2,000,000 Written Premium: $2,000,000 Net Investment Income: $660,000 Incurred loss: $1,500,000 Underwriting Expenses: $200,000 7.) Calculate the loss ratio .75 .1 .5 .35 8.) Calculate the expense ratio .75 .10 .5 .33 9.) Calculate the Investment income .33 .38 .10 .5 19. The agency is a relationship that exists when one party the agent acts in behalf of the Principal Broker

Independent adjusters TPA’s 20. A particular person say ABC sells insurance for a person who seeks it. ABC being the independent agent who does all the formalities as per the agency contract given by the principal. Finally the person purchases the insurance with the help of agent. This act of the agent is what authority? Implied Express Apparent Binding 21. Responsibilities of the agent to the principal Reasonable care Loyalty Accounting All of the above 22. Difference between independent and exclusive

23. ABC advertises using the agents name and photo but mainly focuses on advertising the insurance company it represents what kind of agency is DEF Exclusive agency Independent agency Direct writing system Insurance contract provision 24. Jane works for XYZ insurance and in an automobile firm. She has a client John who buys a automobile from her. If she recommends him to buy XYZ insurance Which unfair trade practice is it? Tie- in sales Rebating Unfair trade practices 25. Formal enactments of federal, state and local legislative is referred to as Statuary law Common law Constitutional law 26. What is civil law?

Government takes responsibility for prosecuting the wrongdoers. Applies to wrongful acts that deem the society Deals with a personal quarrel between two parties

27. In property insurance, carelessly taped electrical wiring is an example of Cause of loss Hazard Peril Time element loss 28. John is 22 yr old male, single who walks drives 15 miles per day. His insurer (underwriter) says that this will be considered while deciding rating and will he will belong to the large group of people in this category which type of rating was he talking about? Class rating Judgmental rating Independent rating Experience rating 29. When will you have Adverse selection? When the premium is low as compared to loss exposures 30. XYZ wanted to incorporate risk management in his house. Which is the initial risk management step? Identifying loss exposure Analysis Loss exposure Examining the feasibility of the risk management technique Implementing the risk management technique 31. Mary is the single parent and has to commute a long distance for work. There is no other proper mode of transport and she is having a very critical economic situation, she wants to buy a automobile to drop her children at school and also to commute to work. Which is the best risk management tech which she can follow? Retention Insurance Avoidance Loss control

32. XYZ takes reinsurance with ABC cause there is no other way to continue doing business.. ACC to the AGREEMENT 50% of all the loss exposures will be reinsured by ABC. Which kind of reinsurance is it? Treaty reinsurance Facultative reinsurance Broad form coverage 33. A company ABC which is entitles to receive sales commission is also entitled to receive contingent commission annually based on performance and is applicable to which of these options: Independent agency Direct writing Exclusive agency 34. in the case of property insurance apart from a owner who else has insurable interest and name is specified in the declaration page: Mortgagee Bailee Bailor 35. Which of the following is one an activity of the underwriter Billing Claim handling Pricing coverage All of the above 36. Some man has a lawn mower which isn’t functioning well and the son points to his dad saying this isn’t working well. Immediately this man would tell his son he has insurance and they have nothing to worry. What hazard would this be? Morale Hazard Moral hazard Physical hazard Legal hazard

37. There was a question on which way wud be used by an underwriter to gather info on an applicant financial rating services 38. there was question on cancellation of policy wat wud happen?

39. A person in an orginazation handles all the claims by phone email contacts what is he to the insurer? Inside claim representative Field representative Adjuster Broker

40. There was this case study saying a company faced some serious claim in another state where they weren’t located so what exactly should they do for handling their claims? Independent Adjusters brokers Inside field representatives

41. all the various steps in claim handling shud be learnt

42. what is the necessity of having reservation of rights letter when one of which is to inform the insured there cud be a coverage problem Protect the insurer so that he can deny coverage later 43.if a man wants with property insurance gets actual cash value minus the depreciation. How or where can he find this? Insuarnce policy By appraisers By current market

44. for a policy to be enforced all of the following are wrong except Into cocaine Manic depression Insurer agent not registered in one state where he sells insurance The check of the insured bounced back 45. in liability insurance all of the following are presnt except Co insurance Aggregate limit OCCURANCE LIMIT Other value insurance 46. in the declartion page u wud find all of the following except Full text of the policy exclusions 47. wat is not true abt modular policies? It wil make a policy by itself wen different documents are added to it

48. wat happens when insurer cancels the policy?

