RMI211 Practice Exam 3 Practice Questions and Answers

RMI211 Practice Exam 3 Practice Questions and Answers The major reasons for insurer insolvency include which of the following: I. Inadequate pricing and loss reserves II. Rapid Growth and inadequate surplus A. I only B. II only C. both I and II D. Neither I norII - Answer️️ -C Which of the following is a principal method of insuring the solvency of insurers? A. requiring submission of annual financial statements to state regulators B. tracking and investing market conduct complaints against insurers C. disciplining agents of the insurer for illegal sale practices D. regulating the forms (applications and policies) employed by the insurer - Answer️️ -A ©SOPHIABENNETT@ Sunday, August 25, 2024 2:42 PM 2 The number of title insurance companies operating in State Z is relatively low. Recently, the largest of these companies (50% market share) acquired the second largest company (30% market share). Immediately after the acquisition, the insurer raised premiums by 75%. This scenario demonstrates which of the following rationales for the regulation of insurance? A. maintain insurers solvency B. prohibit unfair sales practice by agents C. ensure reasonable rates D. make insurance available - Answer️️ -C In which of the following did the Court decide insurance was interstate commerce when conducted across state lines, and therefore was subject to federal regulation? A. Paul v. Virginia B. South-Eastern Underwriters Association case C. McCarran-Ferguson Act D. Financial Modernization Act - Answer️️ -B ©SOPHIABENNETT@ Sunday, August 25, 2024 2:42 PM 3 A life insurance company based in Canada was licensed to operate in Massachusetts. When operating in Massachusetts, the Canadian insurer is considered to be (a) A. domestic insurer B. captive insurer C. foreign insurer D. alien insurer - Answer️️ -D XYZ Mutual Insurance Company has total assets of $10 million. The policyholders' surplus is $2 million. What are XYZ Mutual's total liabilities? A. $4 million B. $8 million C. $10 million D. $ 12 million - Answer️️ -B Mutual Property Insurance Company has a surplus of $2 million. According to a conservative rule, how much in new net premiums can Mutual Property Insurance Company safely write? A. $2 million ©SOPHIABENNETT@ Sunday, August 25, 2024 2:42 PM 4 B. $8 million C. $10 million D. $20 million - Answer️️ -A Melody's car was damaged when another driver ran a stop sign and hit her car. Melody decided to collect from her own insurer and to let her insurer recoup the loss payment from the negligent driver who hit her. What fundamental legal principle is illustrated in this scenario? A. the principle of utmost good faith B. the principle of insurable interest C. the principle of subrogation D. the principle of reasonable expectations - Answer️️ -C When Ben applied for life insurance, he was asked on the applicatio