CIC - Insurance Company Operations
Exam 2026 Questions and Answers
Three types of Insurance Company and Management Stuctures - Correct answer-1.
Stock Insurance Company
2. Mutual Insurance Company
3. Reciprocal
Stock Insurance Company - Correct answer-an incorporated insurance company
owned by STOCKHOLDERS
the stockholders elect the corporation's board of directors
stockholders may or may not be policy holders
What is the objective of a Stock Insurance Company? - Correct answer-To make a
profit for its stockholders
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,Profits may be shared by forms of stock dividends or increase in stock value
Characteristics of a Stock Insurance Company - Correct answer-1. Capitalization
2. Reach is greater with regard to brand
3. Primary responsibility is to stockholders not policy holders
4. Pressure on top line growth at the expense of profit
Mutual Insurance Company - Correct answer-incorporated insurance company
OWNED by its POLICYHOLDERS
Board of Directors is voted on by the policy holders
What is the objective of a Mutual Insurance Company? - Correct answer-to provide
insurance at or near the actual cost of doing business
if there is money left over in the form of profits it may be returned to policy
holders as a dividend or used to reduce future premiums
Characteristics of a Mutual Insurance Company - Correct answer-1. No
Stockholders
2. Stable
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,3. Longevity in the market
4. Less pressure on the day-to-day results
Reciprocal - Correct answer-is a group of individuals or organizations called
subscribers who join together into an association for the purpose of insuring one
another
What is the objective of a Reciprocal? - Correct answer-Subscribers insure one
another in an insurance application of "one for all, and all for one"
Characteristics of a Reciprocal - Correct answer-1. Insureds are also the insurers
2. Specific to a niche or a single line of business
3. Less profit less pressure
4. May be more difficult to raise capital
Purpose of Establishing the Board of Directors - Correct answer-to make certain
the investors and/or owners interests are protected
What are the three Primary Obligations of Board Members? - Correct answer-1.
Duty of Care - being prudent and using due diligence (focusing on the facts)
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, 2. Duty of Loyalty - keeping the interests of the company ahead of one's own
interest
3. Duty of Obedience - Following by laws, state purpose of company, laws (may
include disclosure of conflict of interest, as required)
Company Culture - Correct answer-is the distinctive ethos of the organization - its
the companies "personality"
Values Statement - Correct answer-Commonly held values that define the
company's culture and beliefs
Mission Statement - Correct answer-Short statment of the company's core and
overall goal - why does the company do what it does
The mission statement does: - Correct answer-1. Identifies the goal of its
operations
2. Communicates purpose and direction to employees, customers, etc.
Two types of Company Culture - Correct answer-1. Active Approach - leadership
makes it happen - intentional actions, clearly defined values
©COPYRIGHT 2025, ALL RIGHTS RESERVED 4
Exam 2026 Questions and Answers
Three types of Insurance Company and Management Stuctures - Correct answer-1.
Stock Insurance Company
2. Mutual Insurance Company
3. Reciprocal
Stock Insurance Company - Correct answer-an incorporated insurance company
owned by STOCKHOLDERS
the stockholders elect the corporation's board of directors
stockholders may or may not be policy holders
What is the objective of a Stock Insurance Company? - Correct answer-To make a
profit for its stockholders
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
,Profits may be shared by forms of stock dividends or increase in stock value
Characteristics of a Stock Insurance Company - Correct answer-1. Capitalization
2. Reach is greater with regard to brand
3. Primary responsibility is to stockholders not policy holders
4. Pressure on top line growth at the expense of profit
Mutual Insurance Company - Correct answer-incorporated insurance company
OWNED by its POLICYHOLDERS
Board of Directors is voted on by the policy holders
What is the objective of a Mutual Insurance Company? - Correct answer-to provide
insurance at or near the actual cost of doing business
if there is money left over in the form of profits it may be returned to policy
holders as a dividend or used to reduce future premiums
Characteristics of a Mutual Insurance Company - Correct answer-1. No
Stockholders
2. Stable
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
,3. Longevity in the market
4. Less pressure on the day-to-day results
Reciprocal - Correct answer-is a group of individuals or organizations called
subscribers who join together into an association for the purpose of insuring one
another
What is the objective of a Reciprocal? - Correct answer-Subscribers insure one
another in an insurance application of "one for all, and all for one"
Characteristics of a Reciprocal - Correct answer-1. Insureds are also the insurers
2. Specific to a niche or a single line of business
3. Less profit less pressure
4. May be more difficult to raise capital
Purpose of Establishing the Board of Directors - Correct answer-to make certain
the investors and/or owners interests are protected
What are the three Primary Obligations of Board Members? - Correct answer-1.
Duty of Care - being prudent and using due diligence (focusing on the facts)
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
, 2. Duty of Loyalty - keeping the interests of the company ahead of one's own
interest
3. Duty of Obedience - Following by laws, state purpose of company, laws (may
include disclosure of conflict of interest, as required)
Company Culture - Correct answer-is the distinctive ethos of the organization - its
the companies "personality"
Values Statement - Correct answer-Commonly held values that define the
company's culture and beliefs
Mission Statement - Correct answer-Short statment of the company's core and
overall goal - why does the company do what it does
The mission statement does: - Correct answer-1. Identifies the goal of its
operations
2. Communicates purpose and direction to employees, customers, etc.
Two types of Company Culture - Correct answer-1. Active Approach - leadership
makes it happen - intentional actions, clearly defined values
©COPYRIGHT 2025, ALL RIGHTS RESERVED 4
