LOMA 308 TEST PAPER 2025/2026 QUESTIONS WITH
SOLUTIONS GRADED A+
✔✔Peachtree must be licensed by
Both State A and State B
State A only
State B only
Neither State A nor State B - ✔✔A. - Insurance companies must be licensed by each
state in which they operate. Peachtree, therefore, must by licensed by State A and
State B.
✔✔Because it is a stock insurance company, Peachtree can expand its operations by
(choose all that apply)
Selling more stock
Purchasing other stock insurance companies
Purchasing mutual insurance companies
Purchasing other publicly held corporations - ✔✔A, B, & d -Stock insurance companies
can raise additional operating funds by selling more stock. Stock companies can also
acquire or establish affiliations with other stock insurance or other publicly held
companies. A mutual insurance company can be purchased or controlled only by
another mutual company.
✔✔Suppose you are the CEO of a newly incorporated and licensed insurance
company. What do you think is the next thing your company must do before it can begin
selling policies? - ✔✔Before an insurance company can develop goals and objectives,
create operational plans, or establish controls, it needs to create a mission statement
that sets out, in writing, the company's "reason for being" and defines the scope of its
business activities.
✔✔Mission Statement - ✔✔A written statement that describes a company's
fundamental purpose or reason for being.
Mission statements should be
- Broad enough to cover all aspects of the company's business
- Specific enough to focus on what the company actually does
✔✔Management - ✔✔is the process companies use to plan, organize, and control
operations.
Although management sounds like a set of separate, well-defined steps, it's actually a
continuous process in which managers use information developed during one stage to
provide feedback on the previous stage and direct the next stage.
✔✔Planning - ✔✔is the process companies use to evaluate business opportunities,
determine goals, and develop strategies.
,Most insurance companies conduct two types of planning: corporate planning and
operational planning. Senior managers guide corporate planning for the entire
organization. Managers in operational areas create plans for their own units.
✔✔Corporate planning - ✔✔SWOT analysis
Corporate planning usually starts with an analysis of the company's:
Internal environment to identify strengths and weaknesses in the company's operations
External environment to identify trends that create opportunities and threats for the
company
Objectives the company is uniquely qualified to pursue
✔✔Corporate Objectives - ✔✔A statement of a long-term result a company plans to
achieve.
corp objectives should be
- clearly stated
- specific and measurable
- realistic
- actionable
✔✔Corporate Strategies - ✔✔define how a company intends to achieve its objectives.
Because most objectives can be achieved in more than one way, different companies
often use different strategies even when they want to achieve the same results.
Corporate strategies for most companies focus on growing and expanding business by
- increasing sales among existing customers
- Generating sales among new customers or in new markets
- capturing business from competitors
✔✔Operational Planning - ✔✔At the end of the corporate planning process, the
company's mission statement, corporate objectives, and corporate strategies are
combined to create a corporate business plan. This plan is then communicated
downward to managers in various operational areas.
Managers in operational areas then create their own objectives, strategies, and plans,
following the same steps used to create the corporate business plan. The difference is
that operational planning is narrower in scope than corporate planning and covers a
shorter time period.
Operational plans are communicated back up to senior management for approval.
Senior management works with operational area managers to make necessary changes
and then incorporates the individual plans into the company's overall business plan.
✔✔Example - Corporate Planning - ✔✔Normally covers one to five years
Establishes goals and strategies for the entire company
,Focuses on strategic issues such as profit, growth, technology use, service quality,
sales, and market share
✔✔Example - Operational Planning - ✔✔Normally covers less than two years
Establishes goals and strategies for specific areas of company operations, such as
claims, underwriting, or marketing
Focuses on tactical issues such as how, when, and where activities are to be
performed; who is responsible for each activity; what resources will be required to
execute the plans; how much each activity will cost; and how results will be measured
and monitored
✔✔The Perimeter Insurance Company's management developed the corporate
objectives listed below. The most effective of these objectives is
a. To increase sales of its fixed-rate insurance products
b. To increase customer retention by 10 percent
c. To reduce company operating expenses by 6 percent within five years
d. To see a measurable improvement in customer satisfaction within six months - ✔✔C.
- To be effective, an objective must be clearly stated, specific and measurable, realistic,
and actionable. Only Objective C has all of these characteristics. Objective A has none
of these characteristics. Objective B is specific in terms of amount, but not time.
Objective D is specific in terms of time, but not amount.
✔✔The purpose of a SWOT analysis is to
a. Identify corporate objectives a company is uniquely qualified to pursue
b. Distinguish between internal and external conditions that affect company operations
c. Provide feedback about company performance
d. Describe how a company can meet objectives using the fewest resources possible -
✔✔A SWOT analysis weighs company strengths and weaknesses against
environmental opportunities and threats to help companies develop and achieve
corporate objectives.