49. wat is true abt nonadmitted assests Cannot be converted to cash

50. There was a damage caused by mines Mine subsidence is the answer 51. Read about other insurance provisions as well.

52. learn completed operations (the examples)

53. business operations(example) 54. which of these comes under statutes law Workers compensation laws 55. vandalism comes under which coverage Basic coverage 56. a person writes an article about another persons conduct badly. He publishes it what act willl this be Libel (intentional tort) 57. breach of warranty shud be read( example) 58.loss exposure survey is not the right way to identify los exposure why? An important loss exposure can be overlooked 59.all the benefits for the various people involved or who consider risk management shud be read.

1) Why is Insurance known as a Transfer System. Ans: The gives a Insured periodic premium and the insurer covers insured’s the loss

2) Why law of large numbers used Ans: To predict the losses

3) All of them listed below are Ideally Insurable Except Ans: Small heterogeneous exposures

4) Which statement is correct regarding Private Insurers. Ans: Mutual insurance companies are owned by policy holders

5) which of the following is done by the state Ans: Unemployment

6) All are Benefits of Insurance Except Ans: Premiums paid by insured

7) What law of indemnity states Ans: The Insured must not be financially in a better status than he was before the loss

8) A shop is damaged due to fire. The shop owner has a Business income insurance plan. He lost a income of 5000 dollars in this period and spent 15000 dollars to repair the shop. How much will the insurer pay. Ans: 5000 dollars

9) A mechanic sets up stove at a house and when it was first used it causes fire accident. What type of liability Ans: Completed operations liability

10) The Insured bought a photograph polishing solution which the shopkeeper said will protect the photograph. When the insured used it on a 5000 dollar photograph the photograph cracked. Ans: Breach of Warranty

11) When the plumber came to fix a new sink he damaged the water pipe line. What liability is this. Ans: Business Operation Liability

12) The insurance program in which only those citizen who meet the eligibility criteria can obtain is Ans: Social Security Program (Old age plan)

13) The purpose of NAIC is Ans: It creates the model law for the problem present

14) Why must the premium be Adequate Ans: It must cover the loss, expenses and also the insurers nominal profit

15) The Law which says approval is required only when it is a certain percent above or below the previously filed rates Ans: Flex rating Laws

16) What IRIS does

Ans: Develops financial ratios to detecting insurers overall condition

17) What is required by the agent to renew license Ans: Must pass the exams conducted

18) E&S can also insure Ans: Those with poor loss exposure

19) What is earned premium Ans: amount that applies to the part of policy period already occurred

20) Which is a non-admitted assets Ans: Office Furniture

21) They will give Admitted asset, loss reserve liability, unearned Premium Reserve liability and other liabilities. Find Policyholder surplus Ans: Policy Holder Surplus= Admitted Asset- [loss reserve liability+unearned Premium Reserve liability+other liabilities]

22) What will be present in an Income Statement Ans: Earned Premium

23) They will give Incurred loss, Earned Premium, Written Premium, Incurred Underwritting expenses and Net investment income. Find loss ratio,expense ratio and Investment Income Ratio

24) Capacity Ratio is

Ans: Ratio of written premium to Policy Holder surplus

25) Responsibility of Principal to Agent Ans: Must pay for the services

26) An agent collects premium on behalf of the Principal even if not mentioned in the contract Ans: Implied Authority

27)An agent is Ans: A legal representative of an insurance company

28)Which of the following is correct regarding Advertisement Ans: Exclusive Agency has agents photo and insurance company name in its ad

29) An ABC agency said it wont handle a clients requirement. It appoint and supervises agents. What is it Ans: Managing General Agency

