ASLI 320 EXAM QUESTIONS ANSWERED CORRECTLY LATEST UPDATE 2026
surplus lines market - Answers The distribution system of surplus lines insurers and intermediaries
that provides insurance on risks for which insurance is not available from admitted insurers
admitted insurer - Answers An insurer to which a state insurance department has granted a license to
do business within that state.
non admitted insurer - Answers Not authorized to do business in the state
surplus lines law - Answers anyone with a surplus lines license issued by that state to get insurance
from an eligible insurer if cannot get coverage from the admitted market
distressed risk - Answers A risk characterized by unfavorable attributes that have made it
unacceptable to admitted insurers.
unique risk - Answers A risk that is so specialized or unusual that admitted insurers are unwilling to
insure it.
high capacity risk - Answers A risk that requires high limits of insurance that may exceed the
underwriting criteria of admitted insurers.
Export List - Answers A list of coverages or classes of business that can be "exported" (written in the
surplus lines market) without fulfilling the diligent search requirement.
Reinsurance - Answers an arrangement by which the primary insurer that initially writes the insurance
transfers to another insurer part or all of the potential losses associated with such insurance
Stock Insurer - Answers owned by its stockholders and formed to earn profit for them
mutual insurer - Answers owned by its policyholders and formed to provide insurance to themselves
Lloyd's of London - Answers not an insurer, but a society of members who underwrite insurance in
syndicates
Captive Insurer - Answers This is an insurer that's established and owned by a parent firm for the
purpose of insuring the parent firm's loss exposure.
Risk Control - Answers A conscious act or decision not to act that reduces the frequency and/or
severity of losses or makes losses more predictable.
domestic insurer - Answers An insurance company that conducts business in the state of
incorporation.
Foreign Insurer - Answers licensed to operate in one state but created in another
Alien Insurer - Answers domiciled in another country other than the US
NAIC (national association of insurance commissioners) - Answers coordinate insurance regulation
activities among each state insurance department
guaranty fund - Answers A state-established fund that provides a system for the payment of some of
the unpaid claims of insolvent insurers licensed in that state,
what funds the guaranty fund - Answers generally funded by assessments collected from all insurers
licensed in the state.
NAIC annual statement - Answers The primary financial statement prepared by insurers and required
by every state insurance department.
focused differentiation strategy - Answers serving only one segment of the overall market and
offering unique/custom products so they can charge higher price
solvency - Answers ability of an insurer to meet its financial obligations as they become due, even
those resulting from insured losses that may be claimed several years in the future.
Reciprocal Insurance Exchange - Answers owned by its policyholders, formed to provide insurance
coverage to their members aka subscribers
what is another term for reciprocal insurance exchange - Answers inter insurance exchange
what areas of operation does Market Conduct Regulation regulate - Answers sales practices,
underwriting practices, claims practices, and bad-faith actions.
unfair trade practices law - Answers State law that specifies certain prohibited business practices
reserve - Answers amount insurer estimates to set aside on a claim
Solvency surveillance - Answers process to verify the solvency of insurers and determine if their
financial condition allows them to remain in business
IRIS - Answers insurance regulatory information system
what is the IRIS - Answers warning system to monitor the financial soundness of insurers
stamping office - Answers an organization that facilitates compliance with state laws regarding surplus
lines
what are the standards to regulate surplus lines insurance - Answers the ten guiding principles
, IID - Answers international insurers department
what does the IID do - Answers gathers information from non admitted, aliens about their financials
diligent search - Answers confirming that coverage cannot be provided by admitted insurers
affidavit - Answers signed statement showing effort to find coverage from admitted insurer before
going to surplus lines market
policyholders surplus - Answers total admitted assets minus total liabilities
another term for premium to surplus ratio - Answers capacity ratio
premium to surplus ratio - Answers indicates an insurer's financial strength by comparing written
premiums to policyholder surplus
residual market - Answers insurers that make insurance available through a shared risk mechanism to
those who cannot obtain coverage in the admitted market.
automobile insurance plan - Answers Plan for insuring high-risk drivers in which all auto insurers doing
business in the state are assigned their proportionate share of such drivers based on the total volume
of auto insurance written in the state.
fair access to insurance requirements (FAIR) plans - Answers An insurance pool through which private
insurers collectively address an unmet need for property insurance on urban properties, especially
those susceptible to loss by riot or civil commotion.
