ARe 320 – Serving the Reinsurance Customer Practice Test

These questions are part of the practice quiz. Start practicing

• Which liability arises out of the manufacture, distribution, or sale of an unsafe, dangerous, or defective product and the failure to meet duties to the user or consumer?
• Reinsurance payable on paid loss and LAE is categorized as which liability?
• Which document is commonly used to assess an applicant's safety program, loss history, and other risk factors?
• In no-fault states, which coverage is authorized or mandated and tends to remove small bodily injury claims from the court system?
• Which loss exposure category covers commercial equipment, severe flood loss exposures, earthquake and volcanic activity, foundations, excavations, and underground pipes?
• Which term describes any condition presenting a risk of financial loss to a family due to death, sickness, injury, or unemployment?
• Which term describes tangible property consisting of land, all structures permanently attached to the land, and whatever is growing on the land?
• Which scale is used to allocate premium between a primary and an excess layer?
• In a bailment, who is the party temporarily possessing the personal property?
• Which term describes a breach of a legal duty regarding ownership or use of property, contractual agreements, statutory or regulatory requirements?
• What term describes the requirement that agreements must be signed no later than nine months after the effective date to receive reinsurance treatment and the complete and final agreement of all terms by the time the contract is entered into?
• LAE in insurance accounting stands for what?
• All tangible or intangible property that is not real property is called what?
• Which Schedule P part covers history of cumulative net paid losses, DCC expenses, the number of claims closed with and without loss payment?
• Which Schedule P part covers history of bulk and IBNR reserves by type of insurance to form a loss development triangle?
• Which term describes a land motor vehicle that is subject to motor vehicle laws in the state it is licensed?
• What is the primary way to resolve reinsurance disputes between the reinsurer and the primary insurer?
• Policy that covers two or more lines of business by combining ISO's commercial lines coverage parts?
• What does PIP stand for?
• In evaluating a submission, the clearance process would address which question?
• Which rating method uses the insured's loss experience during the current policy period to adjust the premium?
• Duties must be discharged in a manner the director reasonably believes to be in the best interests of the corporation. Which fiduciary duty is this?
• Which option is not a COPE component?
• What term describes a reinsurance marketing system in which a reinsurance intermediary brokers the reinsurance transaction between the primary insurer and reinsurer(s)?
• Which valuation method pays the cost to repair or replace property using new materials of like kind and quality with no deduction for depreciation?
• Which item is classified as primary insurer liabilities?
• Which policy covers two or more lines of business by combining ISO's commercial lines coverage parts?
• Which reinsurer negotiates the treaty terms and generally assumes a significant share of the treaty's liability?
• Which term describes a commercial property coverage form covering buildings, your business personal property, and personal property of others?
• Which form provides broadest coverage on dwellings, other structures, and personal property for owner occupants and also covers loss of use coverage?
• Which liability arises out of the manufacture, distribution, or sale of a defective product and the failure to meet duties to the user or consumer?
• What legal rule provides that a director will not be personally liable for a decision involving business judgment, provided the director made an informed decision and acted in good faith?
• Which doctrine allows an employee to sue the employer when the employer acts in a capacity other than that of an employer?
• The Personal Auto Policy (PAP) is divided into six sections. Which of the following is a section?
• Which Schedule Part provides details about reinsurance ceded broken down by authorized, unauthorized, and certified reinsurers with amounts shown for reinsurance recoverable on paid loss and LAE, known case loss and LAE reserved, IBNR and LAE reserves, unearned premiums, and contingent commissions, plus aging and provision for reinsurance?
• Which term describes a condition that presents the possibility of a loss resulting from damage to property in which a person or organization has a financial interest?
• Which policy covers all shipments made or received by the insured throughout a one-year policy period?
• Which risk control technique involves shifting the financial consequences of a loss to another party?
• Which risk control technique reduces the frequency of a particular loss?
• A person who negligently furnishes a defective automobile to another may be liable to a third person injured as a proximate result of the defect. This exemplifies which liability concept?
• Which coverage protects money, securities and other property against a variety of crime acts including employee theft, robbery, forgery, extortion, and computer fraud?
