For the most part, who makes the laws governing the actions of insurance agents? 1. Cities and towns 2. Individual states 3. State and federal governments 4. The federal government
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a. A waiver is: Select one: a. A condition in property insurance b. A condition found only in life insurance c. A condition found in both life and property insurance d. The intentional abandonment of a known right 2. If an insurance agent were to give legal advice to a client, this would be: Select one: a. A required part of the job b. A crime c. Only a problem if the advice was incorrect and led to a client's loss d. A violation of the Fair Trade Act 3. All of the following are reasons to explain why the insurance transaction is so carefully regulated except: Select one: a. Insolvent insurers can create serious socio-economic problems. b. Insurance buyers and sellers have unequal knowledge. c. Insurance prices must be set before costs are known. d. Insurance company failures were a significant contributing factor to the Great Depression of the 1930s 4. All the following arguments have been used to support state insurance regulation except: Select one: a. State regulation is known to be effective. b. State regulation is cheaper to administer. c. State regulation allows experimentation. d. State regulation is more responsive to local conditions.
Akash M.
Case Application Ashley is an actuary who is employed by the Nebraska Department of Insurance. Her duties include monitoring the financial position of insurance companies doing business in Nebraska. Based on an analysis of annual financial statements that insurers are required to submit, she discovered that Mutual Life Insurance has a risk-based capital ratio of 75 percent. Based on this information, answer the following questions: a. What is the purpose of requiring insurers to meet risk-based capital requirements? b. What regulatory action, if any, should the Nebraska Department of Insurance take with respect to Mutual Life Insurance? c. Would your answer to part (b) Change if the risk-based capital ratio for Mutual Life Insurance fell to 30 percent? Explain your answer. d. Mutual Life Insurance has 25 percent of its assets invested in common stocks. Assume the stocks are sold, and the proceeds are invested in U.S. government bonds. What effect, if any, will this investment change have on the risk-based capital ratio of Mutual Life Insurance? Explain your answer.
1. David and Audrey are the named insureds in their homeowners policy, and the home's title was transferred a few years ago to a trust they established as part of their estate plan. If their home sustains property damage, a. David and Audrey are still covered because of their insurable interest in the home. b. legal precedents show that David and Audrey will be unable to recover from the insurer. c. the insurer could argue that the trust that owns the home is not an insured. d. the trust is automatically covered as an additional insured. 2. Ralph and Sybil own a home in Memphis, which is insured by a standard homeowners policy. They also rent a beach house in Destin on an annual basis. Rodney, their insurance agent, suggests that they consider increasing the limit on personal property at the beach house, because the standard homeowners policy provides a limit of only _______ of the personal property limit on their primary residence. a. 25 percent b. 10 percent c. 15 percent d. 5 percent 3. Which one of the following is not a pertinent question for an insurer to ask in determining how best to handle a given trust exposure? a. How are the parties to the trust related? b. How is the lawyer who created the trust to be compensated in the event of a loss? c. What are the grantor's rights under the terms of the trust? d. What tangible property does the trust hold?
Supreeta N.
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