Insurance level 1 Alberta Exam Study
Guide Questions and Actual Answers
2025-2026 Version.
The philosophy behind insurance is to
a) provide a vehicle through which wealthy individuals and corporations may protect their
property against catastrophic loss
b) allow insurers to grow larger and more stable, thus creating jobs and supporting the economy
c) spread the losses of the few amongst the premiums of the many
d) spread the losses of the many amongst the premiums of the few - Answer spread the losses
of the few amongst the premiums of the many
Once an underwriter decides to accept a risk, they must establish an appropriate premium.
They apply base rates established by actuaries, add loadings, and then multiply the final rate by
the amount insured to obtain the premium. A loading applied by an underwriter...
A) Is an additional charge included in an insurance rate to reflect a hazard not contemplated in
the basic rate for the class
b)is accomplished by applying the established rates to the specific items that are to be insured
c) is the rate multiplied by the amount of insurance
d) reflects the danger of loss arising from what happens to other nearby risks - Answer Is an
additional charge included in an insurance rate to reflect a hazard not contemplated in the basic
rate for the class
When an insurer pays a claim to its insured under a contract of insurance and attempts to
recover the amount from a third party whom it believes is responsible for the damage, this is
known as
a) indemnity
b)insurable interest
c) coinsurance
d) subrogation - Answer Subrogation
What Are the differences between treaty and facultative reinsurance - Answer Treaty
,Not Facultative Reinsurance
Choice to reinsure or not
Reinsurance is insurance for insurance companies. It is a method of spreading risk for insurers.
Which of the following is NOT a reason for reinsuring?
a) To reduce the effect of a catastrophic loss
b) To increase the insurer's capacity to write business
c) To promote the collection and pooling of loss information
d) To provide stability in a fl uctuating market - Answer To promote the collection and pooling
of loss information
What is the difference between an agent and a broker? - Answer A broker is an independent
business person who is authorized to sell insurance policies on
behalf of an insurer. They usually represent many insurers.
An agent represents one company only. They are employees of an insurance company.
Carlos Marrero is an agent for elite insurance company. Although he represents only Elite
Insurance, he is not a company employee and is responsible for his own expenses. Carlos is paid
a commission for the policies he sells, but the client list belongs to Elite Insurance company.
What type of company is Elite Insurance
A)Exclusive agency company
b)Partnership
c) Independent agent selling company
d) Sole proprietorship - Answer Exclusive agency company
What is the difference between an independent brokerage system and a direct writer? - Answer
direct writer markets their products directly to the public.
An independent brokerage sys-
tem does not. It uses independent brokers to sell their products
, body. Brokers and agents must take _____ hours annually of approved courses and seminars
relating to their business
A)20
B)15
C)30
D)12 - Answer 15
Based on the principal and agent legal relationship. It is understood that an insurers (principals)
knowledge of a risk is the same as that of the intermediary (agent). What does this mean?
A)Full disclosure to the intermediary by the client is required
b)Information given to the intermediary by the client is deemed to be given to the insurer
c) Both the insurer and the intermediary are expected to be knowledgeable
d) Both the insurer and the intermediary are partners in protecting the client from fortuitous
events - Answer Information given to the intermediary by the client is deemed to be given to
the insurer
Which of the following is considered to be a fiduciary?
a) An insured
b)An insurance agent
c) A lessor
d) The Alberta Insurance Council - Answer An insurance agent
As an insurance broker, you must communicate factual statements about a risk to an
underwriter, so the risk may be properly assessed. The duty of disclosure
a) is fundamental to the principle of utmost good faith that underlies all insurance transactions
b)does not impact the insurer
c) falls solely on the shoulders of the applicant and broker
d) requires accurate transmission of the risk particulars to the insured - Answer Is the
fundamental to the principle of utmost good faith that underlies all insurance transactions
Guide Questions and Actual Answers
2025-2026 Version.
The philosophy behind insurance is to
a) provide a vehicle through which wealthy individuals and corporations may protect their
property against catastrophic loss
b) allow insurers to grow larger and more stable, thus creating jobs and supporting the economy
c) spread the losses of the few amongst the premiums of the many
d) spread the losses of the many amongst the premiums of the few - Answer spread the losses
of the few amongst the premiums of the many
Once an underwriter decides to accept a risk, they must establish an appropriate premium.
They apply base rates established by actuaries, add loadings, and then multiply the final rate by
the amount insured to obtain the premium. A loading applied by an underwriter...
A) Is an additional charge included in an insurance rate to reflect a hazard not contemplated in
the basic rate for the class
b)is accomplished by applying the established rates to the specific items that are to be insured
c) is the rate multiplied by the amount of insurance
d) reflects the danger of loss arising from what happens to other nearby risks - Answer Is an
additional charge included in an insurance rate to reflect a hazard not contemplated in the basic
rate for the class
When an insurer pays a claim to its insured under a contract of insurance and attempts to
recover the amount from a third party whom it believes is responsible for the damage, this is
known as
a) indemnity
b)insurable interest
c) coinsurance
d) subrogation - Answer Subrogation
What Are the differences between treaty and facultative reinsurance - Answer Treaty
,Not Facultative Reinsurance
Choice to reinsure or not
Reinsurance is insurance for insurance companies. It is a method of spreading risk for insurers.
Which of the following is NOT a reason for reinsuring?
a) To reduce the effect of a catastrophic loss
b) To increase the insurer's capacity to write business
c) To promote the collection and pooling of loss information
d) To provide stability in a fl uctuating market - Answer To promote the collection and pooling
of loss information
What is the difference between an agent and a broker? - Answer A broker is an independent
business person who is authorized to sell insurance policies on
behalf of an insurer. They usually represent many insurers.
An agent represents one company only. They are employees of an insurance company.
Carlos Marrero is an agent for elite insurance company. Although he represents only Elite
Insurance, he is not a company employee and is responsible for his own expenses. Carlos is paid
a commission for the policies he sells, but the client list belongs to Elite Insurance company.
What type of company is Elite Insurance
A)Exclusive agency company
b)Partnership
c) Independent agent selling company
d) Sole proprietorship - Answer Exclusive agency company
What is the difference between an independent brokerage system and a direct writer? - Answer
direct writer markets their products directly to the public.
An independent brokerage sys-
tem does not. It uses independent brokers to sell their products
, body. Brokers and agents must take _____ hours annually of approved courses and seminars
relating to their business
A)20
B)15
C)30
D)12 - Answer 15
Based on the principal and agent legal relationship. It is understood that an insurers (principals)
knowledge of a risk is the same as that of the intermediary (agent). What does this mean?
A)Full disclosure to the intermediary by the client is required
b)Information given to the intermediary by the client is deemed to be given to the insurer
c) Both the insurer and the intermediary are expected to be knowledgeable
d) Both the insurer and the intermediary are partners in protecting the client from fortuitous
events - Answer Information given to the intermediary by the client is deemed to be given to
the insurer
Which of the following is considered to be a fiduciary?
a) An insured
b)An insurance agent
c) A lessor
d) The Alberta Insurance Council - Answer An insurance agent
As an insurance broker, you must communicate factual statements about a risk to an
underwriter, so the risk may be properly assessed. The duty of disclosure
a) is fundamental to the principle of utmost good faith that underlies all insurance transactions
b)does not impact the insurer
c) falls solely on the shoulders of the applicant and broker
d) requires accurate transmission of the risk particulars to the insured - Answer Is the
fundamental to the principle of utmost good faith that underlies all insurance transactions
