RMIN 4000 BROWN EXAM 2 ACTUAL
QUESTIONS AND VERIFIED CORRECT
ANSWERS
●● Major types of private insurers
Answer: Stock Insurers
Mutual Insurers
Lloyds of London
●● stock insurer
Answer: a corp. owned by stockholders, objective is to earn profit for
stockholders by increasing the value of the stock and paying dividends
(examples: Allstate, Metlife, Progressive, Aetna, Chubb, Travelers)
●● mutual insurers
Answer: a corp. owned by policyholders, profits are distributed to
policyholders by dividends or rate reductions (examples: Statefarm,
Northwestern Mutual, Nationwide, New York Life, Liberty Mutual)
●● 3 forms of mutual insurers
Answer: advance premium mutual, assessment mutual, fraternal insurer
●● advance premium mutual
,Answer: insurer does not issue assessable policies
●● assessment mutual
Answer: insurer has right to assess policyholders an additional amount if
the insurer's financial operations are unfavorable (if the company doesn't
make enough money by the end of the year, they can charge you extra)
●● fraternal insurer
Answer: Provides life and health insurance to members of a social or
religious organization
●● Lloyd's of London
Answer: world's leading market for members to write specialized lines
of business, NOT an insurer (ex: Amazon would use multiple syndicates
among different lines of insurance who split the risk among them) (How
the Lloyd's market works video, JLO insured her butt)
●● Lloyd's brokers
Answer: represent policyholders to arrange coverage with syndicates
●● Lloyd's Syndicates
Answer: offer insurance contracts in the market (sort of similar to
NYSE), must meet Lloyd's stringent capital requirements
, ●● Lloyd's managing agents
Answer: manage the syndicates, who typically specialize in certain lines
●● Lloyd's underwriters
Answer: work for the syndicates to assess risks and determine premiums
●● Lloyd's members
Answer: provide capital to the syndicates, receiving profits or bearing
losses, most are corp. or limited partnerships, "names" are high net
worth individuals
●● Insurance agent
Answer: someone who legally represents the principal (insurance
company) and has the authority to act on the principal's behalf, and the
principal is legally responsible for all acts of an agent when the agent is
acting within the scope of authority
●● insurance binders
Answer: provide temporary insurance until the policy is actually written
(can't drive car off lot when buying without one)
-Can typically be provided by P&C agents
-Life insurance agents usually have no authority to issue binders because
it takes time to issue a life insurance policy
QUESTIONS AND VERIFIED CORRECT
ANSWERS
●● Major types of private insurers
Answer: Stock Insurers
Mutual Insurers
Lloyds of London
●● stock insurer
Answer: a corp. owned by stockholders, objective is to earn profit for
stockholders by increasing the value of the stock and paying dividends
(examples: Allstate, Metlife, Progressive, Aetna, Chubb, Travelers)
●● mutual insurers
Answer: a corp. owned by policyholders, profits are distributed to
policyholders by dividends or rate reductions (examples: Statefarm,
Northwestern Mutual, Nationwide, New York Life, Liberty Mutual)
●● 3 forms of mutual insurers
Answer: advance premium mutual, assessment mutual, fraternal insurer
●● advance premium mutual
,Answer: insurer does not issue assessable policies
●● assessment mutual
Answer: insurer has right to assess policyholders an additional amount if
the insurer's financial operations are unfavorable (if the company doesn't
make enough money by the end of the year, they can charge you extra)
●● fraternal insurer
Answer: Provides life and health insurance to members of a social or
religious organization
●● Lloyd's of London
Answer: world's leading market for members to write specialized lines
of business, NOT an insurer (ex: Amazon would use multiple syndicates
among different lines of insurance who split the risk among them) (How
the Lloyd's market works video, JLO insured her butt)
●● Lloyd's brokers
Answer: represent policyholders to arrange coverage with syndicates
●● Lloyd's Syndicates
Answer: offer insurance contracts in the market (sort of similar to
NYSE), must meet Lloyd's stringent capital requirements
, ●● Lloyd's managing agents
Answer: manage the syndicates, who typically specialize in certain lines
●● Lloyd's underwriters
Answer: work for the syndicates to assess risks and determine premiums
●● Lloyd's members
Answer: provide capital to the syndicates, receiving profits or bearing
losses, most are corp. or limited partnerships, "names" are high net
worth individuals
●● Insurance agent
Answer: someone who legally represents the principal (insurance
company) and has the authority to act on the principal's behalf, and the
principal is legally responsible for all acts of an agent when the agent is
acting within the scope of authority
●● insurance binders
Answer: provide temporary insurance until the policy is actually written
(can't drive car off lot when buying without one)
-Can typically be provided by P&C agents
-Life insurance agents usually have no authority to issue binders because
it takes time to issue a life insurance policy
