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RMI final exam review questions with correct answers.
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RMI final exam review questions with correct answers.
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RMI final exam review questions with correct answersAll of the following insurance contracts would be considered short-term
except?
Auto
Health
Homeowner's
Annuities Correct Answer-annunites
Given the following data: written premiums = $100, loss reserves = 45,
underwriting expenses incurred = 30, unearned premium reserves = 25,
losses + loss adjustment expenses incurred = 60, earned premiums = 90,
surplus = 50, what is the value of the expense ratio?
30/50=0.60
(30+60)/100=0.90
30/90=0.33
30/100=0.30 Correct Answer-30/100 = 0.30
Gene has a need for insurance that is unavailable in the state where he
lives. To obtain insurance in the nonadmitted market, Gene should see
A nonadmitted agent
A general agency broker
A direct writer
A surplus lines broker Correct Answer-A surplus lines broker
,The right of the states to regulate the business of insurance was first
established by:
Paul v. Virginia
The South-Eastern Underwriters Association case
The Sherman Act
McCarran-Ferguson Act Correct Answer-McCarran-Ferguson Act
Given the following data: written premiums = $100, loss reserves = 45,
underwriting expenses incurred = 30, unearned premium reserves = 25,
losses + loss adjustment expenses incurred = 60, earned premiums = 90,
surplus = 50, what is the value of the loss ratio?
45/100=0.45
60/90=0.67
60/100=0.60
45/90=0.50 Correct Answer-60/90= 0.67
Which of the following is a principle method of ensuring the solvency of
insurers?
None of the other answers are correct
Calculation of risk-based capital standards for insurers
Disciplining agents of the insurer for illegal sales practices
Regulating the forms (applications and policies) employed by the insurer
,Tracking and investigating market conduct complaints against insurers
Correct Answer-Calculation of risk-based capital standards for insurers
Indiana has a 2% premium tax and Florida has a 4% premium tax. If an
insurer domiciled in Florida acquires a license and writes business in
Indiana, what tax rate will Indiana charge on premiums?
2%
3%
4%
6%
No other answer is correct Correct Answer-4%
What fundamental concept provides the motivation for regulation of the
insurance industry?
Agency conflict between insurance consumers and insurance companies
Adverse selection between regulators and consumers
Asymmetric information between insurance consumers and insurance
companies
Moral hazard of insurance regulators Correct Answer-Asymmetric
information between insurance consumers and insurance companies
A mutual insurer "assessing" their policies would be doing which of the
following?
Cancel a class of policies
No other answer is correct
, Transferring their policies to a reinsurer
Paying policyholder dividends
Requiring additional payments from policyholders due to unexpectedly
high losses Correct Answer-Requiring additional payments from
policyholders due to unexpectedly high losses
Insurers operating in the state (regardless of which state that may be) are
responsible for paying state premium taxes on the premiums written in
the state. The majority of this tax money goes towards which of the
following?
State insurance departments
Federal government
Other state expenses
State insurance departments and the federal government share in
premiums taxes equally
Fraud prevention Correct Answer-State insurance departments
Under what type of rate regulation are insurer required to obtain
regulatory approval of ratings before using them if the rate change
exceeds a specified predetermined range?
File-and-use-law
Use-and-file law
Flex-rating law
Prior-approval law Correct Answer-Flex-rating law
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