• Which are the four common commercial liability loss exposures?
• Which term describes assigning members of a dataset into categories based on known characteristics such as size, location, and types of coverage?
• Which statement describes the three major steps of reinsurance placement?
• What type of reinsurance gives reinsurers the right to accept or reject each individual loss exposure submitted by the primary insurer?
• Which component comprises the confirmation letter, interests and liabilities agreement, and treaty clauses in treaty documentation?
• Which liability arises from bodily injury or property damage on premises or from ongoing operations away from the premises, generally based on negligence?
• Which form is designed for renters?
• Which agency has extensive data on the occurrence and intensity of floods, hurricanes, tornadoes, earthquakes, and other natural catastrophes that can be modeled?
• Schedule P Part 1 covers history and development of incurred net losses and DCC expenses.
• What is the process that considers whether the reinsurer is already providing reinsurance coverage for the insured represented in the submission, is another underwriter employed by the same reinsurer also evaluating the proposal, has the reinsurer provided reinsurance for the same loss exposure before and what was the previous underwriting experience?
• What are the four elements of property loss exposure?
• Which form includes personal property, broad form covered perils, liability, and loss of use coverage?
• Which exposure represents the risk of financial loss to a family from events such as death or unemployment?
• Which form covers buildings, your business personal property, and personal property of others?
• Which term describes all tangible property not classified as real property?
• What term describes an unauthorized reinsurer that meets certain qualifications and is approved by the state insurance regulator of the ceding company's state of domicile?
• NPW CY refers to which concept in the premium calculation context?
• Which items are typically included in a workers' compensation application information?
• Which policy covers only one line of business?
• The expression 'premiums earned by type of insurance' and its components appears in which underwriting and investment exhibit?
• The loss of benefits one spouse is entitled to receive from the other due to injury or death?
• Duties must be performed in accordance with applicable statutes and the terms of the corporate charter. This is which fiduciary duty?
• Which option lists the four elements of property loss exposure correctly?
• Which Schedule F part restates the balance sheet to identify ceded reinsurance and shows the BS gross of ceded reinsurance?
• Which Schedule F part lists five largest provisional commission rates in the insurer's treaties and the largest reinsurance recoverable due from any single reinsurer?
• Which concept is associated with establishing underwriting intent and creating the spirit of the agreement, serving as a record of why and how an underwriting decision was made?
• Under the fault-based tort liability system, what must the victim prove before collecting damages?
• Which no-fault option adds no-fault benefits to auto insurance policies but places no restrictions on the right to sue?
• Which type of insurance provides coverage for bodily injury and property damage liability, personal and advertising injury, and medical payments?
• Which term describes the services that include examination of the worldwide reinsurance market, reinsurance program design including actuarial evaluation, assistance with negotiation of premiums and terms, advice on underwriting accounting and claims handling, and reinsurance claims handling?
• Which document shows the limit as a dollar amount in excess of the primary insurer's retention?
• What term refers to the expense that an insurer incurs to investigate, defend, and settle claims according to policy terms?
• What term describes a value that reflects the payment of principal and interest over time?
• Who is typically the party most affected when property is lost, damaged, or destroyed?
• Which system is the traditional method for seeking compensation for auto accident victims?
• Which term describes the cost to repair or replace property using new materials of like kind and quality with no deduction for depreciation?
• Which insurance covers loss from the accidental breakdown of covered equipment?
• Which loss exposure category addresses infrastructure risks such as foundations, excavations, and underground pipes in a commercial building context?
• The section of a structure that is so well protected that fire cannot spread from that section to another is called what?
• Catastrophe model elements for personal lines include which of the following?
• The party that is affected most when property is lost, damaged, or destroyed is usually the:
• What term describes a large property whose construction and management emphasize risk mitigation and loss control for a specific occupancy?
• Under statutory accounting principles (SAP), an insurer's total admitted assets minus its total liabilities equals what?
• Policy that covers only one line of business?
• Which document is intended to indicate the effectiveness of the primary insurer's reinsurance program?
• Which form lists broad perils such as fire or lightning, windstorm or hail, explosion, riot or civil commotion, aircraft, vehicles, smoke, vandalism or malicious mischief, theft, volcanic eruption?
