MICHIGAN SURPLUS LINES FINAL PAPER 2025/2026
QUESTIONS AND ANSWERS GUARANTEE A+
(
✔✔(11) For surplus lines insurers, the relative freedom from form and rate regulation
give:
A)Flexibility
B) Legal Waiver
C) Cost Advantage
D) The right of non-disclosure - ✔✔A) Flexibility
✔✔(12) In the context of insurance, losses depend primarily on which two variables:
A) The background
B) The number of losses
C) The amount involved
D) The nature of events
E) The policy - ✔✔B) The number of losses
C) The amount involved
✔✔(13) Who must verify the financial strength and viability of a nonadmitted insurer?
A) The insurance commission
B) The department of commerce
C) The surplus line broker/agent
D) The guarantee association of the state - ✔✔C) The surplus line broker/agent
✔✔(14) Which of these imposes a set of national eligibility standards for surplus lines
insurers domiciled in any US jurisdiction?
A) NRCA
B) NRTT
C) NRAS
D) NRRA - ✔✔D) NRRA (National Risk Retention Association)
✔✔(15) In Michigan, a surplus lines producer must report surplus lines or non admitted
insurance business written for a Michigan risk on what basis?
A) Monthly
B) Quarterly
C) Semi-Annually
D) Annually - ✔✔C) Semi-Annually
✔✔(16) Which of these can be used to determine success between an underwriter and
an agent?
A) Hit Ratio
B) Spot Ratio
C) Transfer Ratio
D) Smart Ratio
, E) None of These - ✔✔A) Hit Ratio
✔✔(17) In many insurance policies, losses will be reimbursed only in excess of a
threshold known as:
A)A Baseline
B) A Deductible
C) A Bottom-line
D) A trigger - ✔✔B) A Deductible
✔✔(18) A benefit limit serves as:
A) A lower bond on how much the insurer will pay for the loss
B) An upper bound on how much the insurer will pay for the loss
C) A lower bound on the loss
D) AN upper bound on the loss - ✔✔B) An upper bound on how much the insurer will
pay for the loss
✔✔(19) When there is inflation:
A) The claim payments will increase accordingly
B) The claim payments will decrease accordingly
C) The claim payments will always remain the same
D) The policy will be voided - ✔✔A) The claim payments will increase accordingly
✔✔(20) What refers to the probability distribution that is associated with either the loss
or the amount paid as a result of the loss?
A) Claim distribution
B) Income Distribution
C) Loss Distribution
D) Risk Distribution - ✔✔C) Loss Distribution
✔✔(21) What describe the provisions for future liabilities?
A) Perils
B) Risk Factors
C) Risk Dimensions
D) Risk Profiles
E) Hazards
F) Reserve - ✔✔F) Reserve
✔✔(22) A domestic insurance company:
A) Is a foreign insurer to other states
B) Is a foreign insurer only to other countries
C) Cannot serve as a surplus line insurer in some western states
D) Must be incorporated in at least two states - ✔✔A) Is a foreign insurer to other states
✔✔(23) A captive insurance company exists primarily to:
QUESTIONS AND ANSWERS GUARANTEE A+
(
✔✔(11) For surplus lines insurers, the relative freedom from form and rate regulation
give:
A)Flexibility
B) Legal Waiver
C) Cost Advantage
D) The right of non-disclosure - ✔✔A) Flexibility
✔✔(12) In the context of insurance, losses depend primarily on which two variables:
A) The background
B) The number of losses
C) The amount involved
D) The nature of events
E) The policy - ✔✔B) The number of losses
C) The amount involved
✔✔(13) Who must verify the financial strength and viability of a nonadmitted insurer?
A) The insurance commission
B) The department of commerce
C) The surplus line broker/agent
D) The guarantee association of the state - ✔✔C) The surplus line broker/agent
✔✔(14) Which of these imposes a set of national eligibility standards for surplus lines
insurers domiciled in any US jurisdiction?
A) NRCA
B) NRTT
C) NRAS
D) NRRA - ✔✔D) NRRA (National Risk Retention Association)
✔✔(15) In Michigan, a surplus lines producer must report surplus lines or non admitted
insurance business written for a Michigan risk on what basis?
A) Monthly
B) Quarterly
C) Semi-Annually
D) Annually - ✔✔C) Semi-Annually
✔✔(16) Which of these can be used to determine success between an underwriter and
an agent?
A) Hit Ratio
B) Spot Ratio
C) Transfer Ratio
D) Smart Ratio
, E) None of These - ✔✔A) Hit Ratio
✔✔(17) In many insurance policies, losses will be reimbursed only in excess of a
threshold known as:
A)A Baseline
B) A Deductible
C) A Bottom-line
D) A trigger - ✔✔B) A Deductible
✔✔(18) A benefit limit serves as:
A) A lower bond on how much the insurer will pay for the loss
B) An upper bound on how much the insurer will pay for the loss
C) A lower bound on the loss
D) AN upper bound on the loss - ✔✔B) An upper bound on how much the insurer will
pay for the loss
✔✔(19) When there is inflation:
A) The claim payments will increase accordingly
B) The claim payments will decrease accordingly
C) The claim payments will always remain the same
D) The policy will be voided - ✔✔A) The claim payments will increase accordingly
✔✔(20) What refers to the probability distribution that is associated with either the loss
or the amount paid as a result of the loss?
A) Claim distribution
B) Income Distribution
C) Loss Distribution
D) Risk Distribution - ✔✔C) Loss Distribution
✔✔(21) What describe the provisions for future liabilities?
A) Perils
B) Risk Factors
C) Risk Dimensions
D) Risk Profiles
E) Hazards
F) Reserve - ✔✔F) Reserve
✔✔(22) A domestic insurance company:
A) Is a foreign insurer to other states
B) Is a foreign insurer only to other countries
C) Cannot serve as a surplus line insurer in some western states
D) Must be incorporated in at least two states - ✔✔A) Is a foreign insurer to other states
✔✔(23) A captive insurance company exists primarily to:
