Types Of Producers And Insurers

Question 1

What are the 3 types of producers? Define them.

Answer 1

Agents, brokers, and solicitors (aka field underwriters)

Agents: person = appointed to represent insurer = cannot charge fees
Brokers: not appointed, represents buyer not insurer = can charge fees
Solicitor: individual = appointed and employed to represent only one agent or broker = cannot bind contracts

Question 2

What is E&O?

Answer 2

Errors and omissions; professional liability for non-medical professionals = mistake insurance

Question 3

Agents have 3 authorities/power. What are they?

Answer 3

Expressed - in writing (contract)
Implied- not in writing (between agent and insurer)
Apparent- gives the impression that authority exists

Question 4

An insurance agent is appointed to transact…

Answer 4

All lines and classes except life and disability

Question 5

Law of agency is the relationship between…

Answer 5

Agent is authorized to represent and act for the insurer (principal)

Question 6

Which marketing system does the insurer not own the expiration list?

Answer 6

An independent agency

Question 7

Errors and omissions is a type of lability insurance…

Answer 7

For non-medical professionals. Insurance agents use this to protect themselves if they give incorrect advice or information to a client.

Question 8

Agency name cannot end with…

Answer 8

Insurance, underwriter or company

Question 9

(Blank) is required for an agent or solicitor to transact.

Answer 9

Appointment

First appointment is an implied declaration that the person is of good reputation and worthy of the license.

Question 10

What is an inactive license and expired license?

Answer 10

Inactive = no appointment on file however fees and education are current
Expired = fees and/or education are not current

Question 11

What are the 4 divisions of an insurer?

Answer 11

Marketing/sales, underwriting, claims and actuarial

The laws that govern these 4 divisions is known as the Market conduct regulations

Question 12

4 major categories of insurers

Answer 12

Property, casualty, life, accident & health

Question 13

California code has xx classes/lines of insurance..

Answer 13

22 classes/lines (casualty is not a class but a label for several classes)

Question 14

Process when mutual insurer becomes a stock insurer.

Answer 14

Demutualization

Question 15

An insurer who offers rates to insureds who have an average or better than average loss exposure is considered…

Answer 15

Standard market insurer

Question 16

Describe Independent Agencies/Agent.

Answer 16

Appointed to represent more than 1 insurer. Own their accounts, policy records and renewals

Question 17

Describe Exclusive/Captive Agencies/Agent

Answer 17

Appointed to represent a single insurer, or one with common ownership or affiliates.

Question 18

A direct writer is considered to be a(n) XXX of an insurer.

Answer 18

Employee; insurer owns the policies and renewals.

Question 19

Marketing/distribution system that does not use an agent.

Answer 19

Direct Mail (or Direct response); part of mass marketing.

Question 20

Describe Surplus Lines Broker.

Answer 20

Only license that may transact with non admitted insurers.

Question 21

California requires anyone who transacts insurance to be…

Answer 21

Licensed

Question 22

State of California uses the term transact to include…

Answer 22

TENS

Transaction (servicing existing contracts), Execution (issuing policy or binder), Negotiations (quoting), Solicitation (bulk mail)

Question 23

A Managing General Agent (MGA) writes what percentage of premium of the policyholder’s surplus?

MGA cannot…

Answer 23

5% or more of insurer’s premium

MGAs cannot settle claims.

Question 24

A person who acts in the capacity that requires an active license without having a valid license is guilty of a…

Answer 24

Misdemeanor