Business Quiz: Insurance Company Organization And Regulation

Approved & Edited by ProProfs Editorial Team
The editorial team at ProProfs Quizzes consists of a select group of subject experts, trivia writers, and quiz masters who have authored over 10,000 quizzes taken by more than 100 million users. This team includes our in-house seasoned quiz moderators and subject matter experts. Our editorial experts, spread across the world, are rigorously trained using our comprehensive guidelines to ensure that you receive the highest quality quizzes.
Learn about Our Editorial Process
| By Fsspc
F
Fsspc
Community Contributor
Quizzes Created: 22 | Total Attempts: 232,092
Questions: 10 | Attempts: 798

SettingsSettingsSettings
Insurance Quizzes & Trivia

There are several types of insurance organizations and arrangements that provide insurance coverage. Not all of them are corporations (or companies) that are in business to make a profit, but most of them are. The various categories of insurers represent the different ways they raise the money necessary to begin a business and enroll their prospects for insurance. Although you need to understand the nature and structure of for-profit insurance companies, you should also know that there are other markets and providers of insurance, including non-incorporated private organizations and the federal and state governments.


Questions and Answers
  • 1. 

    A nonexclusive agent:

    • A.

      Represents a single insurance company.

    • B.

      Works for a direct writer.

    • C.

      Is an independent businessperson.

    • D.

      Does not collect commissions.

    Correct Answer
    C. Is an independent businessperson.
    Explanation
    C is correct. A nonexclusive, or independent, agent represents more than one company. This type of agent collects commissions on the policies sold, but collects no salary from the companies he or she represents.

    Rate this question:

  • 2. 

    Solicitors may not:

    • A.

      Issue or countersign policies.

    • B.

      Sell insurance.

    • C.

      Collect premiums.

    • D.

      Sign an application.

    Correct Answer
    A. Issue or countersign policies.
    Explanation
    A is correct. A solicitor, who often works with or for an agent, has more limited authority than the agent. A solicitor sells insurance and might even be authorized to collect premiums. However, a solicitor cannot issue or countersign policies.

    Rate this question:

  • 3. 

    At DEF Insurance Company, agents are employees of the company who are paid a salary plus commissions. This is an example of what type of insurance marketing system?

    • A.

      Captive

    • B.

      Independent

    • C.

      Direct writer

    • D.

      Direct response

    Correct Answer
    C. Direct writer
    Explanation
    C is correct. In the direct writer system, the insurer's agents are actually employees. They can receive a salary, be paid on commission, or both.

    Rate this question:

  • 4. 

    Which insurance company department is responsible for accepting and rejecting applications based on company standards?

    • A.

      Underwriting

    • B.

      Loss Control

    • C.

      Claims

    • D.

      Agency

    Correct Answer
    A. Underwriting
    Explanation
    A is correct. Underwriting is the process of selecting certain types of risks and rejecting others so that the insurer will have a profitable book of business.

    Rate this question:

  • 5. 

    Which insurance company department is responsible for paying insureds' covered losses?

    • A.

      Audit

    • B.

      Claims

    • C.

      Underwriting

    • D.

      Reinsurance

    Correct Answer
    B. Claims
    Explanation
    B is correct. The claims department sees that the company's insureds are adequately indemnified for their losses. Claim adjusters determine the cause of loss, whether the loss is covered by the policy, the value of the loss, and the amount of loss payable by the policy.

    Rate this question:

  • 6. 

    Who is responsible for licensing insurance agents?

    • A.

      Lloyd's Associations

    • B.

      State insurance department

    • C.

      Interstate Commerce Commission

    • D.

      Insurance Services Office

    Correct Answer
    B. State insurance department
    Explanation
    B is correct. State insurance departments devote much of their time to working with insurance agents. One of their most important duties is agent licensing.

    Rate this question:

  • 7. 

    Agent Blondell is offering a free television to every applicant who agrees to buy insurance through his agency. In most states, this is an illegal practice known as:

    • A.

      Rebating

    • B.

      Twisting

    • C.

      Misrepresentation

    • D.

      Failure of fiduciary responsibility

    Correct Answer
    A. Rebating
    Explanation
    A is correct. Rebating is giving or offering some benefit other than those specified in the policy, such as cash, gifts, or securities, to induce a customer to buy insurance. Rebating is illegal in all but two states.

    Rate this question:

  • 8. 

    Which of the following is not one of the duties of an agent?

    • A.

      Making appropriate coverage recommendations to prospective customers

    • B.

      Writing the provisions of a customer's policy

    • C.

      Helping prospective customers complete the application

    • D.

      Assuring that customers understand the coverage they are purchasing

    Correct Answer
    B. Writing the provisions of a customer's policy
    Explanation
    B is correct. Agents have a responsibility to interact effectively with customers in regard to the insurance transaction, but they do not determine the provisions of the policies the insurer issues.

    Rate this question:

  • 9. 

    The Excel Insurance Company is incorporated in the state of Tennessee. It is also authorized to do business in Georgia. In Georgia, Excel is known as what type of company?

    • A.

      Alien

    • B.

      Foreign

    • C.

      Domestic

    • D.

      Non-admitted

    Correct Answer
    B. Foreign
    Explanation
    B is correct. Insurance companies are known as domestic companies in their home states, foreign companies in other states in which they are admitted to do business, and alien companies if their home office is located in a country other than the United States.

    Rate this question:

  • 10. 

    Can states require insurance companies to use certain forms or rates in connection with certain types of insurance?

    • A.

      No, that would be a violation of the principle of open competition.

    • B.

      No, they can only require that forms and rates be subject to prior approval.

    • C.

      No, insurers can always begin using forms and rates as soon as they are properly filed with the state.

    • D.

      Yes, some states have mandatory forms or rates for certain coverages.

    Correct Answer
    D. Yes, some states have mandatory forms or rates for certain coverages.
    Explanation
    D is correct. In addition to open competition, prior approval, and file-and-use rules, some states mandate the forms or rates for certain coverages.

    Rate this question:

Quiz Review Timeline +

Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.

  • Current Version
  • Mar 20, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Feb 24, 2009
    Quiz Created by
    Fsspc
Back to Top Back to top
Advertisement
×

Wait!
Here's an interesting quiz for you.

We have other quizzes matching your interest.