• What term describes the gross loss with no reduction for reinsurance recoveries?
• What term refers to the acceptance of too much reinsurance coverage on a loss exposure?
• Which term best describes predicting a numeric outcome from data features?
• The four primary fiduciary duties of directors and officers are:
• Which NAIC schedule provides the detailed historical information on paid and reserved losses and LAE?
• Which liability generally covers bodily injury or property damage arising out of completed work performed by the insured or its subcontractors?
• Loss prevention, loss reduction, avoidance, and contractual transfers of risk describe which concept?
• Which form is the contents broad form used for renters, providing broad form covered perils and liability?
• Which NAIC annual statement schedule shows ceded and assumed reinsurance details, plus portfolio transfers?
• Which item shows unpaid losses and LAE by type of insurance with supporting details from Schedule P?
• Which item is classified as primary insurer assets?
• In the notation '$250,000 xs $750,000', what does 'xs' signify?
• What is the primary insurer's acceptance of the facultative reinsurer's authorization called?
• What term describes personal property affixed to real property so as to become part of it?
• Which term defines a land motor vehicle, trailer, or semitrailer designed for travel on public roads and subject to motor vehicle laws?
• Which exhibit provides supporting documentation for the statement of income allocating expenses by three major functional areas?
• The term that describes the collection of obligations including care, loyalty, disclosure, and obedience is:
• Which doctrine protects corporate directors from personal liability when they make informed, good-faith business decisions?
• Losses based on the actions of the employers directors and officers, employment practices and fiduciary duties. This describes which loss exposure category?
• PSOLD is a tool designed to aid reinsurers in pricing excess layers of property coverage.
• Which form is the unit-owners form covering most common perils for owner-occupied units, such as fire or lightning, windstorm or hail, explosion, riot or civil commotion, aircraft, vehicles, smoke, vandalism or malicious mischief, theft, and volcanic eruption?
• Which instrument indicates the reinsurer's acceptance of a loss exposure subject to review?
• What term denotes a corporate stock that has been reacquired by the issuing company and held for corporate purposes?
• Which organization develops increased limit factor tables used in pricing reinsurance?
• Which homeowners form includes all broad coverages, falling objects, weight of ice snow and sleet, accidental discharge or overflow of water or steam, sudden and accidental tearing apart, cracking, burning, or bulging, freezing, sudden and accidental damage from artificially generated electrical current and liability?
• COPE, in facultative reinsurance, refers to the information required by the reinsurer. Which option correctly defines COPE?
• Which item is considered reinsurer assets?
• Which of the following describes the key elements required to prove strict liability in product liability cases?
• A loss exposure category that covers employee-related lawsuits such as discrimination and harassment is:
• What is a ratemaking technique that adjusts the insured's premium for the current policy period based on the insured's loss experience during the current period; paid losses or incurred losses may be used to determine loss experience?
• A reserve established for losses that reasonably can be assumed to have been incurred but not yet reported is called what?
• The duty that requires actions to comply with statutes and the corporate charter is:
• PSOLD stands for which of the following?
• Which term is used for all tangible property that is not real property?
• Which three metrics are commonly included in portfolio key indicators?
• Which Part of PAP covers damage to your own auto?
• Which liability is imposed by a court or statute in the absence of fault for harm resulting from ultrahazardous activities?
• Which term describes written instruments representing either money or other property, such as stocks and bonds?
• Which term describes a contractual arrangement in which one party agrees to assume the legal liability of another party?
• The BPP definition of building includes which of the following items?
• Net loss is calculated by subtracting which amount from gross loss?
• A lender who acquires conditional rights to property to secure a loan is called a:
• Which coverage protects money, securities and other property against a variety of criminal acts such as employee theft, robbery, forgery, extortion, and computer fraud?
• Which policy covers cargo on a specified trip, such as machinery being moved from a manufacturer to a business?
• Which part covers the history and development of incurred net losses and DCC expenses?
• Which fiduciary duty requires duties be discharged with the care that a person in a similar position would reasonably believe appropriate under similar circumstances?
