California P&C Insurance Exam
CODE: CIC - Answer-california insurance code. state legislature writes the code
dept of insurance enforces the code.
1. general rules governing insurance
2. lines of insurance
3. the insurance commissioner
4. insurance adjusters
CODE: Insurance Commissioner - Answer-is elected by the people to serve a 4-year term. up to 2 terms.
CODE: INS AGENT - Answer-Appointed by and acts on behalf of the insurer. Represents one company, as
a captive agent. Receives commission or sales.
CODE: INS BROKER - Answer-Represents the insured, and acts in the client's best interest. Charges a
broker fee.
CODE: SOLICITOR - Answer-Is not licensed. Serves in a support capacity to the broker or agent. Can not
write business.
CODE: LIFE & HEALTH AGENT - Answer-sells two lines of insurance
CODE: LIFE & DISABILITY ANALYST - Answer-is a consultant and receives a fee from the insured
CODE: ADMITTED vs. NON-ADMITTED - Answer-admitted - are approved to transact by state
,non-amitted - not approved. sold thru surplus lines broker
CODE: DOMICILE - Answer-domestic - ca/ca
foreign - ny/ca
alien - mexico/ca
CODE: STOCK INSURER - Answer-organized to make profit for their stockholders
CODE: MUTUAL INSURER - Answer-owned by policyowners
CODE: MCCARRAN-FERGUSON ACT - Answer-gave states the right to regulate insurance
CODE: DIRECT MARKETING - Answer-selling insurance out of a vending machine
CODE: DEMUTUALIZATION - Answer-when a mutual insurer changes to a stock insurer
CODE: SUBROGATION - Answer-third party substitution money rights. the insurer's right to seek
recovery from a third party.
the LAW of LARGE NUMBERs - Answer-the greater the number of insureds, the more accurately we can
predict the losses, and set the appropriate premium
CODE: INSOLVENT - Answer-carrier only able to provide for all its liabilities and for reinsurance of all
outstanding risks.
, CODE: SOLVENT - Answer-good financial standing. insurer must possess additional assets equivalent to
such aggregate "paid in capital" required by the code after making provision for all such liabilities and for
reinsurance
CODE: BINDER - Answer-a temporary agreement between the insurer and insured.
good for 90 days/max $1,000,000
no binders in LIFE ins
CODE: 770 CIC - Answer-financing can not be contigent upon which insurance agent is being used.
CODE: UNFAIR TRADE - Answer-1. mispresentation
2. advertising membership in CIGA
3. unfair claims practices. settlement discouraging advice of attorney
CODE: TORT LAW - Answer-a type of civil law that deals with wrongful acts, and is used to determine
liability.
1. unintentional tort law: texting, other negligence.
2. intentional tort law - personal injury (slander, libel, invasion of privacy)
3. absolute liability - dangerous operations
GENERAL: RISK - Answer-an uncertainty or change of loss
1. pure - only a chance of a loss or no loss. (car, home)
2. speculative - possibility of loss or gain (lottery, stockmarket)
GENERAL: MANAGE RISK - Answer-TARR-
transfer - purchase insurance
avoid - zero risk, if no participation
CODE: CIC - Answer-california insurance code. state legislature writes the code
dept of insurance enforces the code.
1. general rules governing insurance
2. lines of insurance
3. the insurance commissioner
4. insurance adjusters
CODE: Insurance Commissioner - Answer-is elected by the people to serve a 4-year term. up to 2 terms.
CODE: INS AGENT - Answer-Appointed by and acts on behalf of the insurer. Represents one company, as
a captive agent. Receives commission or sales.
CODE: INS BROKER - Answer-Represents the insured, and acts in the client's best interest. Charges a
broker fee.
CODE: SOLICITOR - Answer-Is not licensed. Serves in a support capacity to the broker or agent. Can not
write business.
CODE: LIFE & HEALTH AGENT - Answer-sells two lines of insurance
CODE: LIFE & DISABILITY ANALYST - Answer-is a consultant and receives a fee from the insured
CODE: ADMITTED vs. NON-ADMITTED - Answer-admitted - are approved to transact by state
,non-amitted - not approved. sold thru surplus lines broker
CODE: DOMICILE - Answer-domestic - ca/ca
foreign - ny/ca
alien - mexico/ca
CODE: STOCK INSURER - Answer-organized to make profit for their stockholders
CODE: MUTUAL INSURER - Answer-owned by policyowners
CODE: MCCARRAN-FERGUSON ACT - Answer-gave states the right to regulate insurance
CODE: DIRECT MARKETING - Answer-selling insurance out of a vending machine
CODE: DEMUTUALIZATION - Answer-when a mutual insurer changes to a stock insurer
CODE: SUBROGATION - Answer-third party substitution money rights. the insurer's right to seek
recovery from a third party.
the LAW of LARGE NUMBERs - Answer-the greater the number of insureds, the more accurately we can
predict the losses, and set the appropriate premium
CODE: INSOLVENT - Answer-carrier only able to provide for all its liabilities and for reinsurance of all
outstanding risks.
, CODE: SOLVENT - Answer-good financial standing. insurer must possess additional assets equivalent to
such aggregate "paid in capital" required by the code after making provision for all such liabilities and for
reinsurance
CODE: BINDER - Answer-a temporary agreement between the insurer and insured.
good for 90 days/max $1,000,000
no binders in LIFE ins
CODE: 770 CIC - Answer-financing can not be contigent upon which insurance agent is being used.
CODE: UNFAIR TRADE - Answer-1. mispresentation
2. advertising membership in CIGA
3. unfair claims practices. settlement discouraging advice of attorney
CODE: TORT LAW - Answer-a type of civil law that deals with wrongful acts, and is used to determine
liability.
1. unintentional tort law: texting, other negligence.
2. intentional tort law - personal injury (slander, libel, invasion of privacy)
3. absolute liability - dangerous operations
GENERAL: RISK - Answer-an uncertainty or change of loss
1. pure - only a chance of a loss or no loss. (car, home)
2. speculative - possibility of loss or gain (lottery, stockmarket)
GENERAL: MANAGE RISK - Answer-TARR-
transfer - purchase insurance
avoid - zero risk, if no participation
