Question 1

Lloyd's of London specializes in the surplus line market.

Accepted Answer

Lloyd's of London is known for specializing in the surplus line market, which deals with insurance for high-risk items and situations that regular insurers typically do not cover.

Question 2

A federal program insures the solvency of private insurers, in a way similar to banks and other financial institutions.

Accepted Answer

The Federal Deposit Insurance Corporation (FDIC) insures deposits at banks and savings institutions, but there is no federal program that insures the solvency of private insurers in the same way. Insurance companies are regulated by state insurance departments.

Question 3

In spite of extensive promotion, only about half of all U.S. homeowners purchase property insurance on their homes.

Accepted Answer

The majority of U.S. homeowners do purchase property insurance for their homes, often because it is required by mortgage lenders.

Question 4

The largest line of coverage now sold by life insurers is that of annuities.

Accepted Answer

Annuities have become the largest line of coverage sold by life insurers, as they offer a way for individuals to secure a steady income stream for retirement, appealing to the growing retirement planning market.

Question 5

Projected growth rates for insurance demand in industrial countries is twice as high as in emerging economies such as Eastern Europe and China.

Accepted Answer

Emerging economies, including Eastern Europe and China, typically have higher projected growth rates for insurance demand compared to industrial countries, due to factors like increasing wealth, underpenetration of insurance products, and economic development.

Question 6

Match the descriptions with their terms:
-Insurance contracts directed mainly at risks of the individual are termed _________________.

Accepted Answer

Personal coverages refer to insurance contracts that are primarily focused on covering the risks associated with individuals, such as life, health, and personal property insurance.

Question 7

Match the descriptions with their terms:
-Insurance contracts directed at perils that may destroy property are called property coverages or _________________.

Accepted Answer

General insurance refers to non-life insurance policies, including those that cover property against perils such as fire, theft, and natural disasters.

Question 8

Match the descriptions with their terms:
-A type of insurer in which individuals take risk personally is a/an _________________.

Accepted Answer

Lloyd's Association is a type of insurer where individuals take on risk personally, often through a syndicate structure.

Question 9

Match the descriptions with their terms:
-An insurer that is among the earliest known types of insurers in the world is _________________.

Accepted Answer

Lloyd's of London is among the earliest known types of insurers in the world, with its origins tracing back to the 17th century.

Question 10

Match the descriptions with their terms:
-A/an _________________ in life insurance is an individual employed to hire, train, and supervise agents at a lower level.

Accepted Answer

A general agent in life insurance is responsible for hiring, training, and supervising lower-level agents, fitting the description provided.

Question 11

Match the descriptions with their terms:
-A/An _________________ works for one insurer only.

Accepted Answer

An exclusive agent represents only one insurer or group of insurers under common ownership, not competing companies, which matches the description given.

Question 12

Match the descriptions with their terms:
-A method of distributing insurance through phone or direct contact by mail without intermediaries is known as _________________.

Accepted Answer

Direct response insurance is characterized by the method of selling insurance directly to consumers through telephone or mail communication, bypassing traditional agents or brokers.

Question 13

Match the descriptions with their terms:
-A party appointed to take charge of a reciprocal insurer is a/an _________________.

Accepted Answer

An attorney-in-fact is the party appointed to take charge of a reciprocal insurer, managing its operations and making decisions on its behalf.

Question 14

Match the descriptions with their terms:
-A type of insurance policy in which policyholders may be asked to contribute to losses in addition to paying premiums is a/an _________________.

Accepted Answer

An assessable policy is a type of insurance policy where, in addition to paying premiums, policyholders may be asked to contribute to losses. This is particularly common in mutual insurance companies where policyholders are also the owners and may share in the company's financial risks.

Question 15

Match the descriptions with their terms:
-A channel of distribution for property-liability insurance comparable to the wholesaler-retailer system for distributing tangible goods is known as the _________________.

Accepted Answer

The American Agency System is a channel of distribution for property-liability insurance that functions similarly to the wholesaler-retailer system for tangible goods, involving independent agents who sell insurance products from multiple insurance companies.

Question 16

Match the descriptions with their terms:
-A type of insurer using exclusive agents to sell insurance and to serve as the insurer's main contact with customers is called a/an _________________.

Accepted Answer

Direct writers use exclusive agents to sell insurance and act as the insurer's main contact with customers.

Question 17

Match the descriptions with their terms:
-An insurer organized as a profit-making venture for its owners is known as a/an _________________.

Accepted Answer

A stock company is an insurer organized as a profit-making venture for its owners.

Question 18

Match the descriptions with their terms:
-An insurer organized as a nonprofit company owned by its policy holders is a/an _________________.

Accepted Answer

A mutual company is an insurer organized as a nonprofit company owned by its policyholders.

Question 19

Match the descriptions with their terms:
-A mutual company specializing in insuring manufacturing establishments is known as a/an _________________.

Accepted Answer

A mutual company specializing in insuring manufacturing establishments is known as a factory mutual.

Question 20

Match the descriptions with their terms:
-A mutual company specializing in insuring agricultural operations is a/an _________________.

Accepted Answer

A mutual company specializing in insuring agricultural operations is known as a farm mutual.

Quiz 22: Risk Management and the Insurance Industry

Lloyd's of London specializes in the surplus line market.

A federal program insures the solvency of private insurers, in a way similar to banks and other financial institutions.

In spite of extensive promotion, only about half of all U.S. homeowners purchase property insurance on their homes.

The largest line of coverage now sold by life insurers is that of annuities.

Projected growth rates for insurance demand in industrial countries is twice as high as in emerging economies such as Eastern Europe and China.

Match the descriptions with their terms: -Insurance contracts directed mainly at risks of the individual are termed _________________.

Match the descriptions with their terms: -Insurance contracts directed at perils that may destroy property are called property coverages or _________________.

Match the descriptions with their terms: -A type of insurer in which individuals take risk personally is a/an _________________.

Match the descriptions with their terms: -An insurer that is among the earliest known types of insurers in the world is _________________.

Match the descriptions with their terms: -A/an _________________ in life insurance is an individual employed to hire, train, and supervise agents at a lower level.

Match the descriptions with their terms: -A/An _________________ works for one insurer only.

Match the descriptions with their terms: -A method of distributing insurance through phone or direct contact by mail without intermediaries is known as _________________.

Match the descriptions with their terms: -A party appointed to take charge of a reciprocal insurer is a/an _________________.

Match the descriptions with their terms: -A type of insurance policy in which policyholders may be asked to contribute to losses in addition to paying premiums is a/an _________________.

Match the descriptions with their terms: -A channel of distribution for property-liability insurance comparable to the wholesaler-retailer system for distributing tangible goods is known as the _________________.

Match the descriptions with their terms: -A type of insurer using exclusive agents to sell insurance and to serve as the insurer's main contact with customers is called a/an _________________.

Match the descriptions with their terms: -An insurer organized as a profit-making venture for its owners is known as a/an _________________.

Match the descriptions with their terms: -An insurer organized as a nonprofit company owned by its policy holders is a/an _________________.

Match the descriptions with their terms: -A mutual company specializing in insuring manufacturing establishments is known as a/an _________________.

Match the descriptions with their terms: -A mutual company specializing in insuring agricultural operations is a/an _________________.