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# Q.1) If the insurer cancels the policy, the return premium will be calculated usually on a A. B. C. D. Short-rate basis.

## Flat Basis. Pro-rata basis. (Correct Answer Penalty basis.

Q.2) A Capti!e Insurance company is """""""""""""" . A. #he insurance company that accepts the loss e\$posure of the primary Insurer. #he insurer that is formed as a subsidiary of its own parent company, or%ani&ation or B. %roup, for the purpose of writin% all or part of the insurance on the parent company or companies. (Correct Answer An insurer that is owned by its policy holders and formed as a corporation for the C. purpose of pro!idin% insurance to its policy holder-owners. A federal %o!ernment funded, state controlled insurance or%ani&ation pro!idin% insurance D. to unusual Insurance needs.

Q.3) A bailment is A. B. C. D. 'oldin% the property of another. (Correct Answer An e\$clusion in the property policy. A named peril. A lender that loans money on a home, buildin%, or other real property.

Q.4) An insurers capacity ratio is: A. Calculated by di!idin% its written premiums by its policyholders surplus. (Correct Answer Calculated by subtractin% the in!estment income ratio from the B. combined ratio. Calculated by di!idin% net in!estment income by earned premiums for a particular period. C. D. #he sum of the loss ratio and the e\$pense ratio.

Q.5) If an insurance company refuses to pay a claim that should be paid or offers to settle a claim for less than it (nows the claim is worth or denies a claim without ade)uate in!esti%ation, this could %i!e rise to A. Bad faith claim a%ainst the Insurance company (Correct Answer B. *nfair descrimination by Insurance company C. +on% term profit for the Insurance company Cancellation of +iscence doin% business by the Insurance company D.

Q.6) ,atch the Column A elements with Column B elementsColumn A Column B .. ,utual Insurance Company A. Salaried employees of the Insurance companies. /. 0irect 1ritin% A%ents B. 2wned by the policy holders. 3. Independent Ad4usters C. 'andle claims for the Insurance companies for a fee. 5. Choicepoint 0. In!estors own the association 6. +loyd7s of +ondon 8. C+*8 report A. B. C. D. .C, /8, 3A, 5B, 60 .B, /8, 3C, 5A, 60 .B, /A, 3C, 58, 60 (Correct Answer .0, /A, 30, 58, 6C

Q.7) 1hat is I90A and which country does it belon% toA. B. C. D. International 9e%ulatory and 0e!elopment authority, *SA Insurance 9ates and de!elopment Association, Canada. Insurance 9e%ulatory and 0e!elopment Authority (I90A , India. (Correct Answer Internal 9e!enue 0epartment of America, *SA.

Q.8) 1hich of the followin% is a Federal :o!ernment Insurance Pro%ramA. B. C. D. Federal Air Insurance pro%ram Fair Access to Insurance 9e)uirements Plan Social Security Pro%ram (Correct Answer State wor(ers compensation insurance pro%ram

Q.9) If you dont understand all of the terms in your auto insurance policy, what should you do? A. B. C. D. Contact your insurance a%ent, who is responsible for ser!icin% your policy. 1ait until you need to file a claim to contact anyone. Contact your state;s department of insurance. Both A and C. (Correct Answer

Q.10) 1hich one of the followin% statements is true re%ardin% types of rates used by insurersA. B. C. D. Class rates apply to all insureds in the same ratin% cate%ory. (Correct Answer ,erit ratin% plans are also called manual ratin% plans. Class rates are not based on loss statistics. Class rates reflect loss characteristics of a particular insured.

Q.11) 1hy would an underwriter modify the rate char%ed for the co!era%e pro!ided when e!aluatin% an
application for insurance-

A. B. C. D.

Because treaty reinsurance in una!ailable for the e\$posures indicated #o address the moral ha&ards the underwriter identified durin% in!esti%ation #o better match the rate to the characteristics of the ris( (Correct Answer Because the applicant is not acceptable for co!era%e

Q.12) Most liability insurance policies exclude coverage for losses intentionally
caused by the insured because such losses do not meet which one of the following characteristics of an ideally insurable exposure?

A. B. C. D.

+ar%e number of similar e\$posure units Accidental (Correct Answer <ot catastrophic <ot economically feasible to insure

Q.13) Compensatory damages are intended to compensate a victim for harm actually
suffered and can include

A. B. C. D.

Puniti!e dama%es Special dama%es. (Correct Answer 'old harmless costs. Contractual obli%ations.

