All of the following are arguments in favor of using an applicant’s credit record in personal lines underwriting EXCEPT A) Most consumers have good credit records and benefit when credit history is used as a rating factor. B) Use of credit data in underwriting and rating eliminates price discrimination against minority groups when they purchase […]
Sam’s furniture was destroyed by a fire. The furniture cost $1200 when it was purchased, but similar new furniture now costs $1800. Assuming the furniture was 50 percent depreciated, what is the actual cash value of Sam’s loss? A) $600 B) $900 C) $1200 D) $1800 ANSWER Answer: B
A score derived from an individual’s credit history and other factors that is used by many auto and homeowners insurers for underwriting and rating purposes is called a(n) A) CLUE score. B) insurance score. C) expense ratio score. D) combined ratio score. ANSWER Answer: B
Under which of the following rules is actual cash value determined by taking into consideration all relevant factors an expert would use to determine the value of the property? A) the circumstantial evidence rule B) the broad evidence rule C) the property indemnity rule D) the objective value rule ANSWER Answer: B
The purpose of the Financial Analysis Solvency Tracking (FAST) system employed by the NAIC is to A) prioritize insurance companies for additional regulatory action. B) quicken the approval of rates in prior approval states. C) speed-up the claims settlement process for insurers charged with delaying claims payments. D) quickly address market conduct complaints by consumers. […]
A total loss under a valued policy is settled on the basis of the A) market value of the loss. B) actual cash value of the loss. C) replacement value of the loss. D) amount of insurance covering the loss. ANSWER Answer: D
All of the following statements about insurance regulation are true EXCEPT A) Insurance commissioners are appointed in some states and elected in some states. B) Insurers are subject to regulation by certain federal agencies and laws. C) The National Association of Insurance Commissioners (NAIC) can force states to adopt the model laws that it drafts. […]
A systemic risk is a risk that A) can be eliminated through diversification. B) can be the cause of the collapse of an entire system. C) can be insured privately. D) can be easily contained so that it does not spread. ANSWER Answer: B
To correct abuses in the financial services industry, Congress passed an Act in 2010 that included numerous provisions to reform the financial services industry. This Act was the A) Financial Modernization Act. B) McCarran-Ferguson Act. C) Dodd-Frank Act. D) Biggert-Waters Act. ANSWER Answer: C
Which of the following is authority given to the Federal Insurance Office created by the Dodd-Frank Act? A) to represent the federal government in international discussions of insurance regulation B) to license and charter new insurance companies that plan to operate nationally C) to be the primary monitor of insurance company solvency D) to be […]
