Alabama P&C Insurance Exam Questions &
Answers | Updated 2026
Dishonesty - CORRECT ANSWER -Deceit, misrepresentation, untruthfulness, falsification
Insurers - CORRECT ANSWER -insurance companies or carriers who manufacture and sell
insurance coverage by way of policies or contracts.
Insurance Agencies - CORRECT ANSWER -independent organizations that recruit, contract with,
and support sales agents and producers
insurance agents - CORRECT ANSWER -also known as producers.. licensed individuals
representing an insurance company when transacting insurance
Insured - CORRECT ANSWER -the person or entity that buys insurance for protection from loss
of life, health, property, or liability.
National Association of Insurance Commissioners (NAIC) - CORRECT ANSWER -consists of all
State and territorial insurance commissioners or regulators. It provides resources, research,
legislative and regulatory recommendations and interpretations for state insurance regulators. It
also promotes uniformity among states. Members may accept or reject recommendations. The
NAIC has no legal authority to enact or enforce insurance laws.
Federal Insurance Office - CORRECT ANSWER -Established by the Dodd-Frank Wall Street Reform
& Consumer Protection Act. They monitor the insurance industry & identifies issues & gaps in
the state regulation of insurers. Also monitors affordable insurance by traditionally undeserved
communities and consumers like minorities & low and moderate income persons. They are not
regulators or supervisors.
, Insurance Regulation at the State Level - CORRECT ANSWER -The insurance industry is primarily
regulated at the state level. The legislative branch writes and passes state insurance laws. The
Judicial Branch interprets and determines the constitutionality of statues. The executive branch
enforces the existing statutes in place. The Commissioner, Director, or Superintendent of
Insurance is typically appointed by the Governor. The Commissioner has the power to issue
rules & regulations to help enforce statutes.
Insurance Regulation at the Federal Level - CORRECT ANSWER -In the aftermath of the Supreme
Court decision in U.S. v. South-Eastern Underwriters (1944), the McCarran-Ferguson Act of 1945
established that the federal government will not regulate the business of insurance in areas
which the states have historically had the authority to do so (such as producer and company
licensing) unless the states fail to cooperate. Congress created federal agencies to provide
regulatory oversight impacting insurance practices.
Stock Insurance Company - CORRECT ANSWER -A type of insurance company owned by
stockholders or share holders. Directors and officers direct the company operations and are
elected by stock holders. Stock Holders receive taxable corporate dividends as a return of profit
when declared by Directors. Dividends not guaranteed. Insure Non-participating policies
traditionally.
Mutual Insurer - CORRECT ANSWER -An insurer that is owned by its policyholders and formed as
a corporation for the purpose of providing insurance to them. Has a board of trustees or
directors who directs the company operations & is elected by Policy Holders/members.
Policyholders receive non taxable dividends as a return of unused premium when declared by
Directors. Dividends aren't guaranteed. Traditionally issues participating policies.
Reciprocal Insurance Company - CORRECT ANSWER -A group-owned insurer whose main activity
is risk sharing.
Lloyd's of London - CORRECT ANSWER -not an insurer, but a society of members who
underwrite insurance in syndicates
Answers | Updated 2026
Dishonesty - CORRECT ANSWER -Deceit, misrepresentation, untruthfulness, falsification
Insurers - CORRECT ANSWER -insurance companies or carriers who manufacture and sell
insurance coverage by way of policies or contracts.
Insurance Agencies - CORRECT ANSWER -independent organizations that recruit, contract with,
and support sales agents and producers
insurance agents - CORRECT ANSWER -also known as producers.. licensed individuals
representing an insurance company when transacting insurance
Insured - CORRECT ANSWER -the person or entity that buys insurance for protection from loss
of life, health, property, or liability.
National Association of Insurance Commissioners (NAIC) - CORRECT ANSWER -consists of all
State and territorial insurance commissioners or regulators. It provides resources, research,
legislative and regulatory recommendations and interpretations for state insurance regulators. It
also promotes uniformity among states. Members may accept or reject recommendations. The
NAIC has no legal authority to enact or enforce insurance laws.
Federal Insurance Office - CORRECT ANSWER -Established by the Dodd-Frank Wall Street Reform
& Consumer Protection Act. They monitor the insurance industry & identifies issues & gaps in
the state regulation of insurers. Also monitors affordable insurance by traditionally undeserved
communities and consumers like minorities & low and moderate income persons. They are not
regulators or supervisors.
, Insurance Regulation at the State Level - CORRECT ANSWER -The insurance industry is primarily
regulated at the state level. The legislative branch writes and passes state insurance laws. The
Judicial Branch interprets and determines the constitutionality of statues. The executive branch
enforces the existing statutes in place. The Commissioner, Director, or Superintendent of
Insurance is typically appointed by the Governor. The Commissioner has the power to issue
rules & regulations to help enforce statutes.
Insurance Regulation at the Federal Level - CORRECT ANSWER -In the aftermath of the Supreme
Court decision in U.S. v. South-Eastern Underwriters (1944), the McCarran-Ferguson Act of 1945
established that the federal government will not regulate the business of insurance in areas
which the states have historically had the authority to do so (such as producer and company
licensing) unless the states fail to cooperate. Congress created federal agencies to provide
regulatory oversight impacting insurance practices.
Stock Insurance Company - CORRECT ANSWER -A type of insurance company owned by
stockholders or share holders. Directors and officers direct the company operations and are
elected by stock holders. Stock Holders receive taxable corporate dividends as a return of profit
when declared by Directors. Dividends not guaranteed. Insure Non-participating policies
traditionally.
Mutual Insurer - CORRECT ANSWER -An insurer that is owned by its policyholders and formed as
a corporation for the purpose of providing insurance to them. Has a board of trustees or
directors who directs the company operations & is elected by Policy Holders/members.
Policyholders receive non taxable dividends as a return of unused premium when declared by
Directors. Dividends aren't guaranteed. Traditionally issues participating policies.
Reciprocal Insurance Company - CORRECT ANSWER -A group-owned insurer whose main activity
is risk sharing.
Lloyd's of London - CORRECT ANSWER -not an insurer, but a society of members who
underwrite insurance in syndicates
