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UGA RMIN 4000 Brown Test 2 Questions
and Correct Answers
Private insurance industry Ans: U.S. insurance industry employed
2.6 million people
Insurers paid $20.5 billion in premium taxes
Major types of private insurers Ans: Stock insurers
mutual insurers
lloyd's of london
Stock insurers Ans: A corporation owned by stockholders
Objective is to earn profit for stockholders by increasing the value
of the stock and paying dividends
Stockholders elect board of elections
Mutual insurers Ans: A corporation owned by policyholders
Profits are distributed to policyholders by dividends or rate
reductions
Policyholders elect board of electives
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, 2 | Page
Loyd's of london Ans: World's leading market that provides
service and physical facilities for its members to write specialized
lines of insurance
NOT an insurer
Types of mutual insurers Ans: Assessment mutual
Advance premium mutual
Fraternal insurer
Assessment mutual Ans: Insurer has the right to assess
policyholders an additional amount if the insurer's financial
operations are unfavorable
Assessment: additional charge - if insurance company is losing
money
As result very few still exist (no one wanna pay that, assessment
difficult to collect)
Advance premium mutual Ans: Insurer does not issue assessable
policies
Most common mutual insurance type
Fraternal insurer Ans: Provides life and health insurance to
members of a social or religious organization
Lloyd's structure Ans: Loyd's brokers: represent policyholders to
arrange covers with syndicates
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Loyd's syndicates: offer insurance contracts in the market
-Underwriters
Lloyd's syndicates Ans: Must meet lloyd's stringent capital
requirements
Members
Join together and provide capital to form syndicates, receiving
profits or bearing losses
Most are corporations or limited partnerships
"Names" are high net worth individuals
managing agents: manage the syndicates, who typically specialize
in certain lines
underwriters: work for the syndicates to assess risks and
determine premiums
Insurance agent Ans: Someone who legally represents the
principal (insurance company) and has the authority to act on the
principal's behalf
The principal is legally responsible for all acts of an agent when
the agent is acting within scope of authority
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Typically has the authority to bind coverage
Client (business) ← → Broker ←→ insurance carrier
Insurance binders Ans: Provide temporary insurance until the
policy is actually written
Can typically be provided by property and casualty (P & C) agents
Life insurance agents usually have no authority to issue binders
Can be verbal or written
Ex: buying a car, buying a house
Why can't life insurance agents issue binders Ans: Because
insurance company wants ability to fully underwrite the applicant
Don't want asymmetric information
Types of agents Ans: Independent:
Usually represent several unrelated insurers
© 2025 All rights reserved
UGA RMIN 4000 Brown Test 2 Questions
and Correct Answers
Private insurance industry Ans: U.S. insurance industry employed
2.6 million people
Insurers paid $20.5 billion in premium taxes
Major types of private insurers Ans: Stock insurers
mutual insurers
lloyd's of london
Stock insurers Ans: A corporation owned by stockholders
Objective is to earn profit for stockholders by increasing the value
of the stock and paying dividends
Stockholders elect board of elections
Mutual insurers Ans: A corporation owned by policyholders
Profits are distributed to policyholders by dividends or rate
reductions
Policyholders elect board of electives
© 2025 All rights reserved
, 2 | Page
Loyd's of london Ans: World's leading market that provides
service and physical facilities for its members to write specialized
lines of insurance
NOT an insurer
Types of mutual insurers Ans: Assessment mutual
Advance premium mutual
Fraternal insurer
Assessment mutual Ans: Insurer has the right to assess
policyholders an additional amount if the insurer's financial
operations are unfavorable
Assessment: additional charge - if insurance company is losing
money
As result very few still exist (no one wanna pay that, assessment
difficult to collect)
Advance premium mutual Ans: Insurer does not issue assessable
policies
Most common mutual insurance type
Fraternal insurer Ans: Provides life and health insurance to
members of a social or religious organization
Lloyd's structure Ans: Loyd's brokers: represent policyholders to
arrange covers with syndicates
© 2025 All rights reserved
, 3 | Page
Loyd's syndicates: offer insurance contracts in the market
-Underwriters
Lloyd's syndicates Ans: Must meet lloyd's stringent capital
requirements
Members
Join together and provide capital to form syndicates, receiving
profits or bearing losses
Most are corporations or limited partnerships
"Names" are high net worth individuals
managing agents: manage the syndicates, who typically specialize
in certain lines
underwriters: work for the syndicates to assess risks and
determine premiums
Insurance agent Ans: Someone who legally represents the
principal (insurance company) and has the authority to act on the
principal's behalf
The principal is legally responsible for all acts of an agent when
the agent is acting within scope of authority
© 2025 All rights reserved
, 4 | Page
Typically has the authority to bind coverage
Client (business) ← → Broker ←→ insurance carrier
Insurance binders Ans: Provide temporary insurance until the
policy is actually written
Can typically be provided by property and casualty (P & C) agents
Life insurance agents usually have no authority to issue binders
Can be verbal or written
Ex: buying a car, buying a house
Why can't life insurance agents issue binders Ans: Because
insurance company wants ability to fully underwrite the applicant
Don't want asymmetric information
Types of agents Ans: Independent:
Usually represent several unrelated insurers
© 2025 All rights reserved