30)A DEF agency gets commission based on the premium volume and profitability level Ans: Contingent Commission

31) When something of value is given to make the client to buy the policy Ans:Tie in sales

32) Advertising Liability applies when

a)misrepresentation of ad…….. b)copying slogans…….. c)…….. ANS was d)All of the above

33) Sam writes something bad about Tom in a news papers editorial and they are not true. Then it is Ans: Intentional Tort

34) All are process of underwriting activities Except Ans: Marketing the Policy

35) What is Schedule Rate Ans: Many insured within rating class have loss characteristics that might not be fully reflected in class rates

36) Decentralization Ans: Delegates extends authority to personnel in the field office

37) They will ask to find the Premium by giving rate/100dollars and the property insurance limit

38) An insurer want to know the financial status of the company which it is going to insure Ans: Financial Rating Services

39) Hazard due to dishonest Tendencies Ans: Moral Hazard

40) What is true regarding canceling of policy Ans: The Insurer has to give notice before the specified amount of days to the insured

41) Who is a claimant Ans: One who Submits a Claim on the insured’s policy

42) Who is public Adjuster Ans: Someone who represents insured in claim

43) When Agreed Value is used Ans: For Fine Art Properties

44) A step in Property Insurance claim Ans: T check if insured has insurable interest

45) What statement is correct regarding damages Ans: Compensatory damages is to compensate for the harm caused

46) Tom buys Policy from an agent Jack after agreeing the policy conditions and paid the premium. a)Agreement……… b)Legal purpose……… c)Consideration… Ans is d) All of the above

47) Declaration has Ans: List of all Policies

48) Insurer cancels the policy which is of policy period six months after one month itself. the premium was 300 dollars. what is the pro rata refund Ans: 250dollars

49) All about the structure of policies are correct except Ans: Endorsement can be added to a modular policy to make it a self contained one

50) Transfer of rights and duties to other person Ans: Assignment

51) Which of these is correct regarding Boiler and Machinery Ans: Less likely to explosion and must be properly maintained

52) Damage due to graffiti, spray paint a)Basic Plan b)Broad Plan c) Special Plan Ans: is d) All of the above

53) For named peril the burden of proof is on Ans: Insured

54) Which of these is an indirect loss

Ans: Lost Income and Increased Expense

55) Mortgagee is Ans: One who lends money for real property

56) Mortgagee has all the rights except a) Pay Client if insured didn’t

b) to get notified

c) May file the Claim

Ans: The d) option is the answer which I don’t remember

57) CGL covers all except Ans:

Loss

which

occurred

due

to

Billboard

58) What are not generally covered a) Damage of Sofa by bird

b) Water Seepage

c)……..

Ans: d) All of the above

59) What provision will pay reduced amount to the insured if property was underinsured Ans: Insurance-to-value provision

60) Contract Law is a branch of Ans: Civil Law

61) Each person limit $10000 Each occurrence Bodily Injury limit: $25000 Property Damage Limit: $15000

fall

Court Orders Liability for Bodily Injury of the Injured Driver $19500 Property Liability $17000

How much will Insurer Pay Ans: $25000 (Check it out)

62) First step of Risk Management Ans: Identifying Losses

63) Risk Management is required because Ans: All of the above

64) Loss frequency Ans: Sees how often Loss occur

65) All are risk Management techniques except a) Survey

b) Flowchart c) Viewing Loss History

Ans: The d) option is the answer which I don’t remember

66) Insurer asks the insured to keep a fire extinguisher in his boat. Why? Ans: Loss Reduction 67) Best technique which can be used where the loss exposure cannot be avoided, prevented or controlled Ans: Insurance

1. What is civil law? a.)government takes responsibility for prosecuting the wrongdoers. b.) applies to wrongful acts that deem the society c.) deals with a personal quarrel between two people.