✔✔Corporate strategies determine the
a. Specific, action-oriented activities that a company's operational units will perform
b. Long-term results a company plans to achieve
c. Long-term methods a company intends to use to achieve its goals
d. Process a company uses to evaluate business opportunities, determine resource
needs, and identify methods of controlling operations - ✔✔C. - Corporate strategies
define the long-term methods a company intends to use to achieve its goals. The
specific, action-oriented activities a company's operational units perform are part of a
company's operational plans. A company's strategic objectives are the long-term results
the company plans to achieve. Evaluating business opportunities, assessing resources,
and controlling operations are part of planning.
✔✔One true statement about planning in most insurance companies is that it
Is conducted only at the operational level
, Begins at the operational level and results are communicated upward to management
Is conducted only at the corporate level
Begins at the corporate level and results are communicated downward to operations -
✔✔D. - One true statement about planning in most insurance companies is that it
Is conducted only at the operational level
Begins at the operational level and results are communicated upward to management
Is conducted only at the corporate level
Begins at the corporate level and results are communicated downward to operations
✔✔Forthright Financial has an individual life insurance division and an individual annuity
division. Each division has its own product development, marketing, administration, and
claims departments.
Organization by product
Organization by geographic region
Organization by market segment
Organization by function - ✔✔Organization by product
✔✔Crandall Financial Services maintains separate operations for its retail market and
institutional markets. Managers in each market are responsible for all activities
performed in their markets.
Organization by product
Organization by geographic region
Organization by market segment
Organization by function - ✔✔organization by market segment
✔✔Donnely Insurance maintains accounting, IT, human resources, compliance,
underwriting, and customer support divisions at its home office, and these divisions
support all of the company's products and services.
Organization by product
Organization by geographic region
Organization by market segment
Organization by function - ✔✔organization by function
✔✔The Bancroft Insurance Company divides its operations into two different territories,
and each territory performs all product support, administration, and marketing functions.
Organization by product
Organization by geographic region
Organization by market segment
Organization by function - ✔✔organization by geographic region
✔✔organizing operations - ✔✔To ensure that business runs smoothly, insurers need to
organize company operations so that they support company goals.
SOLUTIONS GRADED A+
✔✔Peachtree must be licensed by
Both State A and State B
State A only
State B only
Neither State A nor State B - ✔✔A. - Insurance companies must be licensed by each
state in which they operate. Peachtree, therefore, must by licensed by State A and
State B.
✔✔Because it is a stock insurance company, Peachtree can expand its operations by
(choose all that apply)
Selling more stock
Purchasing other stock insurance companies
Purchasing mutual insurance companies
Purchasing other publicly held corporations - ✔✔A, B, & d -Stock insurance companies
can raise additional operating funds by selling more stock. Stock companies can also
acquire or establish affiliations with other stock insurance or other publicly held
companies. A mutual insurance company can be purchased or controlled only by
another mutual company.
✔✔Suppose you are the CEO of a newly incorporated and licensed insurance
company. What do you think is the next thing your company must do before it can begin
selling policies? - ✔✔Before an insurance company can develop goals and objectives,
create operational plans, or establish controls, it needs to create a mission statement
that sets out, in writing, the company's "reason for being" and defines the scope of its
business activities.
✔✔Mission Statement - ✔✔A written statement that describes a company's
fundamental purpose or reason for being.
Mission statements should be
- Broad enough to cover all aspects of the company's business
- Specific enough to focus on what the company actually does
✔✔Management - ✔✔is the process companies use to plan, organize, and control
operations.
Although management sounds like a set of separate, well-defined steps, it's actually a
continuous process in which managers use information developed during one stage to
provide feedback on the previous stage and direct the next stage.
✔✔Planning - ✔✔is the process companies use to evaluate business opportunities,
determine goals, and develop strategies.
,Most insurance companies conduct two types of planning: corporate planning and
operational planning. Senior managers guide corporate planning for the entire
organization. Managers in operational areas create plans for their own units.
✔✔Corporate planning - ✔✔SWOT analysis
Corporate planning usually starts with an analysis of the company's:
Internal environment to identify strengths and weaknesses in the company's operations
External environment to identify trends that create opportunities and threats for the
company
Objectives the company is uniquely qualified to pursue
✔✔Corporate Objectives - ✔✔A statement of a long-term result a company plans to
achieve.
corp objectives should be
- clearly stated
- specific and measurable
- realistic
- actionable
✔✔Corporate Strategies - ✔✔define how a company intends to achieve its objectives.
