Insurance Concepts and Terminology Quiz

What is the abbreviation for "Institutes Knowledge Group"?

What is the main purpose of insurance as a risk management technique?

How many major insurance sectors exist?

Insurance is a risk transfer mechanism.

Insurance operates as a contract between an insurer and the insured.

All insurance policies meet the same requirements as any other valid contract.

What are two common approaches to structuring an insurance policy?

What is the abbreviation for "Personal Auto Policy"?

What category does liability insurance fall under?

What is the main purpose of life insurance?

Which of these is NOT a type of personal insurance?

What type of insurance may be needed for boat owners?

What type of insurance is usually required by employers to protect themselves against claims from employees who suffer job-related injuries or illnesses?

What type of insurance protects an individual against multiple types of personal losses?

What is the name of the insurance that protects businesses against environmental damage?

What is the name of the insurance that covers many common liability exposures faced by an organization, including its premises, operations, and products?

What type of insurance helps ensure financial stability for businesses that must pay for large potential losses?

A typical "Businessowners policy" is a self-contained policy.

What type of insurance is most commonly purchased by businesses that need to protect themselves from financial losses resulting from the ownership, maintenance, or use of an automobile?

What is the name of the insurance that protects the insured against theft of job-site contents, such as cash registers, computers, and inventory?

What type of insurance do many business organizations purchase to provide property, crime, and liability coverages?

Commercial umbrella liability coverage is similar to personal umbrella liability coverage.

Insurers usually make a profit for their owners.

What is the name of the process by which an insurer can, after paying a covered loss, recover the payment amount from another party who caused the loss?

What is the type of insurance that is typically available through "surplus lines"?

Nonadmitted insurers are required by state insurance departments to file their rates and policy forms.

What is the name of an insurer that is formed primarily to cover the loss exposures of its parent or members?

What is the name of a contract that defines the eligible insurance that a reinsurer agrees to automatically reinsure a portion of from the primary insurer?

Facultative reinsurance is a type of automatic reinsurance.

State governments are always involved in the regulation of insurance.

What type of insurance is required by employers in almost all US states?

Which of these is NOT a reason for government participation in insurance programs?

Which of these is NOT a common example of a US state government insurance program?

There are three levels of government involvement in insurance programs.

The "FAIR plan" is a common example of a federal government insurance program.

What is the name of the insurance program offered by states to help businesses and individuals in high-risk areas purchase property insurance?

What are the five key functions of an insurer?

Which of these is NOT one of the key components of a successful marketing program?

The "underwriting" process only involves selecting the right insureds for the company.

What is the name of the process that helps determine how much coverage an insurer should offer for a given loss exposure?

What does the abbreviation "LAE" stand for?

The key goal of the "claims" function is to generate significant profit.

The "Premium Audit" focuses on determining if the premium paid on a commercial insurance policy was correctly calculated based on actual loss exposures during that period.

Insurers are only making a profit if they have a combined ratio below "100".

What is the name of the ratio that compares "losses and loss adjustment expenses" against "earned premiums"?

Which ratio measures a company's financial health by including all cash inflows against all cash outflows?

What is NOT a category where an insurer might choose to adjust premiums?

The "expense ratio" is the portion of an insurer's written premiums used to pay for acquisition costs, general expenses, and licensing and premium taxes.

The "investment income ratio" is a good gauge of the overall profitability of the insurer.

The "overall operating ratio" helps determine the overall profitability based on underwriting profitability and investment income performance.

Which of these is NOT a type of insurance distribution system?

Independent agents and brokers are considered to be employees of the insurer.

What is the name of the valuable asset owned by an independent agent that gives them the right to sell insurance to existing customers after leaving their prior insurer?

Which distribution system involves agents who are usually restricted to representing a single insurer?

Independent agents have greater control over their operations than direct writers and exclusive agents.

What is the name of an insurance professional who is responsible for placing insurance and surety business with insurers?

Which type of insurer uses employees who are compensated via "salary, commission, or both" and are usually restricted to only representing a single insurer?

What are the main functions of an insurance producer?

What type of distribution system is most common when marketing to large commercial accounts that require sophisticated knowledge and service?

What does the term "affinity marketing" refer to?

What is the primary reason an insurer might choose to operate through an MGA?

The independent insurance agent is a key part of the surplus lines broker system.

A surplus lines broker can place insurance with an unlicensed insurer.

What are the two main categories of insurer income?

What is the name of the process insurers use to determine the price of a policy?

Which of the following is NOT a risk control technique for reducing losses?

Underwriting is an essential part of an insurer's operation and is vital to the organization's survival.

What is the name of the document that allows the insurer to transfer the cost of losses to another party?

Which are the two main types of reinsurance?