2. Federal government deals with al the following except a) Unemployment b.) flood insurance c.)crop insurance d) retirement benefits for the elderly

3.) social security provides all the following benefits except a.) medical benefits to the aged b.) disability benefits to the aged. c.) retirement benefits to workers d.) medical care to elderly

4.) State government deals with one of the following a.) Worker s compensation b.) crop insurance c.) flood insurance. d.) social security program

5.) Formal enactments of federal, state and local legislative is referred to as a.) statuary law

b.) common law c.) constitutional law

6.) In property insurance, Carelessly taped electrical wiring is an example of a.) cause of loss b.) hazard c.) peril d.) Time element loss

Problem: Given : Earned premium : $ 2,000,000 Written Premium : $2,000,000 Investment Income: $660,000 Incurred loss: $1,500,000 Underwriting Expenses: $ 200,000 7.) Calculate the loss ratio .75 .1 .5 .35 8.) Calculate the expense ratio .75 .10 .5 .33

9.) Calculate the Investment income .33 .38 .10 .5

10.) Calculate the policy holder s surplus

11.) Given the net Underwriting gain or loss is $100,000. TO calculate the overall gain or loss which other data is necessary 1. Investment income 2. Net Investment income gain or loss 3. Overall income

12.) In the balance statement of an insurer which of the following will be present. 1. 2. 3. 4.

Admitted assests Expense Revenues Net Investment Income

13.)Jane works for XYZ insurance and in an automobile firm. She has a client John who buys a automobile from her. If she recommends him to buy XYZ insurance Which unfair trade practice is it? 1. Tie- in sales 2. Rebating 3. Some two more options 14.) Policy provision called Condition can be defined as Any promise that qualifies an otherwise enforceable promise of the insurer. Other three options dnt remember

15.) Why is a catastrophic claim like Recession not handled by insurance companies 1.) Because of the large number of consequences due to the catastrophic loss 2,) number of people involved are less 3.)

16.) John is 22 yr old, male , who walks only one km per day … His insurer( underwriter) says that this will be considered while deciding rating and will he will belong to the large grp of pple in this category.. which type of rating was he talking about 1. 2. 3. 4.

Class rating Judgemental rating Independent rating Experience rating

17.) which one of the following is true about modular policy ? 1.) It represents the package policy Other options I dnt remember

18.) When will you have Adverse selection? When the premium is low as compared to loss exposures.

19.) XYZ wanted to incorporate risk management in his house. Which is the intial risk management step ? 1. 2. 3. 4.

Identifying loss exposure Analysis Loss exposure Examining the feasibility of the risk management technique Implementing the risk management technique.

20.) ABC has a small retail shop . He buys property, liability, house owner insurance from XYZ insurance. Another insurer advices him that only buying insurance is not necessary, he should

implement risk management techniques as well. What are advantages he will have if he implements the risk management techniques? 1. he will achieve business goals 2. He can reduce risk and hence develop his business 3. He can reduce expenses by handling loss exposures 4. all the above 21.) After analysis of the loss exposures , what is the risk management step? 1. identifying loss exposure 2. Examining feasibility of the risk management techniques 3. implementing the risk management techniques 4. monitoring the risk management techniques 22.) Mary is the single parent and has to commute a long distance for work . There is no other proper mode of transport and she is having a very critical economic situation,She wants to buy a automobile to drop her children at school and also to commute to work. Which is the best risk management tech which she can follow. 1. 2. 3. 4.

Retention Insurance Avoidance Loss control

23.)Joseph takes a house, he is advised by his insurer to install a fire extinguisher in his house.Which risk control technique is he following by doing the same? 1. loss prevention 2.loss reduction 3. retention 4. avoidance 24.) What is the loss frequency ? The number of losses which occurred in aperiod of time ( refer to definition) John takes house owner insurance frm ABC insurance agency and auto insurance from DEF agency.

