MICHIGAN SURPLUS LINES END OF COURSE 2025/2026
QUESTIONS AND ANSWERS GUARANTEE A+
✔✔LLoyd's associates - ✔✔Lloyds associations are insurance syndicates that base
their structure on Lloyd's of London, a global insurance marketplace. They are funded
by subscriptions paid by members who participate in underwriting activities. They are
not officially associated with Lloyd's of London, despite sharing similarities. They are
sometimes called American Lloyd's or Lloyd's Association Companies. They are subject
to regulations except for form and rates. They can write up to ten times their net assets.
The Lloyd's Market Association (LMA) is a different entity that represents the interests of
Lloyd's managing agencies and members agents.
✔✔Risk Retention Groups - ✔✔A risk retention group (RRG) is a liability insurance
company that is owned by its members, who are businesses or government entities with
similar or related liability exposures. RRGs are formed under state and federal laws,
especially the Liability Risk Retention Act of 1986. RRGs allow members to pool their
risks and self-insure.
✔✔Self-insured funds - ✔✔Money set aside in case of a catastrophic loss to your
belongings. This is only a smart decision if you have enough money saved and you are
practicing smart risk management.
✔✔SIR - ✔✔Self-insured retention is similar in structure to a deductible and has the
same use as a lead primary limit, but it's a payment that's normally paid by the business
rather than a primary insurance policy. In other words, a self-insured retention is an
amount that your business must pay before its umbrella policy will begin paying for a
covered claim that has a retention.
✔✔Private vs. Government insurers - ✔✔Most insurance is written through private
insurers. However, there are instances where governmental-based insurers step in to
offer an insurance alternative when private insurers are unable to provide protection.
This usually relates to the catastrophic nature of the risk, capacity to handle the risk,
and lack of desire to engage in a line of insurance where experience to evaluate
necessary premium intake to offset potential loss is lacking. ex. Private health insurance
plans are generally more expensive, but potentially more comprehensive and
customizable. Public health insurance plans are less expensive due to federal
government assistance but may be less comprehensive than you'd like due to certain
limitations or restrictions.
✔✔Authorized vs Unauthorized Insurers - ✔✔authorized - when a company is licensed
to sell in the standard market (admitted or authorized)
unauthorized - companies that are selling insurance to certain types of risks (called
surplus lines) without having a license (nonapproved)
- no certificate of authority
, ✔✔Domestic Insurers - ✔✔A company is a domestic insurer in the state in which it is
incorporated.
✔✔Foreign Insurers - ✔✔A foreign insurer is licensed to conduct business in states (the
District of Columbia or other US territories) other than the one in which it is
incorporated.
✔✔Alien Insurers - ✔✔Alien insurers are companies incorporated in a country other
than the United States, the District of Columbia, or any US territorial possession.
✔✔Financial Status (Independent Rating Services) - ✔✔AM Best
Fitch
Standard and Poor's
Moody's
Weiss
✔✔Insurer as Principal - ✔✔Insurer as principal refers to the situation where an
insurance company is the main party that engages in the business of insurance. This
means that the insurer is responsible for providing insurance coverage to the clients and
complying with the relevant State insurance laws. An insurer as principal may also be
an insurance agent or broker that supports the clients with insurance purchases. An
insurer as principal has a contract or agreement with the clients to perform work or
services for them.
✔✔Producer/insurer relationship - ✔✔The producer and the insurer have an agency
relationship. The client pays the insurer, and the insurer pays the agent. Therefore, a
producer legally represents who pays him, the insurer. As the producer acts, the
insurance company is concerned about the information relayed to the public by the
producer because it is responsible for all of the producers' acts and expects the
producer to live up to the contract. When a client pays a producer premium for a policy,
it is just like paying the insurer and the producer must be responsible.
✔✔Authority and powers of producers - ✔✔Express, Implied, and Apparent
✔✔Express Authority - ✔✔The explicit authority granted to the agent by the insurer as
written in the agency contract.
✔✔Implied Authority - ✔✔Authority that is not expressed or written into the contract, but
which the agent is assumed to have in order to transact the business of insurance for
the principal.
✔✔Apparent Authority - ✔✔Authority that is only apparent, not real. An agent's apparent
authority arises when the principal causes a third party to believe that the agent has
authority, even though she or he does not.
