Which Of These Describe A Participating Insurance Policy

Question: Which of the following accurately describes a participating insurance policy?

Answer: A participating insurance policy is one in which the policyowner receives dividends deriving from the company’s divisible surplus.

Question: Which of the following types of insurers limits the exposures it writes to those of its owners?

Answer: “Captive insurer”. An insurer that confines or largely limits the exposures it writes to those of its owners is called a captive insurer.

Question: Which of the following outlines the authority given to the Producer on behalf of the insurer?

Answer: The Producer (or Agent) contract outlines the authority given to the Producer on behalf of the insurer.

Question: Who regulates an insurer’s claim settlement practices?

Answer: “State insurance departments”. State insurance departments regulate claim settlement practices.

Question: What type of reinsurance contract between two insurers involves an automatic sharing of the risks assumed?

Answer: The correct answer is “Treaty reinsurance”. Under treaty reinsurance, each party automatically accepts specific percentages of the insurer’s business.

Question: Dividends from a stock insurance company are normally sent to

Answer: The correct answer is “shareholders”. Shareholders normally receive dividends in a stock insurance company.

Question: Dividends from a mutual insurance company are paid to whom?

Answer: Policyholders”. Mutual insurance companies are owned by policyowners, to whom dividends are paid.

Question: An agent’s authority to bind an insurer to an insurance contract may be granted in the

Answer: “agent’s contract and the insurance company’s appointment”. The agent’s contract and appointment with the insurance company grants the authority to bind an insurer to an insurance contract.

Question: A group-owned insurance company that is formed to assume and spread the liability risks of its members is known as a

Answer: A group-owned insurer whose primary activity consists of assuming and spreading the liability risks of its members is called a risk retention group.

Question: Which of the following is a syndicate established by a group of insurers to share underwriting duties?

Answer: The Lloyd’s organization is a syndicate of individuals and companies that individually underwrite insurance.