LOMA 280 Principles Of Insurance
Questions with Complete Solutions
Financial service industry Correct Ans-Businesses that help people, businesses, and
governments save, borrow, invest and manage money
Financial intermediary (insurance companies) Correct Ans-Collects funds from one group of
people businesses and governments (suppliers) and channels them to another group (users)
Convergence Correct Ans-The movement toward a single financial institution serving a
customers banking insurance and security needs (the current trend)
Holding company Correct Ans-Aka parent company that owns and controls others knows as
subsidiaries (groups of subsidiaries are know as affiliates) this is how convergence is happening
Cinsolidation Correct Ans-Combination of financial service institutions across sectors
Merger Correct Ans-Assets and liabilities of toe companies combine
,Acquisition Correct Ans-One corporation purchases a controlling interest in a formerly
independent corp but both remain separate
Domicile Correct Ans-Jurisdiction on which an insurance company operates
Certificate of authority Correct Ans-License that grants an insurer right to conduct business in
a jurisdiction
2 parts of insurance regulation Correct Ans-Make sure insurers are solvent
Make sure insurers conduct business fairly and ethically
Solvent Correct Ans-Able to meet and pay debts and policy benefits when they come due
How to calculate solvency Correct Ans-Liabilities + assets = equity
2 components of stock insurance equity Correct Ans-Capital-money owners invested in
insurer through the purchase of stock
Surplus-the amount of equity that exceeds the capital
, Annual statement Correct Ans-Accounting report insurer prepares each year and files with the
insurance department in each state that it does business in.
On site auditing Correct Ans-Insurance companies have one every 3-5 years
Stock insurance accounting equation Correct Ans-Liabilities + owners equity (capital +
surplus) = assets
Mutual insurance accounting equation Correct Ans-Liabilities + owners equity (surplus) =
assets
Market conduct laws Correct Ans-Regulate how insurance companies do business
Social insurance program Correct Ans-Welfare plan established by law and administered by a
government
Provides population with income security
Provides payments to replace income lost because of age, disability, death,injury, and
unemployment
Questions with Complete Solutions
Financial service industry Correct Ans-Businesses that help people, businesses, and
governments save, borrow, invest and manage money
Financial intermediary (insurance companies) Correct Ans-Collects funds from one group of
people businesses and governments (suppliers) and channels them to another group (users)
Convergence Correct Ans-The movement toward a single financial institution serving a
customers banking insurance and security needs (the current trend)
Holding company Correct Ans-Aka parent company that owns and controls others knows as
subsidiaries (groups of subsidiaries are know as affiliates) this is how convergence is happening
Cinsolidation Correct Ans-Combination of financial service institutions across sectors
Merger Correct Ans-Assets and liabilities of toe companies combine
,Acquisition Correct Ans-One corporation purchases a controlling interest in a formerly
independent corp but both remain separate
Domicile Correct Ans-Jurisdiction on which an insurance company operates
Certificate of authority Correct Ans-License that grants an insurer right to conduct business in
a jurisdiction
2 parts of insurance regulation Correct Ans-Make sure insurers are solvent
Make sure insurers conduct business fairly and ethically
Solvent Correct Ans-Able to meet and pay debts and policy benefits when they come due
How to calculate solvency Correct Ans-Liabilities + assets = equity
2 components of stock insurance equity Correct Ans-Capital-money owners invested in
insurer through the purchase of stock
Surplus-the amount of equity that exceeds the capital
, Annual statement Correct Ans-Accounting report insurer prepares each year and files with the
insurance department in each state that it does business in.
On site auditing Correct Ans-Insurance companies have one every 3-5 years
Stock insurance accounting equation Correct Ans-Liabilities + owners equity (capital +
surplus) = assets
Mutual insurance accounting equation Correct Ans-Liabilities + owners equity (surplus) =
assets
Market conduct laws Correct Ans-Regulate how insurance companies do business
Social insurance program Correct Ans-Welfare plan established by law and administered by a
government
Provides population with income security
Provides payments to replace income lost because of age, disability, death,injury, and
unemployment
