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MICHIGAN SURPLUS LINES INSURANCE
EXAM PREP 2025 BRAND NEW ACTUAL
EXAM WITH ANSWERS.
(1)Surplus Lines premiums typically expand during:
A) A soft Market
B) A Hard Market - correct answer -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 answer -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
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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 answer -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 answer -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 answer -B) Is not always licensed or admitted in
the same state as the broker
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(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 answer -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 answer -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
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C) The transaction would not qualify as the lawful transaction of
surplus lines insurance - correct answer -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 answer -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 answer -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
MICHIGAN SURPLUS LINES INSURANCE
EXAM PREP 2025 BRAND NEW ACTUAL
EXAM WITH ANSWERS.
(1)Surplus Lines premiums typically expand during:
A) A soft Market
B) A Hard Market - correct answer -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 answer -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
, Page | 2
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 answer -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 answer -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 answer -B) Is not always licensed or admitted in
the same state as the broker
, Page | 3
(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 answer -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 answer -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
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C) The transaction would not qualify as the lawful transaction of
surplus lines insurance - correct answer -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 answer -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 answer -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
