Michigan Surplus Lines Insurance Exam Prep questions and answers latest top score.

Michigan Surplus Lines Insurance Exam Prep questions and answers latest top score. (1)Surplus Lines premiums typically expand during: A) A soft Market B) A Hard Market - correct answers.A Hard Market. Surplus lines premiums typically expand during a hard market. (2) During the time of a hard market, insurers will: A) Tighten their underwriting standards B) Loosen their underwriting standards - correct answers.A) Tighten their underwriting standards. Tighten and raise premiums. (3) A Ceding company (Choose all that apply): A) Is a primary insurer B) Is also a reinsurer C) Is always also a captive company D) Passes on to other insurers some part of its risk under insurance policies it has accepted E) Will not be held liable to pay the claims in the event of default by the reinsurer. - correct answers.A) Is primary Insurer D) Passes on to other insurers some of its risk under insurance policies it has accepted (4) An insurers appetite to write business is often measured by: A) Its risk class B) Its status C) Its financial strength D)Its premium to surplus ratio - correct answers.D) Its premium to surplus ratio (5) A surplus lines insurer: A) Has to be licensed and admitted in the same state as the broker B) Is not always licensed or admitted in the same state as the broker - correct answers.B) Is not always licensed or admitted in the same state as the broker (6) Karl the fortune teller believes that the world is full of uncertainty, and so is his destiny. He often engages himself in extreme sports activities for fun and for challenge. He thinks he will need more insurance coverage in the future. He prefers a surplus line policy. A) This is a good idea B) This is probably not a good idea - correct answers.B) This is probably not a good idea Surplus lines is for hard to place risk. nothing about this is really hard to place, and he should maybe just buy more life insurance. (7) A domestic surplus lines company must be licensed in at least one state or other US jurisdiction. True or False - correct answers.True (8) When a surplus lines insurance for coverage in this state is not placed through a licensed surplus lines agent here, A) The transaction is a foreign transaction that is still technically lawful B) The transaction would still qualify as the lawful transaction of surplus lines insurance C) The transaction would not qualify as the lawful transaction of surplus lines insurance - correct answers.C) The transaction would not qualify as the lawful transaction of surplus lines insurance (9) The Terrorism Risk Insurance Act (TRIA): A) Applies to surplus lines policies B) Does not apply to surplus lines policies - correct answers.A) Applies to surplus lines policies. (10) A surplus lines policy: A) Is still covered by the state guaranty fund when placed locally B) Is covered by the state guaranty fund as long as it is placed via a licensed broker or agent. C) Is not covered by the state guaranty fund - correct answers.C) Is not covered by the state guaranty fund (11) For surplus lines insurers, the relative freedom from form and rate regulation give: A)Flexibility B) Legal Waiver C) Cost Advantage D) The right of non-disclosure - correct answers.A) Flexibility (12) In the context of insurance, losses depend primarily on which two variables: A) The background B) The number of losses C) The amount involved D) The nature of events E) The policy - correct answers.B) The number of losses C) The amount involved (13) Who must verify the financial strength and viability of a nonadmitted insurer? A) The insurance commission B) The department of commerce C) The surplus line broker/agent D) The guarantee association of the state - correct answers.C) The surplus line broker/agent (14) Which of these imposes a set of national eligibility standards for surplus lines insurers domiciled in any US jurisdiction? A) NRCA B) NRTT C) NRAS D) NRRA - correct answers.D) NRRA (National Risk Retention Association) (15) In Michigan, a surplus lines producer must report surplus lines or non admitted insurance business written for a Michigan risk on what basis? A) Monthly B) Quarterly C) Semi-Annually D) Annually - correct answers.C) Semi-Annually (16) Which of these can be used to determine success between an underwriter and an agent? A) Hit Ratio B) Spot Ratio C) Transfer Ratio D) Smart Ratio E) None of These - correct answers.A) Hit Ratio (17) In many insurance policies, losses will be reimbursed only in excess of a threshold known as: A)A Baseline B) A Deductible C) A Bottom-line D) A trigger - correct answers.B) A Deductible (18) A benefit limit serves as: A) A lower bond on how much the insurer will pay for the loss B) An upper bound on how much the insurer will pay for the loss C) A lower bound on the loss D) AN upper bound on the loss - correct answers.B) An upper bound on how much the insurer will pay for the loss (19) When there is inflation: A) The claim payments will increase accordingly B) The claim payments will decrease accordingly C) The claim payments will always remain the same D) The policy will be voided - correct answers.A) The claim payments will increase accordingly (20) What refers to the probability distribution that is associated with either the loss or the amount paid as a result of the loss? A) Claim distribution B) Income Distribution C) Loss Distribution D) Risk Distribution - correct answers.C) Loss Distribution (21) What describe the provisions for future liabilities? A) Perils B) Risk Factors C) Risk Dimensions D) Risk Profiles E) Hazards F) Reserve - correct answers.F) Reserve (22) A domestic insurance company: A) Is a foreign insurer to other states B) Is a foreign insurer only to other countries C) Cannot serve as a surplus line insurer in some western states D) Must be incorporated in at least two states - correct answers.A) Is a foreign insurer to other states (23) A captive insurance company exists primarily to: A) Underwrite the risks of the parent owner B) Underwrite the risks of the shareholders C) Underwrite the risks of the partners - correct answers.A) Underwrite the risks of the parent owner (24) Lloyds of London (Choose all that apply): A) Is a business underwriting insurance B) Is under the authorization of the English Parliament C) Is under the authorization of the WTO D) Is under the authorization of the world bank E) Writes most alien surplus lines market - correct answers.A) Is a business underwriting insurance B) Is under the authorization of the English Parliament E) Writes most alien surplus lines market (90%) (25) A mutual insurance company is owned by: A) The policy holders B) Only the board members C) A