AD Banker Chapter 1 Test Questions with Correct Answers Latest Update 2025-2026
Insurance Companies (insurers or carriers) - Answers Manufacture and sell insurance as
policies or contracts.
Insurance Agencies - Answers Captive or independent organizations that recruit, train, contract
with, and support producers.
Insurance Producers - Answers Licensed individuals representing and appointed by insurance
companies when transacting business.
Insured - Answers Person or entity that is covered by insurance, which covers against loss of life,
health, property, and liability.
Owner - Answers Not necessarily the insured under the policy but is responsible for paying
premiums and various rights in contract.
National Association of Insurance Commissioners (NAIC) - Answers State and territorial
insurance commissioners or regulators.
What does the NAIC do? - Answers Provides resources, research, legislative and regulatory
recommendations and interpretations for state insurance regulators.
Does NAIC have legal authority to enact or enforce insurance laws? - Answers NO!
Federal Insurance Office (FIO) - Answers Identifies issues and caps in the state regulation of
insurers. Also monitors access to affordable insurance by traditionally undeserved.
Who established the FIO? - Answers Dodd-Frank Wall Street Reform and Consumer Protection
Act.
Who primarily regulates insurance? - Answers Individual states.
What branch writes and passes state insurance laws, or statutes? - Answers Legislative branch.
What is the role of a state's executive branch? - Answers Enforce the existing statutes.
Who appoints the Commissioner, Director, or Superintendent of Insurance? - Answers The
Governor.
Result of the Supreme Court decision in U.S. vs South-Eastern Underwriters (1944)? - Answers
Established that the federal government will not regulate insurance in areas which the state
have historically had the authority to do so.
What is the exception to the ruling of Supreme Court vs. South-Eastern Underwriters (1944)? -
Answers The state will not regulate their insurance business if the states fail to cooperate.
Who owns stock companies? - Answers Stockholders or Shareholders
, Who manages a stock company when elected by the stockholders? - Answers Directors and
officers.
Stockholders may receive TAXABLE corporate dividends as a share of the company's profits
when and if declared by who? - Answers Directors.
Are dividends guaranteed by stock companies? - Answers NO!
Stock insurers issue Non-Participating policies, meaning that the policyholder is not entitled to
what? - Answers Receive any dividends.
Mutual companies are owned by who? And what are they referred to as? - Answers
Policyholders; members.
Policyholders elect what/who to manage a mutual company? - Answers A Board of Trustees or
Directors.
Policyholders may receive divideneds as a return of any divisible surplus as non-taxable or
taxable? - Answers Non-taxable.
What type of policy is issued by mutual insurers? - Answers Participating policies - policy
holders are entitled to receive any dividends.
Mutual insurers dividends can be paid as or used to? - Answers Cash, reduced premiums, left to
accumulate interest, or used to purchase paid-up additional insurance.
Who owns a reciprocal insurance company? And what is their main activity? - Answers Groups
and risk sharing.
What is a reciprocal insurer? - Answers Unincorporated, and is formed by individuals, firms, and
businesses that exchange insurance on one another.
What are members of reciprocal insurers called? - Answers Subscribers and they assume part
of the risk of all other subscribers.
What happens in a reciprocal insurance company if premiums collected are insufficient to pay
losses? - Answers Assessment of additional premiums can be made.
Who affects the exchange of reciprocal insurance and is not required to be a licensed insurer? -
Answers Attorney-in-Fact.
Lloyd's of London is what? - Answers Not an insurance company but consists of a group of
underwriters who specialize in insuring a particular type of risk.
What are the group of underwriters for Lloyd's of London called? - Answers Syndicates.
What are the members of Lloyd's of London liable for? - Answers Each risk they assume. And
Insurance Companies (insurers or carriers) - Answers Manufacture and sell insurance as
policies or contracts.
Insurance Agencies - Answers Captive or independent organizations that recruit, train, contract
with, and support producers.
Insurance Producers - Answers Licensed individuals representing and appointed by insurance
companies when transacting business.
Insured - Answers Person or entity that is covered by insurance, which covers against loss of life,
health, property, and liability.
Owner - Answers Not necessarily the insured under the policy but is responsible for paying
premiums and various rights in contract.
National Association of Insurance Commissioners (NAIC) - Answers State and territorial
insurance commissioners or regulators.
What does the NAIC do? - Answers Provides resources, research, legislative and regulatory
recommendations and interpretations for state insurance regulators.
Does NAIC have legal authority to enact or enforce insurance laws? - Answers NO!
Federal Insurance Office (FIO) - Answers Identifies issues and caps in the state regulation of
insurers. Also monitors access to affordable insurance by traditionally undeserved.
Who established the FIO? - Answers Dodd-Frank Wall Street Reform and Consumer Protection
Act.
Who primarily regulates insurance? - Answers Individual states.
What branch writes and passes state insurance laws, or statutes? - Answers Legislative branch.
What is the role of a state's executive branch? - Answers Enforce the existing statutes.
Who appoints the Commissioner, Director, or Superintendent of Insurance? - Answers The
Governor.
Result of the Supreme Court decision in U.S. vs South-Eastern Underwriters (1944)? - Answers
Established that the federal government will not regulate insurance in areas which the state
have historically had the authority to do so.
What is the exception to the ruling of Supreme Court vs. South-Eastern Underwriters (1944)? -
Answers The state will not regulate their insurance business if the states fail to cooperate.
Who owns stock companies? - Answers Stockholders or Shareholders
, Who manages a stock company when elected by the stockholders? - Answers Directors and
officers.
Stockholders may receive TAXABLE corporate dividends as a share of the company's profits
when and if declared by who? - Answers Directors.
Are dividends guaranteed by stock companies? - Answers NO!
Stock insurers issue Non-Participating policies, meaning that the policyholder is not entitled to
what? - Answers Receive any dividends.
Mutual companies are owned by who? And what are they referred to as? - Answers
Policyholders; members.
Policyholders elect what/who to manage a mutual company? - Answers A Board of Trustees or
Directors.
Policyholders may receive divideneds as a return of any divisible surplus as non-taxable or
taxable? - Answers Non-taxable.
What type of policy is issued by mutual insurers? - Answers Participating policies - policy
holders are entitled to receive any dividends.
Mutual insurers dividends can be paid as or used to? - Answers Cash, reduced premiums, left to
accumulate interest, or used to purchase paid-up additional insurance.
Who owns a reciprocal insurance company? And what is their main activity? - Answers Groups
and risk sharing.
What is a reciprocal insurer? - Answers Unincorporated, and is formed by individuals, firms, and
businesses that exchange insurance on one another.
What are members of reciprocal insurers called? - Answers Subscribers and they assume part
of the risk of all other subscribers.
What happens in a reciprocal insurance company if premiums collected are insufficient to pay
losses? - Answers Assessment of additional premiums can be made.
Who affects the exchange of reciprocal insurance and is not required to be a licensed insurer? -
Answers Attorney-in-Fact.
Lloyd's of London is what? - Answers Not an insurance company but consists of a group of
underwriters who specialize in insuring a particular type of risk.
What are the group of underwriters for Lloyd's of London called? - Answers Syndicates.
What are the members of Lloyd's of London liable for? - Answers Each risk they assume. And
