1

Insurance as a transfer and sharing of cost of losses, what wud be more appropriate of
the following:
Its an insurance policy for the payment of premiums.

What of the following are ideally insurable loss exposures:

Loss exposures which are definite in time and measurable
Large exposures of similar but independent exposures
Loss exposures which are economically feasible to insure
Loss exposure of small dollar value

All of the following are private insures except

Stockholders
Mutual insures
Guaranty funds
Reciprocal insurers

All of the following are state insurance programs except:

Workers compensation
Unemployment program
FAIR Plans
Crop insurance

What exactly does the state insurance regulation do and options were:
Protects the consumer from paying a premium that is not excessive (this is right)

An example was given saying a particular person faces a covered loss and the process
of the insurance company covering the loss is an act of which principle
Indemnity
Utmost good faith
Transfer of unequal amounts
Adhesion

A person buying a series of insurances was told insurance is not just for safety but
also means of
Reduced social burden
Source of investment funds
Providing support for credit

A man who is a doctor recently had a fire accident at his clinic. Which insurance
should he have purchased to get additional living expenses?
Commercial general liability
Business income insurance
Professional liability
Property insurance
According to an insurer a claimant is one who is?

Make a claim to the insured charging responsibility

The insured who makes a claim
Litigation defendant
10 NAIC is solely developed for:
MODEL LAW (one of the options will have this)
11 Question on why we have IRIS
Financial ratios (answer will have this as one of its options)
12 Ratemaking is the process by which insurers use to calculate the rates that determine
the premium to charge for insurance coverage which is accurately done by
Actuary
Insurer
Independent adjusters
Agents
13 One of the following statements about E&S is true they are:
They E&S insurance is transacted by a licensed broker to other admitted insurers
They are characterized by poor loss experience
They are a form of insurance available by licensed insurers
They require to be file their rates with the state insurance regulation
14 To find the total gain of operation what is the other parameter required when we have
net underwriting gain as 2,000,000.
Net investment income
Net investment gain or loss
Loss ratio
Combined expenses
15 Non-admitted assets example would be:
Furniture and equipment
Stock
Bond
Money in transit
16 What of these would be present in a balance sheet?
Admitted assets
Revenues
Expenses
Net income
17 Capacity ratio is given by
Written premiums by its policy holder surplus
Earned premiums by its unearned premiums
Written premiums by its policy holder surplus

18. Problem:
Given:
Earned premium: $ 2,000,000
Written Premium: $2,000,000
Net Investment Income: $660,000
Incurred loss: $1,500,000
Underwriting Expenses: $200,000
7.) Calculate the loss ratio
.75
.1
.5
.35
8.) Calculate the expense ratio
.75
.10
.5
.33
9.) Calculate the Investment income
.33
.38
.10
.5
19 The agency is a relationship that exists when one party the agent acts in behalf of the
Principal
Broker
Independent adjusters
TPAs
20 A particular person say ABC sells insurance for a person who seeks it. ABC being the
independent agent who does all the formalities as per the agency contract given by the
principal. Finally the person purchases the insurance with the help of agent. This act
of the agent is what authority?
Implied
Express
Apparent
Binding
21 Responsibilities of the agent to the principal
Reasonable care
Loyalty
Accounting
All of the above

22 Difference between independent and exclusive

23 ABC advertises using the agents name and photo but mainly focuses on advertising
the insurance company it represents what kind of agency is DEF
Exclusive agency
Independent agency
Direct writing system
Insurance contract provision
24. Jane works for XYZ insurance and in an automobile firm. She has a client John who
buys a automobile from her. If she recommends him to buy XYZ insurance Which unfair
trade practice is it?
Tie- in sales
Rebating
Unfair trade practices
25. Formal enactments of federal, state and local legislative is referred to as
Statuary law
Common law
Constitutional law
26. What is civil law?
Government takes responsibility for prosecuting the wrongdoers.
Applies to wrongful acts that deem the society
Deals with a personal quarrel between two parties

27. In property insurance, carelessly taped electrical wiring is an example of

Cause of loss
Hazard
Peril
Time element loss
28. John is 22 yr old male, single who walks drives 15 miles per day. His insurer
(underwriter) says that this will be considered while deciding rating and will he will belong
to the large group of people in this category which type of rating was he talking about?

Class rating
Judgmental rating
Independent rating
Experience rating
29. When will you have Adverse selection?
When the premium is low as compared to loss exposures
30. XYZ wanted to incorporate risk management in his house. Which is the initial risk
management step?
Identifying loss exposure
Analysis Loss exposure
Examining the feasibility of the risk management technique
Implementing the risk management technique
31. Mary is the single parent and has to commute a long distance for work. There is no other
proper mode of transport and she is having a very critical economic situation, she wants to
buy a automobile to drop her children at school and also to commute to work. Which is the
best risk management tech which she can follow?
Retention
Insurance
Avoidance
Loss control

32. XYZ takes reinsurance with ABC cause there is no other way to continue doing business..
ACC to the AGREEMENT 50% of all the loss exposures will be reinsured by ABC.
Which kind of reinsurance is it?
Treaty reinsurance
Facultative reinsurance
Broad form coverage
33. A company ABC which is entitles to receive sales commission is also entitled to receive
contingent commission annually based on performance and is applicable to which of these
options:
Independent agency
Direct writing