• The sum of net profit or loss that would have been earned during a suspension plus normal operating expenses including payroll describes which coverage?
• During pre-agreement negotiations, which action is typically performed?
• Which loss exposure category includes jewelry and fine arts, properties in areas prone to natural disasters, beachfront properties, farms, property in flood plains, and mobile homes?
• In a treaty, which reinsurer negotiates the terms and generally assumes a significant share of the treaty's liability?
• Which type of insurance covers losses from the accidental breakdown of covered equipment?
• Which Part of PAP covers medical payments?
• Which policy covers cargo on a specified trip, such as machinery moved from a manufacturer to a business?
• The items 'funds held by company under reinsurance treaties,' 'ceded reinsurance premiums payable,' and 'provision for reinsurance' belong to which category?
• What is the risk called when an asset cannot be sold on short notice without incurring a loss?
• What rating plan adjusts the premium for the current policy period to recognize the loss experience of the insured organization during past policy periods?
• Material facts must be disclosed to all persons who have a right to know them and would not otherwise be able to obtain them. This describes which fiduciary duty?
• Which term describes any condition or situation that presents the possibility of a claim alleging legal responsibility for injury or damage suffered by another party?
• A short document with the coverage, premium provisions, and the operating provisions; it identifies the underlying insured, the primary insurer, and the underlying policy; it is the final legal contract. What is this document?
• Which term refers to various types of vehicles designed for use principally off public roads, such as bulldozers and cranes?
• Which system pays lost wages, medical and vocational rehabilitation expenses, and death benefits to injured workers or their dependents for employment-related injuries and diseases?
• COPE stands for which of the following in property risk assessment?
• Which term describes a vehicle used for sports and recreational activities, such as a dune buggy or dirt bike?
• Which valuation method pays the cost to replace property with the new property of like kind and quality less depreciation?
• The loss exposure category that addresses liabilities arising from a company’s operations (as opposed to its property) is:
• What are the three major functional areas used to allocate expenses in the statement of income?
• Which reinsurers take a percentage of the treaty's liability on the same terms and conditions as the lead reinsurer?
• Premiums WRITTEN by type of insurance are reported in which underwriting and investment exhibit?
• Which policy covers a trucker's liability for damage to cargo of others being transported by the trucker?
• Which form provides dwelling coverage on open perils and contents on named perils?
• What is the term for the risk management process that includes scanning the environment, identifying risks, analyzing risks, treating risks, and monitoring and reviewing?
• Which act was designated to provide all workers with safe and healthful working conditions?
• Which no-fault plan places restrictions on the right to sue an at-fault driver but does not eliminate the right to sue for excess economic losses and non-economic losses if thresholds are met?
• Which liability typically covers injuries resulting from the insured's completed operations?
• Underlying policies issued, premium base, loss history, management philosophy, financial information for the primary insurer, operating systems and procedures of the primary insurer, and results of on-site reviews of the primary insurer's operations are components of which document?
• Which data element is typically included in a loss history record?
• Which term refers to actions to reduce the frequency or severity of losses through proactive measures?
• What term describes a large property whose construction meets high standards of risk mitigation and control characteristics and whose management maintains loss control and risk mitigation best practices for the specific occupancy?
• What are the three basic crime loss coverage combinations?
• What is the reinsurer's offer to reinsure the loss exposure at a certain premium and under specific terms and conditions?
• Losses paid and incurred by type of insurance, used to calculate the loss ratio, are presented in which exhibit?
• Which form is considered the most comprehensive homeowners form?
• What type of insurance provides coverage for property in transit and floating property like contractor equipment?
• Which entity is the regulatory agency of the US Department of Labor that enforces the OSH Act?
• What is the term for a separate legal action brought by a defendant against a third party who might be liable to the defendant for all or part of the plaintiff's claim in the original lawsuit?
• Major types of exposures are discrimination, harassment, wrongful termination, wage and overtime, and retaliation. This describes which loss exposure category?
• Which term describes stock issued as fully paid to a stockholder and subsequently reacquired by the corporation for business purposes?
• Which data analysis technique predicts a numerical value, such as estimating how a premium increase would affect renewal likelihood?
