Rmin 2500 Exam #2

A reinsurance contract that is entered into on a case-by-case basis after an application for insurance is received by a primary insurer is called: {Ans: facultative reinsurance}The unearned premium reserve of an insurer is: {Ans: a liability representing the unearned portion of gross premiums on outstanding policies.}Lloyd's of London {Ans: A society of members who underwrite insurance in syndicates.}The underwriting process begins with the: {Ans: agent.}Advantages of the direct response system for marketing life insurance include: {Ans: Advertising can be specifically directed to selected markets.}What is the primary purpose of coinsurance in health insurance? {Ans: To reduce premiums.}What is the principle of utmost good faith? {Ans: A higher degree of honesty is imposed on both parties to an insurance contract than is imposed on parties to other contracts.}Huge Insurance Company is a property insurer that is interested in protecting itself against cumulative losses that exceed $200 million during the year. This protection can best be obtained using: {Ans: an excess-of-loss reinsurance treaty.}Mutual insurers {Ans: They may pay dividends to their policyowners.}Factors that may result in more restrictive underwriting decisions include: {Ans: I. Inadequate rates II. The unavailability of reinsurance at