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Risk Management

Business

Quiz 7 :

Insurance Operations

Quiz 7 :

Insurance Operations

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In the credit crisis of 2008, credit default swaps were used to insure mortgage-backed securities.
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True False
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Answer:

True

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Brokers are most active in the suburbs and among small insureds.
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True False
Answer:

Answer:

False

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Life insurance does not involve the group sharing of individual losses.
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True False
Answer:

Answer:

False

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Brokers are a more significant part of the marketing mechanism in personal lines of business than in commercial liability business.
True False
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An agent legally represents the company, whereas a broker represents the buyer.
True False
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Producer is another name for both agents and brokers.
True False
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Exclusive agents are permitted to represent only their company or a company in an affiliated group of insurance companies.
True False
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Redlining decisions are made by considering individual insurance applicants.Most often, the redlining is in rich metropolitan areas, placing low-income inner-city dwellers at great advantage.
True False
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Even very sick people such as AIDS patients can obtain life insurance through a group policy.
True False
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Those who purchase insurance through the independent agent are considered by both insurers and agents to be the agent's customers rather than the insurer's.
True False
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A personal producing general agent sells for one or more insurers.
True False
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Subagents are agents of the general agent rather than of the insurer.
True False
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An independent agent owns the x-date.This means that the insurance firm cannot contact the insured directly in case of delay in payment of premiums, but have to inform the agent who contacts the insured.
True False
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Insuring common risks in high volume leads to less accuracy in predicting losses, and these vanish because they have been aggregated by the insurer.
True False
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Like the independent agent, the exclusive agent owns the x-date.
True False
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Incurred losses are both paid losses plus known but not yet paid losses.
True False
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For the life insurance industry, the largest component of liabilities is reserves for pensions.
True False
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Using insurer forms, the independent agent binds an insurer, sends underwriting information to the insurer, and later delivers a policy to the insured.
True False
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The branch manager employs and trains agents for the company and can employ these agents without the consent of the company.
True False
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AIG was one of the largest issuers of mortgage-backed securities at the time of the credit crisis.
True False
Answer:
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