RMIN 4000 EXAM 2 STUDY GUIDE | 2026 | WITH FULL
SOLUTIONS
Major Types of Private Insurers - Answers -Stock Insurers
Mutual Insurers
Lloyds of London
Stock Insurer - Answers --A corporation owned by stockholders.
-Objective is to earn profits for the stockholders by increasing stock and paying
dividends.
(Progressive, Allstate, Metlife, etc.)
Mutual Insurer - Answers --a corporation owned by policyholders.
-profits are distributed to policyholders by dividends or rate reductions.
(statefarm, nationwide, liberty mutual)
types of mutual insurers - Answers -assesement
advanced
fraternal
Lloyd's (of London) - Answers --NOT an insurer, but a society of members who
underwrite insurance in syndicates.
-World's leading market that provides services and physical facilities for its members to
write specialized lines of insurance
Lloyd's broker - Answers -represent policyholders to arrange coverage with syndicates
Lloyd's Syndicates - Answers -those insurance companies that offer insurance
contracts in the market
managing agents - Answers -manage the syndicates, who typically specialize in certain
lines
underwriters - Answers -work for the syndicates to asses risks and determine
premiums
other types of private insurers - Answers -blue cross blue shield plans
health maintenance organizations (HMO'S)
captive insurers
insurance agent - Answers --someone who legally represents the principle (insurance
company) and has the authority to act on the principle's behalf
-the principle (insurance company) is legally responsible for all acts of an agent when
the agent is acting within the scope of authority
, insurance binders - Answers -provide temporary insurance until the policy is actually
written
-can be provided by property and casualty (P&C) agents
-life insurance agents usually have no authority to issue binders
insurance broker - Answers -Someone who legally represents the insured and:
◦Solicits applications and places coverage with the appropriate insurer.
◦Is paid a commission from the insurer.
◦In general, does NOT have the authority to bind
large brokerage firms - Answers --Very important in Commercial P&C coverage.
-May have knowledge of highly specialized insurance markets.
-May provide risk management and losscontrol services.
(AON, Marsh & McLennan, Willis Towers Watson)
surplus lines broker - Answers -Licensed to place business with a nonadmitted insurer.
surplus lines - Answers -Insurance for which there is no readily available, admitted
market in the state
nonadmitted insurer - Answers -an insurer not licensed to do business in the state
Distribution-Independent Agency - Answers --Usually represents several unrelated
insurers. ---Agents are paid a commission which varies by the line of insurance.
-The agency owns the expirations or renewal rights to the business.
-Agents may be authorized to adjust small claims and may provide loss control services
to their insurers
Distribution-Exclusive Agency System (Captive Agents) - Answers --Agent represents
only one insurer or group of insurers under common ownership.
-Agents are generally paid a lower commission rate on renewal business than on new
business.
-Agents usually do not own the expirations or renewal rights to the policies.
-Insurers provide strong support services to new agents
direct writer - Answers --An insurer in which the salesperson is an employee of the
insurer, not an independent contractor.
-Employees are usually compensated on a "salary plus" arrangement
direct response - Answers -Insurer sells directly to the consumer by television or some
other media
independent agent - Answers -usually represents several unrelated insurers
SOLUTIONS
Major Types of Private Insurers - Answers -Stock Insurers
Mutual Insurers
Lloyds of London
Stock Insurer - Answers --A corporation owned by stockholders.
-Objective is to earn profits for the stockholders by increasing stock and paying
dividends.
(Progressive, Allstate, Metlife, etc.)
Mutual Insurer - Answers --a corporation owned by policyholders.
-profits are distributed to policyholders by dividends or rate reductions.
(statefarm, nationwide, liberty mutual)
types of mutual insurers - Answers -assesement
advanced
fraternal
Lloyd's (of London) - Answers --NOT an insurer, but a society of members who
underwrite insurance in syndicates.
-World's leading market that provides services and physical facilities for its members to
write specialized lines of insurance
Lloyd's broker - Answers -represent policyholders to arrange coverage with syndicates
Lloyd's Syndicates - Answers -those insurance companies that offer insurance
contracts in the market
managing agents - Answers -manage the syndicates, who typically specialize in certain
lines
underwriters - Answers -work for the syndicates to asses risks and determine
premiums
other types of private insurers - Answers -blue cross blue shield plans
health maintenance organizations (HMO'S)
captive insurers
insurance agent - Answers --someone who legally represents the principle (insurance
company) and has the authority to act on the principle's behalf
-the principle (insurance company) is legally responsible for all acts of an agent when
the agent is acting within the scope of authority
, insurance binders - Answers -provide temporary insurance until the policy is actually
written
-can be provided by property and casualty (P&C) agents
-life insurance agents usually have no authority to issue binders
insurance broker - Answers -Someone who legally represents the insured and:
◦Solicits applications and places coverage with the appropriate insurer.
◦Is paid a commission from the insurer.
◦In general, does NOT have the authority to bind
large brokerage firms - Answers --Very important in Commercial P&C coverage.
-May have knowledge of highly specialized insurance markets.
-May provide risk management and losscontrol services.
(AON, Marsh & McLennan, Willis Towers Watson)
surplus lines broker - Answers -Licensed to place business with a nonadmitted insurer.
surplus lines - Answers -Insurance for which there is no readily available, admitted
market in the state
nonadmitted insurer - Answers -an insurer not licensed to do business in the state
Distribution-Independent Agency - Answers --Usually represents several unrelated
insurers. ---Agents are paid a commission which varies by the line of insurance.
-The agency owns the expirations or renewal rights to the business.
-Agents may be authorized to adjust small claims and may provide loss control services
to their insurers
Distribution-Exclusive Agency System (Captive Agents) - Answers --Agent represents
only one insurer or group of insurers under common ownership.
-Agents are generally paid a lower commission rate on renewal business than on new
business.
-Agents usually do not own the expirations or renewal rights to the policies.
-Insurers provide strong support services to new agents
direct writer - Answers --An insurer in which the salesperson is an employee of the
insurer, not an independent contractor.
-Employees are usually compensated on a "salary plus" arrangement
direct response - Answers -Insurer sells directly to the consumer by television or some
other media
independent agent - Answers -usually represents several unrelated insurers
