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CHAPTER 1 INTRODUCTION TO INSURANCE

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CHAPTER 1 INTRODUCTION TO INSURANCE All of the following are insurance companies except: a. Blue Cross and Blue Shield b. John s Insurance c. Lloyd s of London – PowerPoint PPT presentation

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Title: CHAPTER 1 INTRODUCTION TO INSURANCE


1
CHAPTER 1 INTRODUCTION TO INSURANCE
  • All of the following are insurance companies
    except
  • a. Blue Cross and Blue Shield
  • b. Johns Insurance
  • c. Lloyds of London
  • d. State Farm

2
Which of the following is not a morale
hazard a. Talking on phone while driving b.
Dishonesty c. Leaving a candle burning d.
Failure to lock a cabinet because the contents
are insured Hint Morale - Carelessness
Moral - Ethics
3
Which of the following is not true of pure
risk? a. Uncertainty of loss without any
possibility of gain b. Gambling is a pure
risk c. Opposite of speculative risk d.
Underwriters prefer pure risks
4
For PC insurance, an insurable interest must
exist? a. When policy takes effect b. At the
time of application c. 30 days following
receipt of certificate of
insurance d. None of the above
5
If property worth 60,000 is insured for 50,000
and a total loss occurs, what amount will the
insured receive? a. 60,000 b.
50,000 c. 25,000 d. 49,750
6
All of the following are false about insurable
risk except a. Loss creates economic
hardship b. Cause of loss is nuclear c. Loss
was intentional d. Non-homogeneous exposure
7
When calculating loss ratios, the divisor
is always a. The expenses b. The
premiums c. Underwriting losses d.
Underwriting losses Expenses
8
Fair discrimination in insurance is based
on a. Coverage F of policy b. Address of
applicant c. Different characteristics or
exposures d. Article IV of the Constitution
9
In Oklahoma, rates are subject to the a. File
and use rule b. Roberts rule c. Prior
approval rule d. 3 second rule
10
Which of the following is not an insurer? a.
Mutual company b. Bureau c. HMO d.
Reciprocal
11
An agent doing business in Oklahoma who is
chartered in the state of Maine is know as
a(n) a. Senior insurer b. Domestic
insurer c. Alien insurer d. Foreign insurer
12
When using reinsurance practices, which of the
following transfers a portion of risk a. The
ceding company b. The reinsurer c. The
seeding agent d. The mortgage company
13
All of the following are false regarding
surplus lines insurance except a. It is
generally less expensive b. Used when coverage
is not available through authorized
insurers c. Purchased for protection against
losses as a result of war d. The most
common type of insurance purchased per
capita in Oklahoma
14
This organization assumes and spreads the
liability exposure of its group members and
provides and alternative risk financing
mechanism a. Weiss Research b. All Risk,
Incorporated c. Policies R Us d. Risk
Retention Groups Note They are exempt from
state guaranty funds
15
FAIR plans are provided by the a. A.M. Best
company b. Local officials c. Federal
government d. State of Oklahoma
16
As an insurance agent you represent none of the
following except a. The reinsurer B. The
insured C. The underwriter D. The principal
17
ALL OF THE FOLLOWING ARE TRUE REGARDING A BINDER
EXCEPT a. May be given orally b. Is a
permanent contract c. Usually ends when policy
begins d. Is a temporary contract
18
This type of agent responsibility holds them in
trust by the insured a. Reassurance b.
Fiduciary c. Trustee d. Estoppel
19
A major priority for underwriters is to avoid
poor risks. Of the following, which term best
describes this practice? a. Adverse
selection b. Arbitration c. Adverse
retention d. Expense ratio
20
Determine the expense ratio from the following
figures Premiums 800,000 Expenses
200,000 Losses 800,000 a. 100 b.
33 c. 25 d. 52
21
A(n) ___________clause establishes value when
insured and insurer do not agree
A(n) __________ is a method of settling an
uninsured motorist claim. Choose the best answer
to complete the above sentences a.
Appraisal aggregate b. Arbitration
appraisal c. Absolute liability
arbitration d. Appraisal arbitration
22
Historically, insurance regulation has been left
to a. The states b. The federal
government c. The agents d. The cities
23
When the U.S. Supreme Court ruled on this
case, it held that insurance was not commerce and
was not subject to federal regulation a.
McCarran-Ferguson, 1944 b. Paul vs. Virginia,
1945 c. Fair Credit Reporting Act d. Paul vs.
Virginia, 1869
24
How often are NAIC meetings held? a. One time
a year b. Three times a year c. Twice every
two years d. Four times a year
25
None of the following agent authority is
specifically granted in oral or written
agreements except a. Implied b. Express c.
Apparent d. Aleatory
26
Which of the following acts protects consumers by
notification and establishing provisions for the
removal of outdated and incorrect
information? a. Fair Credit Reporting Act b.
Free Trade Act c. Credit Subrogation Act d.
McCarran-Ferguson Act
27
What year did the Supreme Court reverse its
previous decision that insurance was not
commerce and not subject to federal
regulation via the South-Eastern Underwriters
Association case? a. 1945 b. 1844 c.
1944 d. 1744
28
All of the following elements are necessary
for the formation of a valid contract
except a. Offer b. Acceptance c. Legal
representation d. Competent parties
29
Of the following individuals, which would
be considered competent to enter into a
contract? a. An insane person b. A person
under the influence of drugs c. A prisoner
serving a life sentence d. A thirteen year old
30
In a unilateral contract a. An act is
exchanged for a promise b. Concealment is
exchanged for material fact c. Adhesion is
exchanged for arbitration d. Warranties are
exchanged for representations
31
If a handwritten entry is made on an
insurance contract, it is a. Null and
void b. Accepted c. Discarded by
underwriter d. None of the above
32
In the McCarran-Ferguson Act, Congress decided
that insurance a. Was interstate commerce b.
Would be regulated by the federal government c
. Would be regulated by the states d. Was not
interstate commerce
33
The difference between concealment
and misrepresentation is a. Failure to
disclose a known fact and assault b. A false
statement and full disclosure c. Failure to
disclose a known fact and a false statement d.
A false statement and indemnity
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