• Policy retention refers to what?
• Which term refers to currency, coins, bank notes, and sometimes traveler’s checks held for sale to the public?
• Which insurance covers property in transit, property kept at other locations, and floating property like contractor equipment moving from job site to job site?
• Which contractual provision obligates one party to assume the legal liability of another party?
• Which of the following describes actions such as regular inspections and maintenance programs to mitigate risk?
• Which document is used to assess risk controls, including loss history and safety program, as part of underwriting or screening?
• What does UM stand for in auto insurance?
• Which term describes a value that reflects the payment of principal and interest over time?
• Which Schedule F part discloses issuing or confirming banks associated with letters of credit referenced in schedule F part 3?
• Which of the following best completes the sentence: establishing underwriting intent and creating the spirit of the agreement serves as what?
• Which form is specifically for condo unit owners?
• Which concept represents the key terms of a reinsurance treaty that underwriters evaluate, including pricing and treaty start/stop dates, cancellations, and exclusions?
• Which category includes items such as cars, furniture, and jewelry?
• A temporary written agreement issued by a facultative reinsurer stating that the reinsurer accepts the loss exposure subject to satisfactory review of the underlying policy is called what?
• In most states, insureds can choose whether to be covered on a modified no-fault basis. Those who opt not to are typically required to purchase add-on no-fault coverage.
• Which term best fits the description of categorizing data into groups based on known traits, such as size or location?
• Which risk concerns the ability to sell an asset quickly without incurring a loss?
• Which NAIC annual statement schedule shows the detailed historical information on paid and reserved losses and LAE?
• Which Schedule F part provides detailed information on historical losses and losses expenses with data shown for the last ten years with an additional year for aggregate data for all prior years?
• A document that typically includes employer background, financial information, loss history, workforce, safety program, work environment, equipment, and processes is called what?
• Which Schedule Part would you consult to determine the largest single reinsurer's recoverable?
• The reinsurer has accepted $250,000 of a $1 million loss exposure and the primary insurer has retained $750,000. This notation is read as:
• Where would you find aging information related to ceded reinsurance recoverable?
• Which document identifies the underlying insured and the policy to which the reinsurance applies?
• The loss exposure category that concerns high-value personal property such as jewelry and art is:
• What term refers to a listing of past claims, including the date of occurrence, the line of business, and the type?
• Which term best describes the measures designed to reduce liability exposure in a commercial setting?
• New policy count is also known as what?
• Under SAP accounting, which measure is defined as total admitted assets minus total liabilities?
• Which document states the facultative limit as a percentage or dollar amount and the primary insurer's retention?
• Which term describes the reinsurers that take a percentage of the treaty's liability on the same terms as the lead reinsurer?
• Which certificate states the limit as a dollar amount in excess of the primary insurer's retention?
• Which term means the cause of a loss?
• Which term describes assets that represent either money or other property, such as stocks and bonds?
• Which term refers to a lender who acquires conditional rights to property to secure a loan?
• Which schedule shows all insurer's ceded and assumed portfolio reinsurance transactions during the year?
• Which metric set is considered portfolio key indicators?
• Which exhibit shows reinsurance assumed by reinsurer including paid and reserved loss and LAE as well as funds deposited with, and letters of credit posted on behalf of, the primary insurer?
• Which technique is used to identify relationships among variables in a dataset?
• The party temporarily possessing the personal property in a bailment is called what?
• In property valuation, which term best describes payment based on current replacement cost without considering depreciation?
• The loss ratio by type of insurance is calculated using data from which exhibit?
• Which risk control technique reduces the severity of a particular loss?
• A guide for pricing casualty reinsurance that is actuarially developed and based on industry-wide or company loss data describes which of the following?
• The person in possession of property is known as a:
• In reinsurance placement, which statement describes selecting a reinsurance marketing system, developing a reinsurance agreement proposal, and completing agreement documentation?
• What is the compensation in the form of a flat fee or a commission that is paid by the reinsurer to the reinsurance intermediary for services provided?
• Which method involves the insurer and insured agreeing at policy inception on the maximum amount that will be paid in the event of a total loss?
• Which form is the Modified Coverage Form?