Page 1 of 84
WASHINGTON SURPLUS LINES BROKER ACTUAL EXAM
2026-2027 COMPLETE 300 QUESTIONS AND VERIFIED
SOLUTIONS LATEST UPDATE THIS YEAR
Which statement best defines statutory accounting for insurers?
A) All assets are valued at market price
B) Certain assets are non-admitted and excluded from claims-paying calculations
C) Assets include goodwill and trademarks
D) Only cash and bonds are counted
Answer: B) Certain assets are non-admitted and excluded from claims-paying calculations
Rationale: Statutory accounting focuses on liquidity and claim-paying ability, excluding non-
admitted assets.
By what date must a WA Surplus Lines Broker file the premium tax return for the prior
calendar year?
A) February 15
B) March 1
C) March 31
D) April 1
Answer: B) March 1
Rationale: WA law requires filing of premium tax returns for the previous year by March 1.
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Bonds rated in which categories are considered investment grade?
A) 3 & 4
B) 1 & 2
C) 4 & 5
D) 2 & 3
Answer: B) 1 & 2
Rationale: SVO considers bonds rated 1 and 2 as secure for investment purposes.
IBNR in insurance terms stands for:
A) Insured but not reimbursed
B) Incurred but not reported
C) Indemnity based on net risk
D) Investment-backed net reserves
Answer: B) Incurred but not reported
Rationale: IBNR represents claims that have occurred but have not yet been reported to the
insurer.
True or False: A surplus lines broker without active business in the year must still file a
premium tax return.
Answer: True
Rationale: Filing is required for all licensed brokers, even if no business was conducted.
Which office assigns bond ratings for insurers?
A) NAIC
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B) SVO
C) AM Best
D) SEC
Answer: B) SVO (Securities Valuation Office)
Rationale: SVO evaluates bonds to determine their investment quality.
Combined ratio is calculated as:
A) Losses ÷ Earned Premium
B) Loss + LAE ÷ Earned Premium
C) Premiums ÷ Policyholders Surplus
D) Net Written Premium ÷ Surplus
Answer: B) Loss + Loss Adjustment Expense ÷ Earned Premium
Rationale: A ratio over 100% indicates underwriting loss.
General Interrogatories in an insurer’s annual statement provide:
A) Reinsurance agreements
B) General company questions, like investment manager and largest risk
C) Policy forms
D) Liquidity ratios
Answer: B) General company questions
Rationale: They give regulatory insight into the insurer’s operations.
Schedule P of an insurer’s financial report includes:
A) Investment portfolios
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B) Open & incurred losses
C) Premium tax filings
D) Dividend distributions
Answer: B) Open & incurred losses
Rationale: Schedule P tracks losses that impact the insurer’s financial stability.
NAIC stands for:
A) National Association of Insurance Commissioners
B) National Association of Insurer Companies
C) National Audit of Insurance Compliance
D) None of the above
Answer: A) National Association of Insurance Commissioners
Rationale: NAIC regulates insurance companies and provides financial oversight.
Which countries are included in an AM Best rating report?
A) US only
B) Canada only
C) US and Canada
D) All North American countries
Answer: C) US and Canada
Rationale: AM Best focuses on the US and Canadian insurers in its ratings.
Where can a broker find the domicile of alien insurers and Lloyd’s syndicates?
A) AM Best Guide
WASHINGTON SURPLUS LINES BROKER ACTUAL EXAM
2026-2027 COMPLETE 300 QUESTIONS AND VERIFIED
SOLUTIONS LATEST UPDATE THIS YEAR
Which statement best defines statutory accounting for insurers?
A) All assets are valued at market price
B) Certain assets are non-admitted and excluded from claims-paying calculations
C) Assets include goodwill and trademarks
D) Only cash and bonds are counted
Answer: B) Certain assets are non-admitted and excluded from claims-paying calculations
Rationale: Statutory accounting focuses on liquidity and claim-paying ability, excluding non-
admitted assets.
By what date must a WA Surplus Lines Broker file the premium tax return for the prior
calendar year?
A) February 15
B) March 1
C) March 31
D) April 1
Answer: B) March 1
Rationale: WA law requires filing of premium tax returns for the previous year by March 1.
,Page 2 of 84
Bonds rated in which categories are considered investment grade?
A) 3 & 4
B) 1 & 2
C) 4 & 5
D) 2 & 3
Answer: B) 1 & 2
Rationale: SVO considers bonds rated 1 and 2 as secure for investment purposes.
IBNR in insurance terms stands for:
A) Insured but not reimbursed
B) Incurred but not reported
C) Indemnity based on net risk
D) Investment-backed net reserves
Answer: B) Incurred but not reported
Rationale: IBNR represents claims that have occurred but have not yet been reported to the
insurer.
True or False: A surplus lines broker without active business in the year must still file a
premium tax return.
Answer: True
Rationale: Filing is required for all licensed brokers, even if no business was conducted.
Which office assigns bond ratings for insurers?
A) NAIC
,Page 3 of 84
B) SVO
C) AM Best
D) SEC
Answer: B) SVO (Securities Valuation Office)
Rationale: SVO evaluates bonds to determine their investment quality.
Combined ratio is calculated as:
A) Losses ÷ Earned Premium
B) Loss + LAE ÷ Earned Premium
C) Premiums ÷ Policyholders Surplus
D) Net Written Premium ÷ Surplus
Answer: B) Loss + Loss Adjustment Expense ÷ Earned Premium
Rationale: A ratio over 100% indicates underwriting loss.
General Interrogatories in an insurer’s annual statement provide:
A) Reinsurance agreements
B) General company questions, like investment manager and largest risk
C) Policy forms
D) Liquidity ratios
Answer: B) General company questions
Rationale: They give regulatory insight into the insurer’s operations.
Schedule P of an insurer’s financial report includes:
A) Investment portfolios
, Page 4 of 84
B) Open & incurred losses
C) Premium tax filings
D) Dividend distributions
Answer: B) Open & incurred losses
Rationale: Schedule P tracks losses that impact the insurer’s financial stability.
NAIC stands for:
A) National Association of Insurance Commissioners
B) National Association of Insurer Companies
C) National Audit of Insurance Compliance
D) None of the above
Answer: A) National Association of Insurance Commissioners
Rationale: NAIC regulates insurance companies and provides financial oversight.
Which countries are included in an AM Best rating report?
A) US only
B) Canada only
C) US and Canada
D) All North American countries
Answer: C) US and Canada
Rationale: AM Best focuses on the US and Canadian insurers in its ratings.
Where can a broker find the domicile of alien insurers and Lloyd’s syndicates?
A) AM Best Guide
