RMIN 4000 Exam 2 Brown Questions and
Answers Graded A+
Private insurance industry in 2016 - Correct answer-US insurance industry
employed 2.6 million people and insurers had $20.5 billion in premium taxes
Major types of private insurers - Correct answer-Stock Insurers
Mutual Insurers
Lloyds of London
stock insurer - Correct answer-a corp. owned by stockholders, objective is to earn
profit for stockholders by increasing the value of the stock and paying dividends
(examples: Allstate, Metlife, Progressive, Aetna, Chubb, Travelers)
mutual insurers - Correct answer-a corp. owned by policyholders, profits are
distributed to policyholders by dividends or rate reductions (examples: Statefarm,
Northwestern Mutual, Nationwide, New York Life, Liberty Mutual)
3 forms of mutual insurers - Correct answer-advance premium mutual, assessment
mutual, fraternal insurer
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,advance premium mutual - Correct answer-insurer does not issue assessable
policies
assessment mutual - Correct answer-insurer has right to assess policyholders an
additional amount if the insurer's financial operations are unfavorable (if the
company doesn't make enough money by the end of the year, they can charge you
extra)
fraternal insurer - Correct answer-Provides life and health insurance to members of
a social or religious organization
Lloyd's of London - Correct answer-world's leading market for members to write
specialized lines of business, NOT an insurer (ex: Amazon would use multiple
syndicates among different lines of insurance who split the risk among them) (How
the Lloyd's market works video, JLO insured her butt)
Lloyd's brokers - Correct answer-represent policyholders to arrange coverage with
syndicates
Lloyd's Syndicates - Correct answer-offer insurance contracts in the market (sort of
similar to NYSE), must meet Lloyd's stringent capital requirements
Lloyd's managing agents - Correct answer-manage the syndicates, who typically
specialize in certain lines
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, Lloyd's underwriters - Correct answer-work for the syndicates to assess risks and
determine premiums
Lloyd's members - Correct answer-provide capital to the syndicates, receiving
profits or bearing losses, most are corp. or limited partnerships, "names" are high
net worth individuals
Insurance agent - Correct answer-someone who legally represents the principal
(insurance company) and has the authority to act on the principal's behalf, and the
principal is legally responsible for all acts of an agent when the agent is acting
within the scope of authority
insurance binders - Correct answer-provide temporary insurance until the policy is
actually written (can't drive car off lot when buying without one)
-Can typically be provided by P&C agents
-Life insurance agents usually have no authority to issue binders because it takes
time to issue a life insurance policy
insurance broker - Correct answer-someone who legally represents the insured and
solicits applications and places coverage with the appropriate insurer, is paid
commission from the insurer, and in general, does NOT have the authority to bind
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
Answers Graded A+
Private insurance industry in 2016 - Correct answer-US insurance industry
employed 2.6 million people and insurers had $20.5 billion in premium taxes
Major types of private insurers - Correct answer-Stock Insurers
Mutual Insurers
Lloyds of London
stock insurer - Correct answer-a corp. owned by stockholders, objective is to earn
profit for stockholders by increasing the value of the stock and paying dividends
(examples: Allstate, Metlife, Progressive, Aetna, Chubb, Travelers)
mutual insurers - Correct answer-a corp. owned by policyholders, profits are
distributed to policyholders by dividends or rate reductions (examples: Statefarm,
Northwestern Mutual, Nationwide, New York Life, Liberty Mutual)
3 forms of mutual insurers - Correct answer-advance premium mutual, assessment
mutual, fraternal insurer
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
,advance premium mutual - Correct answer-insurer does not issue assessable
policies
assessment mutual - Correct answer-insurer has right to assess policyholders an
additional amount if the insurer's financial operations are unfavorable (if the
company doesn't make enough money by the end of the year, they can charge you
extra)
fraternal insurer - Correct answer-Provides life and health insurance to members of
a social or religious organization
Lloyd's of London - Correct answer-world's leading market for members to write
specialized lines of business, NOT an insurer (ex: Amazon would use multiple
syndicates among different lines of insurance who split the risk among them) (How
the Lloyd's market works video, JLO insured her butt)
Lloyd's brokers - Correct answer-represent policyholders to arrange coverage with
syndicates
Lloyd's Syndicates - Correct answer-offer insurance contracts in the market (sort of
similar to NYSE), must meet Lloyd's stringent capital requirements
Lloyd's managing agents - Correct answer-manage the syndicates, who typically
specialize in certain lines
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
, Lloyd's underwriters - Correct answer-work for the syndicates to assess risks and
determine premiums
Lloyd's members - Correct answer-provide capital to the syndicates, receiving
profits or bearing losses, most are corp. or limited partnerships, "names" are high
net worth individuals
Insurance agent - Correct answer-someone who legally represents the principal
(insurance company) and has the authority to act on the principal's behalf, and the
principal is legally responsible for all acts of an agent when the agent is acting
within the scope of authority
insurance binders - Correct answer-provide temporary insurance until the policy is
actually written (can't drive car off lot when buying without one)
-Can typically be provided by P&C agents
-Life insurance agents usually have no authority to issue binders because it takes
time to issue a life insurance policy
insurance broker - Correct answer-someone who legally represents the insured and
solicits applications and places coverage with the appropriate insurer, is paid
commission from the insurer, and in general, does NOT have the authority to bind
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
