All of the following statements about the independent agency system are true EXCEPT A) Agents are often authorized to adjust small claims. B) Agents are compensated on the basis of commissions. C) The insurer rather than the agent owns the renewal rights to the business. D) The agent is an independent business person who represents […]
Which of the following statements about mutual insurers is true? A) They are legally organized as partnerships. B) They have a board of directors which is selected by state insurance departments. C) They are owned by their stockholders. D) They may pay dividends to their policyholders. ANSWER Answer: D
Sarah owns a property and liability insurance agency. She is authorized to represent several insurance companies and she is compensated by commissions. Sarah’s agency owns the expiration rights to the business she sells. Sarah is a(n) A) independent agent. B) exclusive agent. C) direct writer. D) insurance broker. ANSWER Answer: A
Which of the following statements is true about fraternal insurers? A) They are legally organized as stock insurers. B) They specialize in writing life and health insurance. C) They are taxed more heavily than other types of insurers because of discriminatory marketing practices. D) They account for the majority of life insurance in force in […]
Under one life insurance marketing system, agents conduct sales interviews at the workplace with the approval of the management of the business. There are few direct costs to the employer, and this marketing system is especially appropriate for low-income and middle-income workers. This life insurance marketing system is called the A) direct response system. B) […]
The corporate structure of mutual insurers has changed in recent years. All of the following are examples of significant changes EXCEPT A) demutualization of some insurers. B) sharp increase in the number of mutual insurance companies. C) increase in company mergers. D) formation of mutual holding companies. ANSWER Answer: B
Which of the following is a characteristic of a typical mass merchandising plan? A) higher commission scales for agents and higher administrative expenses B) payment of premiums through payroll deduction C) group rather than individual underwriting D) contributions by the employer to the cost of coverage ANSWER Answer: B
Why are some mutual insurers referred to as “assessment mutuals”? A) They charge low premiums because the loss exposures of their insureds are thoroughly assessed before a policy is written. B) They are noted for being very thorough in their assessment of investment opportunities. C) They are assessed for state premium taxes only if they […]
Which of the following statements about reciprocal exchanges is (are) true? I. Reciprocal exchanges usually specialize in health insurance. II. Reciprocal exchanges are unincorporated mutual insurance companies. A) I only B) II only C) both I and II D) neither I nor II ANSWER Answer: B
Which of the following statements about Lloyd’s of London is true? A) Coverage is actually written by syndicates who belong to Lloyd’s of London. B) New individual members or Names who belong to the various syndicates have unlimited legal liability. C) It operates as an admitted insurer throughout the United States. D) It allows underwriters […]