QUESTIONS AND ANSWERS GUARANTEE A+
✔✔LLoyd's associates - ✔✔Lloyds associations are insurance syndicates that base
their structure on Lloyd's of London, a global insurance marketplace. They are funded
by subscriptions paid by members who participate in underwriting activities. They are
not officially associated with Lloyd's of London, despite sharing similarities. They are
sometimes called American Lloyd's or Lloyd's Association Companies. They are subject
to regulations except for form and rates. They can write up to ten times their net assets.
The Lloyd's Market Association (LMA) is a different entity that represents the interests of
Lloyd's managing agencies and members agents.
✔✔Risk Retention Groups - ✔✔A risk retention group (RRG) is a liability insurance
company that is owned by its members, who are businesses or government entities with
similar or related liability exposures. RRGs are formed under state and federal laws,
especially the Liability Risk Retention Act of 1986. RRGs allow members to pool their
risks and self-insure.
✔✔Self-insured funds - ✔✔Money set aside in case of a catastrophic loss to your
belongings. This is only a smart decision if you have enough money saved and you are
practicing smart risk management.
✔✔SIR - ✔✔Self-insured retention is similar in structure to a deductible and has the
same use as a lead primary limit, but it's a payment that's normally paid by the business
rather than a primary insurance policy. In other words, a self-insured retention is an
amount that your business must pay before its umbrella policy will begin paying for a
covered claim that has a retention.
✔✔Private vs. Government insurers - ✔✔Most insurance is written through private
insurers. However, there are instances where governmental-based insurers step in to
offer an insurance alternative when private insurers are unable to provide protection.
This usually relates to the catastrophic nature of the risk, capacity to handle the risk,
and lack of desire to engage in a line of insurance where experience to evaluate
necessary premium intake to offset potential loss is lacking. ex. Private health insurance
plans are generally more expensive, but potentially more comprehensive and
customizable. Public health insurance plans are less expensive due to federal
government assistance but may be less comprehensive than you'd like due to certain
limitations or restrictions.
✔✔Authorized vs Unauthorized Insurers - ✔✔authorized - when a company is licensed
to sell in the standard market (admitted or authorized)
unauthorized - companies that are selling insurance to certain types of risks (called
surplus lines) without having a license (nonapproved)
- no certificate of authority
, ✔✔Domestic Insurers - ✔✔A company is a domestic insurer in the state in which it is
incorporated.
✔✔Foreign Insurers - ✔✔A foreign insurer is licensed to conduct business in states (the
District of Columbia or other US territories) other than the one in which it is
incorporated.
✔✔Alien Insurers - ✔✔Alien insurers are companies incorporated in a country other
than the United States, the District of Columbia, or any US territorial possession.
✔✔Financial Status (Independent Rating Services) - ✔✔AM Best
Fitch
Standard and Poor's
Moody's
Weiss
✔✔Insurer as Principal - ✔✔Insurer as principal refers to the situation where an
insurance company is the main party that engages in the business of insurance. This
means that the insurer is responsible for providing insurance coverage to the clients and
complying with the relevant State insurance laws. An insurer as principal may also be
an insurance agent or broker that supports the clients with insurance purchases. An
insurer as principal has a contract or agreement with the clients to perform work or
services for them.
✔✔Producer/insurer relationship - ✔✔The producer and the insurer have an agency
relationship. The client pays the insurer, and the insurer pays the agent. Therefore, a
producer legally represents who pays him, the insurer. As the producer acts, the
insurance company is concerned about the information relayed to the public by the
producer because it is responsible for all of the producers' acts and expects the
producer to live up to the contract. When a client pays a producer premium for a policy,
it is just like paying the insurer and the producer must be responsible.
✔✔Authority and powers of producers - ✔✔Express, Implied, and Apparent
✔✔Express Authority - ✔✔The explicit authority granted to the agent by the insurer as
written in the agency contract.
✔✔Implied Authority - ✔✔Authority that is not expressed or written into the contract, but
which the agent is assumed to have in order to transact the business of insurance for
the principal.
✔✔Apparent Authority - ✔✔Authority that is only apparent, not real. An agent's apparent
authority arises when the principal causes a third party to believe that the agent has
authority, even though she or he does not.