25.) DEF advertises using the agents name and photo but mainly focuses on advertising the insurance company it represents what kind of agency is DEF 1. exclusive agency 2. independent agency 3 direct writing agency 26.) some information similarly given on ABC and asked which type of agency it is.. 27.) some questions on state insurance regulators .. I dnt remember them exactly 28.) XYZ takes reinsurance with ABC cause there is no other way to continue doing business.. ACC to the AGREEMENT 50% of all the loss exposures will be reinsured by ABC. Which kind of reinsurance is it? Treaty reinsurance Facultative reinsurance Two more options 29.) what is NAIC ? .. Model law one option ..  that is the answer. 30.) which one of the following is not private funds Guaranty funds Stocks Mutual funds Reciprocal funds

31.) According to continuing education laws for insurance representatives which one of the following is true 1.) the need to clear a written exam before renewing the license . I dnt remember the other options..

Important notes 1. Plz follow 3rd edition book for ins21 2. Go through the glossary before the exam 3. Be through with the examples . most examples are repeated from the book in the exam 4. Read the contents in the furnished inside the boxes 5. Formulas highly important 1.Loss payable clause: Ans:Secured lender and personal property 2. Idemnity 3.Provision not included in the claim settlement of liabilty insurance Ans: Co-insurance 3.Insurance as transfer system 4.Law of large numbers Ans: Predict future outcomes or losses 5.not insurable loss property Ans: Property with small dollar value 6.Federal Govt Insurance Ans: Crop and Flood 7.state Govt insurance Regulator Ans: should prevent from excessive premium and inadequate returns and unfairly discriminatory 8. IRIS Ans: Financial Ratios(To determine the financial status of the Insurer) 9.NAIC Ans: Model Law 10. Rate Making system: Ans :Actuarial Rate Making provides the rate for insurance

11.Excess and supply business Ans: Provides insurance for poor experience 12. Broker Ans: Represents the customer 13. Over all operating gain or loss (Formula0 14.unearned premiums (problems ) 15.To calculate premium problem 16. wat are non admitted asserts Ans: Office furnitures 17.Non admitted asserts Ans:not easily converted to cash 18. the usage of fire extenguisher helps in Ans: Loss Reduction 19:define Loss frequency And: no of losses occurred in a given period 20. during hurricane lots of claims occur , which kind of adjuster will help the insurance company Ans: I ndependant adjuster 21.capacity ratio (formula) 22.responsibilty of agent to principle 23.responsibilty of principle to agent Ans: to pay the commission to the agent 24.Express authority Ans: Gives binding coverage to the agent 25.Exclusive agency system

Ans: all of the above( don’t remember the options) 26.Independant agency system will receive wat kind of commission Ans:Contingent Commission 27.Exclusive Agency advertisement Ans: Can advertise about the agency and the company( the answer will contain the advertising using the photo of the owner)

28.underwriting activity :know the steps: questions will be like wat wats 1st step . 4th step etc) 29.Adverse Selection Ans:Premium Low relative to loss exposure 30.standard Form Ans: Insurance Advisory organisation develops the standard form 31. define faculative reinsurance 32.Define Treaty reinsurance 33;Morale hazard Ans: I have insurance I need not be careful 34.Actual Cah value Ans: Actual cash value includes depreciation 35.Modular Policy: Ans: Modular policy consists of differents document none of which by itself forms a complete document 36. Contract law comes under Ans:Civil Law 37.comman Law is other wise know as Ans: Case Law

38.A teenager sprayed graffiti on the fence of the neighbour wat form of coverage does it come under Ans:Basic form of coverage 39. Exclusions does not come under declarations page 40.The dispute between private parties comes under which law Ans:Civil Law 41. A person tries to harm the reputation of the other by false advertising Ans:Intentional tort Statutory Liabilty Ans: Worker’s compensation 42. wat is the first step in risk management 43. mortgagee: Ans: cannot modify the coverage 44.public adjuster: Ans: Represent the insured 45:which of the following is the best option; Ans: capacity can be increased by reinsurance 46 the underwriters can determine The financial status of commercial insurance company by Ans: Financial Rating / inspection report ( not sure) 47.wat is most importanly done in in the implementation step of Risk Management Ans: To determine the costs of the risk (not sure again) 48: The agent is not given exclusive rights to collect premium but still he collects wat form of authority is this Ans:Implied Authority 49.Policy holder surplus(formula) Ans: admitted asserts –total liabilities