Exam

What type of risk is insurable?

Only pure risk that result in a loss or no change

What are the 3 types of producer authority?

Express, implied , and apparent

What does STARR Stand for?

Sharing, Transfer, Avoidance, Reduction, Retention

List 5 Elements of Insurable Risk?

Due to Chance, Definite and Measurable, Statistically Predictable, Not catastrophic, Randomly selected/large loss exposure

What is a Warranty in an insurance contract?

An absolutely true statement upon which the validity of the Insurance contract is based.

What two elements are necessary for a life insurance contract to have a legal purpose?

Insurable Interest and Consent.

Wagering on a sporting event is known as what type of risk?

Speculative Risk

What type of insurer is formed under the laws of another country?

Alien.

What document is required for an insurance company to transact insurance?

Certificate of Authority

What entities make up the Medical Information Bureau

Insurers

The insurer organized to return a profit to the stockholders is what type of insurer?

Stock company

The type of insurance company organized to return any surplus money to it policyholders is known as what?

Mutual company

A insurance company that is formed under the laws of another state is known as what type of insurer?

Foreign

4 Elements of an insurance contract

Agreement (offer/acceptance), consideration, competent parties, and legal purpose

What is the term for the cause of loss insured against in an insurance policy?

Peril

The requirement that agents must account for and promptly remit all insurance funds collected is known as what type of agent responsibility?

Fiduciary

An insurance policy paid a nontaxable dividend to the insured one year, and nothing the next. From what type of insurer did the insured purchase the policy?

Mutual

The reduction, decrease, or disappearance of value of the person or property insure in a policy is known as what?

Loss

List 5 characteristics of an ideally insurable risk?

Loss must be: - Due to chance, - definite and measurable, - statistically predictable, - Not catastrophic, and - Coverage cannot be mandatory

What are the strategies used by underwriters to prevent adverse selection?

Restrictions of coverage, Refusal to accepting a risk, and accepting a risk at a higher rate

If an insurer meets the state financial requirements and is approved to transact business in the state, it is considered what type of insurer?

Authorized or admitted

When risks with higher probability of loss are seeking insurance more often than other risks, this known as what?

Adverse selection

Insurers are classified according to their domicile. What are the 3 types of insurers?

Domestic, Foreign, Alien

3 Types of hazards

Personal, Moral, Morale