RMIN 4000 BROWN EXAM 2 FINAL PAPER
COMPLETE QUESTIONS WITH ACCURATE
SOLUTIONS
●● Major types of private insurers
Answer: Stock insurers
mutual insurers
lloyd's of london
●● Stock insurers
Answer: A corporation owned by stockholders
Objective is to earn profit for stockholders by increasing the value of the
stock and paying dividends
Stockholders elect board of elections
●● Mutual insurers
Answer: A corporation owned by policyholders
Profits are distributed to policyholders by dividends or rate reductions
,Policyholders elect board of electives
●● Loyd's of london
Answer: World's leading market that provides service and physical
facilities for its members to write specialized lines of insurance
NOT an insurer
●● Types of mutual insurers
Answer: Assessment mutual
Advance premium mutual
Fraternal insurer
●● Assessment mutual
Answer: Insurer has the right to assess policyholders an additional
amount if the insurer's financial operations are unfavorable
Assessment: additional charge - if insurance company is losing money
As result very few still exist (no one wanna pay that, assessment difficult
to collect)
●● Advance premium mutual
Answer: Insurer does not issue assessable policies
,Most common mutual insurance type
●● Fraternal insurer
Answer: Provides life and health insurance to members of a social or
religious organization
●● Lloyd's structure
Answer: Loyd's brokers: represent policyholders to arrange covers with
syndicates
Loyd's syndicates: offer insurance contracts in the market
-Underwriters
●● Lloyd's syndicates
Answer: Must meet lloyd's stringent capital requirements
Members
Join together and provide capital to form syndicates, receiving profits or
bearing losses
Most are corporations or limited partnerships
"Names" are high net worth individuals
, managing agents: manage the syndicates, who typically specialize in
certain lines
underwriters: work for the syndicates to assess risks and determine
premiums
●● Insurance agent
Answer: Someone who legally represents the principal (insurance
company) and has the authority to act on the principal's behalf
The principal is legally responsible for all acts of an agent when the
agent is acting within scope of authority
Typically has the authority to bind coverage
Client (business) ← → Broker ←→ insurance carrier
●● Insurance binders
Answer: Provide temporary insurance until the policy is actually written
Can typically be provided by property and casualty (P & C) agents
Life insurance agents usually have no authority to issue binders
COMPLETE QUESTIONS WITH ACCURATE
SOLUTIONS
●● Major types of private insurers
Answer: Stock insurers
mutual insurers
lloyd's of london
●● Stock insurers
Answer: A corporation owned by stockholders
Objective is to earn profit for stockholders by increasing the value of the
stock and paying dividends
Stockholders elect board of elections
●● Mutual insurers
Answer: A corporation owned by policyholders
Profits are distributed to policyholders by dividends or rate reductions
,Policyholders elect board of electives
●● Loyd's of london
Answer: World's leading market that provides service and physical
facilities for its members to write specialized lines of insurance
NOT an insurer
●● Types of mutual insurers
Answer: Assessment mutual
Advance premium mutual
Fraternal insurer
●● Assessment mutual
Answer: Insurer has the right to assess policyholders an additional
amount if the insurer's financial operations are unfavorable
Assessment: additional charge - if insurance company is losing money
As result very few still exist (no one wanna pay that, assessment difficult
to collect)
●● Advance premium mutual
Answer: Insurer does not issue assessable policies
,Most common mutual insurance type
●● Fraternal insurer
Answer: Provides life and health insurance to members of a social or
religious organization
●● Lloyd's structure
Answer: Loyd's brokers: represent policyholders to arrange covers with
syndicates
Loyd's syndicates: offer insurance contracts in the market
-Underwriters
●● Lloyd's syndicates
Answer: Must meet lloyd's stringent capital requirements
Members
Join together and provide capital to form syndicates, receiving profits or
bearing losses
Most are corporations or limited partnerships
"Names" are high net worth individuals
, managing agents: manage the syndicates, who typically specialize in
certain lines
underwriters: work for the syndicates to assess risks and determine
premiums
●● Insurance agent
Answer: Someone who legally represents the principal (insurance
company) and has the authority to act on the principal's behalf
The principal is legally responsible for all acts of an agent when the
agent is acting within scope of authority
Typically has the authority to bind coverage
Client (business) ← → Broker ←→ insurance carrier
●● Insurance binders
Answer: Provide temporary insurance until the policy is actually written
Can typically be provided by property and casualty (P & C) agents
Life insurance agents usually have no authority to issue binders