Exclusive agency
34. in the case of property insurance apart from a owner who else has insurable interest and
name is specified in the declaration page:
Mortgagee
Bailee
Bailor
35. Which of the following is one an activity of the underwriter
Billing
Claim handling
Pricing coverage
All of the above

36. Some man has a lawn mower which isnt functioning well and the son points to his dad
saying this isnt working well. Immediately this man would tell his son he has insurance and they
have nothing to worry. What hazard would this be?
Morale Hazard
Moral hazard
Physical hazard
Legal hazard
37. There was a question on which way wud be used by an underwriter to gather info on an
applicant
financial rating services
38. there was question on cancellation of policy wat wud happen?

39. A person in an orginazation handles all the claims by phone email contacts what is he to the
insurer?
Inside claim representative
Field representative
Adjuster
Broker

40. There was this case study saying a company faced some serious claim in another state where
they werent located so what exactly should they do for handling their claims?
Independent Adjusters
brokers
Inside field representatives

41. all the various steps in claim handling shud be learnt

42. what is the necessity of having reservation of rights letter when one of which is to inform the
insured there cud be a coverage problem
Protect the insurer so that he can deny coverage later
43.if a man wants with property insurance gets actual cash value minus the depreciation. How or
where can he find this?
Insuarnce policy
By appraisers
By current market
44. for a policy to be enforced all of the following are wrong except
Into cocaine
Manic depression
Insurer agent not registered in one state where he sells insurance
The check of the insured bounced back
45. in liability insurance all of the following are presnt except
Co insurance
Aggregate limit
OCCURANCE LIMIT
Other value insurance

46. in the declartion page u wud find all of the following except
Full text of the policy exclusions
47. wat is not true abt modular policies?
It wil make a policy by itself wen different documents are added to it

48. wat happens when insurer cancels the policy?

49. wat is true abt nonadmitted assests

Cannot be converted to cash

50. There was a damage caused by mines

Mine subsidence is the answer
51. Read about other insurance provisions as well.

52. learn completed operations (the examples)

53. business operations(example)
54. which of these comes under statutes law
Workers compensation laws
55. vandalism comes under which coverage
Basic coverage
56. a person writes an article about another persons conduct badly. He publishes it what act willl
this be
Libel (intentional tort)
57. breach of warranty shud be read( example)
58.loss exposure survey is not the right way to identify los exposure why?
An important loss exposure can be overlooked

59.all the benefits for the various people involved or who consider risk management shud be
read.

1) Why is Insurance known as a Transfer System.

Ans: The gives a Insured periodic premium and the insurer covers insureds the loss

2) Why law of large numbers used

Ans: To predict the losses

3) All of them listed below are Ideally Insurable Except

Ans: Small heterogeneous exposures

4) Which statement is correct regarding Private Insurers.

Ans: Mutual insurance companies are owned by policy holders

5) which of the following is done by the state

Ans: Unemployment

6) All are Benefits of Insurance Except

Ans: Premiums paid by insured

7) What law of indemnity states

Ans: The Insured must not be financially in a better status than he was before the loss

8) A shop is damaged due to fire. The shop owner has a Business income insurance plan. He lost
a income of 5000 dollars in this period and spent 15000 dollars to repair the shop. How much
will the insurer pay.
Ans: 5000 dollars

9) A mechanic sets up stove at a house and when it was first used it causes fire accident. What
type of liability
Ans: Completed operations liability

10) The Insured bought a photograph polishing solution which the shopkeeper said will protect
the photograph. When the insured used it on a 5000 dollar photograph the photograph cracked.
Ans: Breach of Warranty

11) When the plumber came to fix a new sink he damaged the water pipe line. What liability is
this.

Ans: Business Operation Liability

12) The insurance program in which only those citizen who meet the eligibility criteria can
obtain is
Ans: Social Security Program (Old age plan)

13) The purpose of NAIC is

Ans: It creates the model law for the problem present

14) Why must the premium be Adequate

Ans: It must cover the loss, expenses and also the insurers nominal profit

15) The Law which says approval is required only when it is a certain percent above or below the
previously filed rates
Ans: Flex rating Laws

16) What IRIS does

Ans: Develops financial ratios to detecting insurers overall condition

17) What is required by the agent to renew license

Ans: Must pass the exams conducted

18) E&S can also insure

Ans: Those with poor loss exposure

19) What is earned premium

Ans: amount that applies to the part of policy period already occurred

20) Which is a non-admitted assets

Ans: Office Furniture

21) They will give Admitted asset, loss reserve liability, unearned Premium Reserve liability and
other liabilities. Find Policyholder surplus
Ans: Policy Holder Surplus= Admitted Asset- [loss reserve liability+unearned Premium Reserve
liability+other liabilities]

22) What will be present in an Income Statement

Ans: Earned Premium

23) They will give Incurred loss, Earned Premium, Written Premium, Incurred Underwritting
expenses and Net investment income. Find loss ratio,expense ratio and Investment Income Ratio

24) Capacity Ratio is

Ans: Ratio of written premium to Policy Holder surplus