non-profit D) A tax exempted organization E) The community served - correct answers.A) The policy holders (26) With a stock company: A) All excess earnings can be distributed as dividends B) All excess earnings can be distributed as pay bonus only C) All excess earnings must be retained as reserves D) All excess must be retained as tax reserves - correct answers.A) All excess earnings can be distributed as dividends (27) Itemization means listing (Choose all that apply): A) Estimated cost of items B) Replacement cost of items C) Appraised cost of items D) Revenue taxes - correct answers.A) Estimated cost of items B) Replacement cost of items C) Appraised cost of items (28) Talking about the administration of insurance claims, what involves reviewing and investigating the cause of a claim? A) Root cause analysis B) Problem Analysis C) Forensic Analysis D) Fault Tree Analysis E) Asset Protection F) Asset Revaluation - correct answers.B) Problem Analysis (29) 100% of surplus lines tax is payable to Michigan if Michigan is the home state of: A) The insurer B) The insured - correct answers.B) The insured (30) According to the Principle of _______, an insured can only claim compensation to the extent of actual loss either from all insurers if multiple policies have been purchased, or from any one insurer. A) Contribution B) Good Faith C) Insurable Interest D) Indemnity E) Subrogation - correct answers.A) Contribution (31) What refers to any event or act that happens before a right will be granted? A) Condition Precedent B) Condition Subsequent C) Condition Neutral D) Condition Aleatory - correct answers.A) Condition Precedent (32) In Michigan, a transaction that takes place in April needs to be reported by: A) August 15th B) September 15th C) October 15th D) November 15th - correct answers.A) August 15th (33) With an insurance policy document, the initial page that summarizes the agreement is commonly known as (Choose All that apply): A) Declarations page B) Policy Specifications Page C) Benefit Summary Page D) Waiver - correct answers.A) Declarations Page B) Policy Specifications Page C) Benefit Summary Page (34) In Michigan, to become licensed as a non-resident Surplus Lines Producer: A) One must be licensed for surplus lines in his his state B) One need not be licensed for surplus lines in his own state, but must hold an active Michigan non-resident PC producers license. C) One must be licensed for Surplus Lines in his home state, and must hold an active Michigan Resident PC producers license. D) One must be licensed for Surplus Lines in his home state, and must hold an active Michigan non-residen - correct answers.D) One must be licensed for Surplus Lines in his home state, and must hold an active Michigan non-resident PC producers license. (35) Which of these can be used to supplement the insurance for property written on a "named perils" basis? A) DIC B) DGC C) DCE D) DST E) DIT - correct answers.A) DIC (Difference in Conditions) (36) Which of the following refers to those written provisions that can be used to add, delete, or modify the provisions in the original contract? A) Endorsements B) Conditions C) Overriding Terms D) Bonus Terms E) Riders - correct answers.A) Endorsements (37) A Surplus Lines intermediary's services: A) May include underwriting and pricing B) May include underwriting but not pricing C) May not include underwriting but include pricing D) Hardly include underwriting and pricing - correct answers.A) May include underwriting and pricing (38) In Michigan, to become licensed as a resident Surplus Lines Producer: A) One must hold an active producers license of any line B) One must hold an active Michigan producer or adjuster license of any line C) One must hold an active Michigan Property and Casualty producer license - correct answers.C) One must hold an active Michigan Property and Casualty producer license (39) Which of these are examples of Inland Marine coverage (Choose All that Apply): A) Cargo B) Builders Risk C) Electronic Data Processing D) Equipment Floaters E) Transport Personnel - correct answers.A) Cargo B) Builders Risk C) Electronic Data Processing D) Equipment Floaters (40) With named perils coverage, A) Only those perils specifically listed are covered B) Only those perils specifically listed are excluded C) All losses are covered except for those that are specifically excluded D) All losses are not covered except for those that are specifically included - correct answers.A) Only those perils specifically listed are covered (41) Insurance contracts are ________, meaning the promise of a party is exchanged for a specific act of another party. A) Adhesion B) Aleatory C) Executory D) Bilateral E) Unilateral - correct answers.E) Unilateral (42) In Michigan, when a surplus line transaction is canceled, tax refund can be made available within: A) 30 Days B) 45 Days C) 60 Days D) 90 Days E) 120 Days F) Never - correct answers.F) Never In Michigan DIFS does not have the authority to issue a surplus lines tax refund as a result of canceled business. (43) In Michigan, Surplus lines insurers: A) Are required to file their premium rates with the state or approval B) Are not required to file their premium rates with the state for approval - correct answers.B) Are not required to file their premium rates with the state for approval (44) A binder agreement: A) Always has an expiration date B) Does not need to come with any expiration date when agreed by both parties C) Can come without any expiration date when agreed by the commissioner of insurance - correct answers.A) Always has an expiration date (45) In Michigan, the notice of a premium increase for a new surplus lines policy term must be sent out how many days in advance? A) 10 B) 12 C) 14 D) 15 E) 21 F) 30 G) Never - correct answers.G) Never (46) In an insurance contract, what may be used to provide additional coverage which is above and beyond those included in the basic contract: A) Conditions B) Overriding terms C) Bonus Terms D) Riders E) Endorsements - correct answers.D) Riders (47) A binding premium receipt, A) Is for initial premium payment B) Is for regular renewal payment C) Avoids the need for formal acceptance D) Bars the insurer from rejecting the application - correct answers.A) Is for the initial premium payment (48) According to the principle of indemnity, the amount of compensations to be paid: A) Will be in proportion to the incurred losses B) Will be in proportion to the premium C) Will be fixed D) Will be annualized - correct answers.A) Will be in proportion to the incurred losses (49) The insuring agreement page summarizes: A) The major promises made by the insurance company B) The major promises made by the insurer