FIN 341 FINAL EXAM QUESTIONS & ANSWERS
1. The financial services industry consists of- Answers - -Commercial banks
-Savings and loan institutions
-Credit unions
-Life and health insurers
-Property and casualty insurers
-Mutual Funds
-Securities brokers and dealers
-Private and state pension funds
-Government-related financial institutions
-Finance companies and other financial firms
2. How many insurance companies are publicly traded in the U.S.- Answers -
3664
3. How many life insurance companies are publicly traded- Answers - 87
4. Most insurance companies are...- Answers - privately held
5. How many property and casualty insurance companies are publicly held-
Answers - 111
6. How many private life and health insurance insurers- Answers - 737
7. How many private property and casualty insures- Answers - 3708
8. The more concentrated...- Answers - The lower the competition
9. Less concentration in...- Answers - Workers comp
10. Types of private insurers- Answers - -Stock Insurers
-Mutual Insurers
-Lloyd's of London
,-Captives
11. Stock insurers- Answers - Insurance companies owned by stockholders
12. Stockholders elect- Answers - board of directors
13. Stockholders bear- Answers - all losses
14. Stockholders may- Answers - receive dividends
15. Stock insurers have- Answers - better access to capital and have better monitoring
16. Mutual insurers- Answers - insurance companies owned by policyholders
17. Policyholders elect- Answers - board of directors
18. policyholders may- Answers - receive dividends or rate reductions
19. Mutual insurers have- Answers - restricted growth, don't have access to financing, and can only issue new
debt
20. Mutual insurers can- Answers - demutualize
,21. Lloyd's of London- Answers - This is NOT an insurer but a group of individuals and companies that
underwrite unusual insurance policies.
22. Lloyd's of London is also known as a- Answers - "wholesale market"
23. The organization of Lloyd's include- Answers - -Names "investors"
-Syndicates
-Underwriters
24. Underwriter- Answers - A person who evaluates and classifies risks to accept or reject them on behalf of the
insurer.
25. Syndicates- Answers - A group of investors who come together to pool their capital & accept insurance risks
26. Names- Answers - Individual members of Lloyd's who provide the capital that backs insurance written at Lloyd's
27. After Lloyd's disaster from 1988-1992, they- Answers - now insure corporations and
individuals
28. Equitas- Answers - A separate entity established by Lloyd's to deal with liability lawsuits that are taken from the US
29. Captive insurer- Answers - A company created by a business to insure its own risks (Instead of
paying another insurance company, the business creates its own insurer to cover its losses).
30. A single parent, or pure captive- Answers - an insurer owned by one parent
31. Association captive- Answers - owned by several parents (in the same industry)
32. End of last year there were captive insurers- Answers - 7000
33. Captive insurers are mainly located in- Answers - low/no income tax places
34. Agent- Answers - someone who represents another person or company (called the principal) & is allowed
to make decisions or take actions for them
35. Principal- Answers - The principal (the insurance company) is legally responsible for what the agent does
36. A property and casualty agent has the power to the insurer-
Answers - bind
, 37. Binder- Answers - Temporary insurance coverage that protects the customer until the oflcial policy is issued
38. A agent normally does not have the authority to bind the insurer-
Answers - life insurance
39. Life insurance coverage can only- Answers - start after approval by the insurance company
40. Broker- Answers - Represents the customer (insured) not the insurance company (insurer)
41. Brokers do not have the authority to- Answers - bind
42. Surplus lines broker (Wholesale)- Answers - Finds insurance from non admitted insurers
(insurers not licensed in the state).
43. When are surplus lines brokers used- Answers - when normal insurance companies won't
cover a risk because it's too risky
1. The financial services industry consists of- Answers - -Commercial banks
-Savings and loan institutions
-Credit unions
-Life and health insurers
-Property and casualty insurers
-Mutual Funds
-Securities brokers and dealers
-Private and state pension funds
-Government-related financial institutions
-Finance companies and other financial firms
2. How many insurance companies are publicly traded in the U.S.- Answers -
3664
3. How many life insurance companies are publicly traded- Answers - 87
4. Most insurance companies are...- Answers - privately held
5. How many property and casualty insurance companies are publicly held-
Answers - 111
6. How many private life and health insurance insurers- Answers - 737
7. How many private property and casualty insures- Answers - 3708
8. The more concentrated...- Answers - The lower the competition
9. Less concentration in...- Answers - Workers comp
10. Types of private insurers- Answers - -Stock Insurers
-Mutual Insurers
-Lloyd's of London
,-Captives
11. Stock insurers- Answers - Insurance companies owned by stockholders
12. Stockholders elect- Answers - board of directors
13. Stockholders bear- Answers - all losses
14. Stockholders may- Answers - receive dividends
15. Stock insurers have- Answers - better access to capital and have better monitoring
16. Mutual insurers- Answers - insurance companies owned by policyholders
17. Policyholders elect- Answers - board of directors
18. policyholders may- Answers - receive dividends or rate reductions
19. Mutual insurers have- Answers - restricted growth, don't have access to financing, and can only issue new
debt
20. Mutual insurers can- Answers - demutualize
,21. Lloyd's of London- Answers - This is NOT an insurer but a group of individuals and companies that
underwrite unusual insurance policies.
22. Lloyd's of London is also known as a- Answers - "wholesale market"
23. The organization of Lloyd's include- Answers - -Names "investors"
-Syndicates
-Underwriters
24. Underwriter- Answers - A person who evaluates and classifies risks to accept or reject them on behalf of the
insurer.
25. Syndicates- Answers - A group of investors who come together to pool their capital & accept insurance risks
26. Names- Answers - Individual members of Lloyd's who provide the capital that backs insurance written at Lloyd's
27. After Lloyd's disaster from 1988-1992, they- Answers - now insure corporations and
individuals
28. Equitas- Answers - A separate entity established by Lloyd's to deal with liability lawsuits that are taken from the US
29. Captive insurer- Answers - A company created by a business to insure its own risks (Instead of
paying another insurance company, the business creates its own insurer to cover its losses).
30. A single parent, or pure captive- Answers - an insurer owned by one parent
31. Association captive- Answers - owned by several parents (in the same industry)
32. End of last year there were captive insurers- Answers - 7000
33. Captive insurers are mainly located in- Answers - low/no income tax places
34. Agent- Answers - someone who represents another person or company (called the principal) & is allowed
to make decisions or take actions for them
35. Principal- Answers - The principal (the insurance company) is legally responsible for what the agent does
36. A property and casualty agent has the power to the insurer-
Answers - bind
, 37. Binder- Answers - Temporary insurance coverage that protects the customer until the oflcial policy is issued
38. A agent normally does not have the authority to bind the insurer-
Answers - life insurance
39. Life insurance coverage can only- Answers - start after approval by the insurance company
40. Broker- Answers - Represents the customer (insured) not the insurance company (insurer)
41. Brokers do not have the authority to- Answers - bind
42. Surplus lines broker (Wholesale)- Answers - Finds insurance from non admitted insurers
(insurers not licensed in the state).
43. When are surplus lines brokers used- Answers - when normal insurance companies won't
cover a risk because it's too risky