adverse selection - Answers reinsuring exposures that have an increased probability of loss because it
is undesirable
UW cycle - Answers hard market followed by soft market , then repeats
hard market - Answers high rates and restrictive underwriting with UW gain
soft market - Answers low rates, relaxed underwriting with more losses
MGA - Answers authorized agent of the insurer who has UW authority on their behalf
treaty reinsurance - Answers A reinsurance agreement that covers an entire class or portfolio of loss
exposures and provides that the primary insurer's individual loss exposures that fall within the treaty
are automatically reinsured.
facultative reinsurance - Answers Reinsurance of individual loss exposures in which the primary
insurer chooses which loss exposures to submit to the reinsurer, and the reinsurer can accept or
reject any loss exposures submitted.
capacity - Answers amount of business insurer can write based premium surplus ratio
lead user - Answers A customer who currently has needs that are likely to become more widespread
in the future.
risk purchasing group - Answers a group of businesses from the same industry joining together to buy
liability insurance from an insurance company
Competitive Advantage - Answers the ability of an insurer to gain more clients by providing lower
prices or better products
program business - Answers An insurer's offering of a policy or combination of policies with special
coverages, prices, or both to insureds with similar characteristics.
Program Manager - Answers A surplus lines intermediary that has created a special, or niche, program
that fits a particular market.
subsidiary - Answers company owned by another company
lloyds broker - Answers An insurance broker who procures coverage in the Lloyd's market on behalf of
insureds.
actual authority - Answers insured gives to agent or agent gives to broker
express authority - Answers The authority granted to an agent by means of the agent's written
contract.
implied authority - Answers Authority that is not expressed or written into the contract, but which the
agent is assumed to have in order to transact the business of insurance for the principal.
apparent authority - Answers A third party's reasonable belief that an agent has authority to act on
the principal's behalf.
leverage - Answers using borrowed money to invest
liquidity - Answers converting an asset to cash with little/no loss of value
open market placement - Answers A method of placing insurance in which insurers decide whether to
accept a particular submission before coverage is bound
errors and omissions - Answers negligent acts or a failure to act
fiduciary - Answers a person who holds assets in trust for a beneficiary
hazard - Answers A condition that increases the frequency or severity of a loss.
surplus lines market - Answers The distribution system of surplus lines insurers and intermediaries
that provides insurance on risks for which insurance is not available from admitted insurers
admitted insurer - Answers An insurer to which a state insurance department has granted a license to
do business within that state.
non admitted insurer - Answers Not authorized to do business in the state
surplus lines law - Answers anyone with a surplus lines license issued by that state to get insurance
from an eligible insurer if cannot get coverage from the admitted market
distressed risk - Answers A risk characterized by unfavorable attributes that have made it
unacceptable to admitted insurers.
unique risk - Answers A risk that is so specialized or unusual that admitted insurers are unwilling to
insure it.
high capacity risk - Answers A risk that requires high limits of insurance that may exceed the
underwriting criteria of admitted insurers.
Export List - Answers A list of coverages or classes of business that can be "exported" (written in the
surplus lines market) without fulfilling the diligent search requirement.
Reinsurance - Answers an arrangement by which the primary insurer that initially writes the insurance
transfers to another insurer part or all of the potential losses associated with such insurance
Stock Insurer - Answers owned by its stockholders and formed to earn profit for them
mutual insurer - Answers owned by its policyholders and formed to provide insurance to themselves
Lloyd's of London - Answers not an insurer, but a society of members who underwrite insurance in
syndicates
Captive Insurer - Answers This is an insurer that's established and owned by a parent firm for the
purpose of insuring the parent firm's loss exposure.
Risk Control - Answers A conscious act or decision not to act that reduces the frequency and/or
severity of losses or makes losses more predictable.
domestic insurer - Answers An insurance company that conducts business in the state of
incorporation.
Foreign Insurer - Answers licensed to operate in one state but created in another
Alien Insurer - Answers domiciled in another country other than the US
NAIC (national association of insurance commissioners) - Answers coordinate insurance regulation
activities among each state insurance department
guaranty fund - Answers A state-established fund that provides a system for the payment of some of
the unpaid claims of insolvent insurers licensed in that state,
what funds the guaranty fund - Answers generally funded by assessments collected from all insurers
licensed in the state.
