Chapter 1 - P&C General Insurance
ACTUAL QUESTIONS AND CORRECT
ANSWERS
The National Association of Insurance Commisioners(NAIC) consists of... - Correct
answers✔✔consists of...ALL STATE and territorial insurance commissioners or regulators
The NAIC provides _______________, _________________, ____________________ and
___________________ for ________________________. - Correct answers✔✔Resources,
Research, Legislative and regulatory recommendations and interpretations for state insurance
regulators.
The NAIC promotes _________________________.
Members may _________________ Recomendations. - Correct answers✔✔Uniformity among
states
Accept or Reject
T/F
The NAIC has has legal authority to enact and enforce insurance laws - Correct answers✔✔False
NAIC does not ___________________. - Correct answers✔✔Legislate
Federal Insurance Office (FIO)
Purpose: - Correct answers✔✔-Monitor the insurance industry
,-Identify issues and gaps in the state regulation of insurers.
The FIO is not a _____________ or _____________. - Correct answers✔✔Regulator or
Supervisor
Who is Insurance primary regulated by? - Correct answers✔✔Individual States
What power does the Insurance Commissioner of a state have? - Correct answers✔✔He/She has
the power to issue rules and regulation to help enforce the statutes put in place by the states
government.
7 Types of Insurance Companies or Carriers - Correct answers✔✔1. Stock Insurance Company
2. Mutual Insurance Company
3. Reciprocal Insurance Company
4. Lloyds of London
5. Fraternal Benefit Societies
6. Risk Retention Groups (RRG)
7. Self-Insurer
Stock Insurance Company - Correct answers✔✔-This type of compnay is owned by its
stockholders and shareholders
-Stockholders receive TAXABLE corporate dividends as a return of profit when declared by the
Directors.
Mutual Insurance Company - Correct answers✔✔A mutual company is owned by policyholders
(who may be referred to as members)
, Policyholders receive NON-TAXABLE dividends as a return of unused premium when declared
by the Directors
Reciprocal Insurance Company - Correct answers✔✔- A group- owned insurer whose main
activity is risk sharing.
Lloyds of London - Correct answers✔✔-NOT an insurance company, but consists of
underwriters call Syndicates, each of which specialize in a specific type of risk.
-Members are individually liable for each risk they assume.
Fraternal Benefit Societies - Correct answers✔✔primarily social organizations that engage in
charitable and benevolent activities that provide health and life insurance to their members.
Risk Retention Groups (RRG) - Correct answers✔✔a group owned insurer that primarily
assumes and spreads the liability related risks of its members.
Membership is limited to risks with similar liability exposures - i.e. theme parks, go carts tracks,
or water slides.
Self Insurer - Correct answers✔✔means to assume the financial risk one's self.
Generally only an option for large companies
Residual Markets - Correct answers✔✔Private coverage sources as a last resort for business and
individuals who have been rejected by voluntary market insurers.
ACTUAL QUESTIONS AND CORRECT
ANSWERS
The National Association of Insurance Commisioners(NAIC) consists of... - Correct
answers✔✔consists of...ALL STATE and territorial insurance commissioners or regulators
The NAIC provides _______________, _________________, ____________________ and
___________________ for ________________________. - Correct answers✔✔Resources,
Research, Legislative and regulatory recommendations and interpretations for state insurance
regulators.
The NAIC promotes _________________________.
Members may _________________ Recomendations. - Correct answers✔✔Uniformity among
states
Accept or Reject
T/F
The NAIC has has legal authority to enact and enforce insurance laws - Correct answers✔✔False
NAIC does not ___________________. - Correct answers✔✔Legislate
Federal Insurance Office (FIO)
Purpose: - Correct answers✔✔-Monitor the insurance industry
,-Identify issues and gaps in the state regulation of insurers.
The FIO is not a _____________ or _____________. - Correct answers✔✔Regulator or
Supervisor
Who is Insurance primary regulated by? - Correct answers✔✔Individual States
What power does the Insurance Commissioner of a state have? - Correct answers✔✔He/She has
the power to issue rules and regulation to help enforce the statutes put in place by the states
government.
7 Types of Insurance Companies or Carriers - Correct answers✔✔1. Stock Insurance Company
2. Mutual Insurance Company
3. Reciprocal Insurance Company
4. Lloyds of London
5. Fraternal Benefit Societies
6. Risk Retention Groups (RRG)
7. Self-Insurer
Stock Insurance Company - Correct answers✔✔-This type of compnay is owned by its
stockholders and shareholders
-Stockholders receive TAXABLE corporate dividends as a return of profit when declared by the
Directors.
Mutual Insurance Company - Correct answers✔✔A mutual company is owned by policyholders
(who may be referred to as members)
, Policyholders receive NON-TAXABLE dividends as a return of unused premium when declared
by the Directors
Reciprocal Insurance Company - Correct answers✔✔- A group- owned insurer whose main
activity is risk sharing.
Lloyds of London - Correct answers✔✔-NOT an insurance company, but consists of
underwriters call Syndicates, each of which specialize in a specific type of risk.
-Members are individually liable for each risk they assume.
Fraternal Benefit Societies - Correct answers✔✔primarily social organizations that engage in
charitable and benevolent activities that provide health and life insurance to their members.
Risk Retention Groups (RRG) - Correct answers✔✔a group owned insurer that primarily
assumes and spreads the liability related risks of its members.
Membership is limited to risks with similar liability exposures - i.e. theme parks, go carts tracks,
or water slides.
Self Insurer - Correct answers✔✔means to assume the financial risk one's self.
Generally only an option for large companies
Residual Markets - Correct answers✔✔Private coverage sources as a last resort for business and
individuals who have been rejected by voluntary market insurers.