Because most objectives can be achieved in more than one way, different companies
often use different strategies even when they want to achieve the same results.
Corporate strategies for most companies focus on growing and expanding business by
- increasing sales among existing customers
- Generating sales among new customers or in new markets
- capturing business from competitors
✔✔Operational Planning - ✔✔At the end of the corporate planning process, the
company's mission statement, corporate objectives, and corporate strategies are
combined to create a corporate business plan. This plan is then communicated
downward to managers in various operational areas.
Managers in operational areas then create their own objectives, strategies, and plans,
following the same steps used to create the corporate business plan. The difference is
that operational planning is narrower in scope than corporate planning and covers a
shorter time period.
Operational plans are communicated back up to senior management for approval.
Senior management works with operational area managers to make necessary changes
and then incorporates the individual plans into the company's overall business plan.
✔✔Example - Corporate Planning - ✔✔Normally covers one to five years
Establishes goals and strategies for the entire company
,Focuses on strategic issues such as profit, growth, technology use, service quality,
sales, and market share
✔✔Example - Operational Planning - ✔✔Normally covers less than two years
Establishes goals and strategies for specific areas of company operations, such as
claims, underwriting, or marketing
Focuses on tactical issues such as how, when, and where activities are to be
performed; who is responsible for each activity; what resources will be required to
execute the plans; how much each activity will cost; and how results will be measured
and monitored
✔✔The Perimeter Insurance Company's management developed the corporate
objectives listed below. The most effective of these objectives is
a. To increase sales of its fixed-rate insurance products
b. To increase customer retention by 10 percent
c. To reduce company operating expenses by 6 percent within five years
d. To see a measurable improvement in customer satisfaction within six months - ✔✔C.
- To be effective, an objective must be clearly stated, specific and measurable, realistic,
and actionable. Only Objective C has all of these characteristics. Objective A has none
of these characteristics. Objective B is specific in terms of amount, but not time.
Objective D is specific in terms of time, but not amount.
✔✔The purpose of a SWOT analysis is to
a. Identify corporate objectives a company is uniquely qualified to pursue
b. Distinguish between internal and external conditions that affect company operations
c. Provide feedback about company performance
d. Describe how a company can meet objectives using the fewest resources possible -
✔✔A SWOT analysis weighs company strengths and weaknesses against
environmental opportunities and threats to help companies develop and achieve
corporate objectives.
✔✔Corporate strategies determine the
a. Specific, action-oriented activities that a company's operational units will perform
b. Long-term results a company plans to achieve
c. Long-term methods a company intends to use to achieve its goals
d. Process a company uses to evaluate business opportunities, determine resource
needs, and identify methods of controlling operations - ✔✔C. - Corporate strategies
define the long-term methods a company intends to use to achieve its goals. The
specific, action-oriented activities a company's operational units perform are part of a
company's operational plans. A company's strategic objectives are the long-term results
the company plans to achieve. Evaluating business opportunities, assessing resources,
and controlling operations are part of planning.
✔✔One true statement about planning in most insurance companies is that it
Is conducted only at the operational level
, Begins at the operational level and results are communicated upward to management
Is conducted only at the corporate level
Begins at the corporate level and results are communicated downward to operations -
✔✔D. - One true statement about planning in most insurance companies is that it
Is conducted only at the operational level
Begins at the operational level and results are communicated upward to management
Is conducted only at the corporate level
Begins at the corporate level and results are communicated downward to operations
✔✔Forthright Financial has an individual life insurance division and an individual annuity
division. Each division has its own product development, marketing, administration, and
claims departments.
Organization by product
Organization by geographic region
Organization by market segment
Organization by function - ✔✔Organization by product
✔✔Crandall Financial Services maintains separate operations for its retail market and
institutional markets. Managers in each market are responsible for all activities
performed in their markets.
Organization by product
Organization by geographic region
Organization by market segment
Organization by function - ✔✔organization by market segment
✔✔Donnely Insurance maintains accounting, IT, human resources, compliance,
underwriting, and customer support divisions at its home office, and these divisions
support all of the company's products and services.
Organization by product
Organization by geographic region
Organization by market segment
Organization by function - ✔✔organization by function
✔✔The Bancroft Insurance Company divides its operations into two different territories,
and each territory performs all product support, administration, and marketing functions.
Organization by product
Organization by geographic region
Organization by market segment
Organization by function - ✔✔organization by geographic region
✔✔organizing operations - ✔✔To ensure that business runs smoothly, insurers need to
organize company operations so that they support company goals.
