Afsb 151 Final Exam| 180 Questions With 100 % Correct Answers | Verified

With which one of the following major types of reinsurance agreements does the reinsurer assume a proportional share of the obligations that the surety assumes, and the reinsurer receives a proportional share of the premium that the surety charges? {Ans: Pro rata share reinsurance}A feature differentiating surety from insurance is that surety involves three parties, which include {Ans: Obligee, principal, and surety}Which one of these is an accurate comparison of suretyship and banking? {Ans: Both suretyship and banking are financial relationships and deal with losses that are generally defined in monetary terms; however, a surety guarantees more than just an extension of credit.}The surety might forfeit a bid bond if which situation exists? {Ans: The difference between bid prices is more than the amount of the bid bond.}In the protective phase of the bond underwriting decision, indemnity is waived only for what type of bonds? {Ans: The smallest and least hazardous bonds}Why are fiduciary bonds generally considered to be short-term obligations? {Ans: Because most estates can be handled within several months or, at most, within a year or two.}