NAIC annual statement - Answers The primary financial statement prepared by insurers and required
by every state insurance department.
focused differentiation strategy - Answers serving only one segment of the overall market and
offering unique/custom products so they can charge higher price
solvency - Answers ability of an insurer to meet its financial obligations as they become due, even
those resulting from insured losses that may be claimed several years in the future.
Reciprocal Insurance Exchange - Answers owned by its policyholders, formed to provide insurance
coverage to their members aka subscribers
what is another term for reciprocal insurance exchange - Answers inter insurance exchange
what areas of operation does Market Conduct Regulation regulate - Answers sales practices,
underwriting practices, claims practices, and bad-faith actions.
unfair trade practices law - Answers State law that specifies certain prohibited business practices
reserve - Answers amount insurer estimates to set aside on a claim
Solvency surveillance - Answers process to verify the solvency of insurers and determine if their
financial condition allows them to remain in business
IRIS - Answers insurance regulatory information system
what is the IRIS - Answers warning system to monitor the financial soundness of insurers
stamping office - Answers an organization that facilitates compliance with state laws regarding surplus
lines
what are the standards to regulate surplus lines insurance - Answers the ten guiding principles
, IID - Answers international insurers department
what does the IID do - Answers gathers information from non admitted, aliens about their financials
diligent search - Answers confirming that coverage cannot be provided by admitted insurers
affidavit - Answers signed statement showing effort to find coverage from admitted insurer before
going to surplus lines market
policyholders surplus - Answers total admitted assets minus total liabilities
another term for premium to surplus ratio - Answers capacity ratio
premium to surplus ratio - Answers indicates an insurer's financial strength by comparing written
premiums to policyholder surplus
residual market - Answers insurers that make insurance available through a shared risk mechanism to
those who cannot obtain coverage in the admitted market.
automobile insurance plan - Answers Plan for insuring high-risk drivers in which all auto insurers doing
business in the state are assigned their proportionate share of such drivers based on the total volume
of auto insurance written in the state.
fair access to insurance requirements (FAIR) plans - Answers An insurance pool through which private
insurers collectively address an unmet need for property insurance on urban properties, especially
those susceptible to loss by riot or civil commotion.
adverse selection - Answers reinsuring exposures that have an increased probability of loss because it
is undesirable
UW cycle - Answers hard market followed by soft market , then repeats
hard market - Answers high rates and restrictive underwriting with UW gain
soft market - Answers low rates, relaxed underwriting with more losses
MGA - Answers authorized agent of the insurer who has UW authority on their behalf
treaty reinsurance - Answers A reinsurance agreement that covers an entire class or portfolio of loss
exposures and provides that the primary insurer's individual loss exposures that fall within the treaty
are automatically reinsured.
facultative reinsurance - Answers Reinsurance of individual loss exposures in which the primary
insurer chooses which loss exposures to submit to the reinsurer, and the reinsurer can accept or
reject any loss exposures submitted.
capacity - Answers amount of business insurer can write based premium surplus ratio
lead user - Answers A customer who currently has needs that are likely to become more widespread
in the future.
risk purchasing group - Answers a group of businesses from the same industry joining together to buy
liability insurance from an insurance company
Competitive Advantage - Answers the ability of an insurer to gain more clients by providing lower
prices or better products
program business - Answers An insurer's offering of a policy or combination of policies with special
coverages, prices, or both to insureds with similar characteristics.
Program Manager - Answers A surplus lines intermediary that has created a special, or niche, program
that fits a particular market.
subsidiary - Answers company owned by another company
lloyds broker - Answers An insurance broker who procures coverage in the Lloyd's market on behalf of
insureds.
actual authority - Answers insured gives to agent or agent gives to broker
express authority - Answers The authority granted to an agent by means of the agent's written
contract.
implied authority - Answers Authority that is not expressed or written into the contract, but which the
agent is assumed to have in order to transact the business of insurance for the principal.
apparent authority - Answers A third party's reasonable belief that an agent has authority to act on
the principal's behalf.
leverage - Answers using borrowed money to invest
liquidity - Answers converting an asset to cash with little/no loss of value
open market placement - Answers A method of placing insurance in which insurers decide whether to
accept a particular submission before coverage is bound
errors and omissions - Answers negligent acts or a failure to act
fiduciary - Answers a person who holds assets in trust for a beneficiary
hazard - Answers A condition that increases the frequency or severity of a loss.
