RMIN 4000 exam 2-smith questions &
answers graded A+ updated
types of private insurers - correct answer ✔✔•Stock insurers
•Mutual insurers
•Lloyd's of London
•Blue Cross and Blue Shield Plans
-Captive Insurers
-Fraternal insurers
Stock Insurers - correct answer ✔✔a corporation owned by stockholders
-earn profit for stockholders by increasing stock value and paying dividends
Mutual Insurers - correct answer ✔✔an insurance corporation owned by the policyholders
- do not issue stock, but rather raise capital through premium payments of policyholders
-profits distributed to policyholders by dividends or rate reductions
Lloyd's Corporation - correct answer ✔✔
Advanced Premium Mutual - correct answer ✔✔policyholders pay set premium upfront
Assessment Mutual - correct answer ✔✔has the right to assess policyowners an additional
amount if the insurer's financial operations are unfavorable
,Insurance Agent - correct answer ✔✔person authorized to issue a bind to bind the principal to a
contract
Broker - correct answer ✔✔represents insureds, usually business firms and large corporations
-may provide other risk management services
Surplus Lines Broker - correct answer ✔✔A person or firm that places business with insurers not
licensed (nonadmitted) in the state in which the transaction occurs but that is permitted to
write insurance because coverage is not available through standard market insurers.
Managing General Agents - correct answer ✔✔Specialized producers with underwriting
authority, can be involved in surplus lines
Types of Marketing Systems - correct answer ✔✔1. Independent Agency System
2. Exclusive Agency System
3. Direct Writer
4. Direct Response System
5. Multiple Distribution System
Independent Agency System - correct answer ✔✔Agents represent several insurers through
signed contracts and are paid on commission or fee basis, not through salary.
exclusive agency system - correct answer ✔✔the agent represents only one insurer or group of
insurers under common ownership
direct writer - correct answer ✔✔Insurance marketing system where the company's agents are
also employees of the company
, direct response system - correct answer ✔✔a marketing system by which insurance products
are sold directly to consumers without a face-to-face meeting with an agent
multiple distribution system - correct answer ✔✔Insurance system where more than one
distribution system is used to sell insurance.
basic company functions - correct answer ✔✔1. ratemaking
2. underwriting
3. production
4. claim settlement
5. reinsurance
6. investments
7. other (accounting, legal, loss control, information systems)
activities of actuaries - correct answer ✔✔
insurance binders - correct answer ✔✔provide temporary insurance until policy is written
** cannot be issued by life insurance agents- full risk assessment must be done before coverage
is issued**
underwriting - correct answer ✔✔The process of reviewing, accepting or rejecting applications
for insurance.
statement of underwriting policy - correct answer ✔✔A _______________________________
establishes policies that are consistent with the company's objectives
basic underwriting principles - correct answer ✔✔1. attain an underwriting profit
2. select prospective insureds according to the company's underwriting standards
answers graded A+ updated
types of private insurers - correct answer ✔✔•Stock insurers
•Mutual insurers
•Lloyd's of London
•Blue Cross and Blue Shield Plans
-Captive Insurers
-Fraternal insurers
Stock Insurers - correct answer ✔✔a corporation owned by stockholders
-earn profit for stockholders by increasing stock value and paying dividends
Mutual Insurers - correct answer ✔✔an insurance corporation owned by the policyholders
- do not issue stock, but rather raise capital through premium payments of policyholders
-profits distributed to policyholders by dividends or rate reductions
Lloyd's Corporation - correct answer ✔✔
Advanced Premium Mutual - correct answer ✔✔policyholders pay set premium upfront
Assessment Mutual - correct answer ✔✔has the right to assess policyowners an additional
amount if the insurer's financial operations are unfavorable
,Insurance Agent - correct answer ✔✔person authorized to issue a bind to bind the principal to a
contract
Broker - correct answer ✔✔represents insureds, usually business firms and large corporations
-may provide other risk management services
Surplus Lines Broker - correct answer ✔✔A person or firm that places business with insurers not
licensed (nonadmitted) in the state in which the transaction occurs but that is permitted to
write insurance because coverage is not available through standard market insurers.
Managing General Agents - correct answer ✔✔Specialized producers with underwriting
authority, can be involved in surplus lines
Types of Marketing Systems - correct answer ✔✔1. Independent Agency System
2. Exclusive Agency System
3. Direct Writer
4. Direct Response System
5. Multiple Distribution System
Independent Agency System - correct answer ✔✔Agents represent several insurers through
signed contracts and are paid on commission or fee basis, not through salary.
exclusive agency system - correct answer ✔✔the agent represents only one insurer or group of
insurers under common ownership
direct writer - correct answer ✔✔Insurance marketing system where the company's agents are
also employees of the company
, direct response system - correct answer ✔✔a marketing system by which insurance products
are sold directly to consumers without a face-to-face meeting with an agent
multiple distribution system - correct answer ✔✔Insurance system where more than one
distribution system is used to sell insurance.
basic company functions - correct answer ✔✔1. ratemaking
2. underwriting
3. production
4. claim settlement
5. reinsurance
6. investments
7. other (accounting, legal, loss control, information systems)
activities of actuaries - correct answer ✔✔
insurance binders - correct answer ✔✔provide temporary insurance until policy is written
** cannot be issued by life insurance agents- full risk assessment must be done before coverage
is issued**
underwriting - correct answer ✔✔The process of reviewing, accepting or rejecting applications
for insurance.
statement of underwriting policy - correct answer ✔✔A _______________________________
establishes policies that are consistent with the company's objectives
basic underwriting principles - correct answer ✔✔1. attain an underwriting profit
2. select prospective insureds according to the company's underwriting standards
