Chapter 1

The stated amount or percent of liquid assets that an insurer must have on hand that will satisfy future obligations to its policyholders is called:

1.  surplus

2.  reserves 

3.  credits

4.  retention

An insurance applicant MUST be informed of an investigation regarding his/her reputation and character according to the:

1.  Fair Labor Standards Board 

2.  Fair Credit Reporting Act 

3.  State Guaranty Association

4.  National Association of Insurance Commissioners

What is the name of the law that requires insurers to disclose information gathering practices and where the information was obtained?

1.  National Association of Insurance Commissioners 

2.  Fair Credit Reporting Act 

3.  Fair Labor Standards Board

4.  State Guaranty Association

What type of reinsurance contract involves two companies automatically sharing their risk exposure?

1.  Arbitrage

2.  Excess 

3.  Treaty 

4.  Facultative

Which of these describe a participating insurance policy?

1.  Policyowners are entitled to receive dividends 

2.  Stock companies allow their policyowners to share in any company earnings 

3.  Policyowners are not entitled to vote for members of the board of directors

4.  Policyowners pay assessments for company losses