Q.14) Clara is insured by IIA Insurance C !"any. #ne ni\$%&' n &%e (ay % !e )r ! ( r*' s%e(as in+ l+ed in an au& acciden&. Clara ran a red li\$%& (%en %er brand ne( ,a-da did n & %a+e any bra*es' and %er car s&ruc* &%e "ic*u" dri+en by Bill' an e!"l yee ) Bi\$ B b.s /r duce C !"any. Bill (as in0ured' and a clai! (as )iled (i&% IIA Insurance C !"any ) r in0ury & B b and da!a\$e & &%e "ic*u".

If there had been no in uries and damage to both vehicles had been minor, the claim would most li!ely be handled by a"n#

A. Inside staff claim representati!e. (Correct Answer B. 2utside staff claim representati!e. C. Public ad4uster. D. Independent ad4uster.

Q.15) A ="""""""""""= letter from your insurer is a notice that e!en thou%h the company is proceedin% to handle your claim, dependin% on what happens, certain losses mi%ht not be co!ered by the terms of the policy. By such a letter, the company preser!es its ri%ht to deny co!era%e at a later date based on the terms of the policy. A. Preser!ation of ri%hts 9eser!ation of ri%hts B. (Correct Answer C. 0enial of ri%hts D. <one of the abo!e

Q.16) If an Insured is Sued(0ra%%ed to court does the Insurance Company defend the Insured in courtA. Insurance company defends the Insured until final 4ud%ement is %i!en Insurance company defends the Insured until the limits of the co!era%e is e\$pended for the B. defence (Correct Answer C. Insurance company does washes of hands as it is not their responsibility to %o to court D. <one of the abo!e

Q.17) Insurance companies are exempted from Consumer protection laws in some states A. B. C. D. >es (Correct Answer >es, becuase Insurance is not consumable product <o <o, because Insurance customers are consumers

Q.18) \$inding authority A. B. C. D. Is usually %ranted in the a%ency contract (Correct Answer Is %ranted by the a%ent to the principal. Is always oral. Is %ranted by the reinsurance treaty.

Q.19) %nder tort law, an individual or organi&ation can face a claim for legal liability on the
basis of

A. B. C. D.

<e%li%ence. Intentional torts. Absolute liability. All of the abo!e. (Correct Answer

Q.20) 1hich one of the followin% in the ris( mana%ement process is inaccurate.. Identifyin% and analy&in% loss e\$posures. /. :atherin% information to support assumptions about the loss e\$posures. 3. Selectin% the most appropriate ris( mana%ement techni)ues. 5. Implementin% the chosen techni)ues in a ris( mana%ement pro%ram . A. B. C. D. . / (Correct Answer 3 5

Q.21) 'he claim handling process includes A. B. C. D. In!esti%atin%. 8!aluatin%. <e%otiation. All of the abo!e.(Correct Answer

Q.22) You have bought a flame red high performance engine car. You were surprised that despite your car has so many great safety features similar to other brand cars, your insurance company charged you more than what it was charging for other brand cars. What could be the reason? A. B. C. D. #he red color cars are alway percie!ed to recie!ed more traffic tic(ets #he hi%h performance en%ine ma(es your car en%ine more prone to theft (Correct Answer #he Insurance company battlin% a case a%ainst your car brand company #he Insurance company had some secret dealin%s with the ri!al company

Q.23) A guaranty fund is: Created by the federal %o!ernment for the purpose of pro!idin% insurance for the social %ood. #he primary fundin% for the Fair Access to Insurance 9e)uirements B. pro%ram. A state fund that pro!ides a system to pay the claims of insol!ent C. insurers. (Correct Answer D. ,ana%ed by the <ational Association of Insurance Commissioners. A.

Q.24) (hich is an example of the reduction in value of property? A camera that was worth ?/@@ is run o!er by the truc(A the camera is now worthless. (Correct Answer B. Because a business owner had a fire, he has lost income. C. A homeowner must li!e in a motel while his burned home is repaired. D. Inflation causes a home to appreciate in !alue. A.

## Q.25) )umongous Insurance Company is considering the purchase of Itty*\$itty Insurance

Company+ ,ollowing is financial data of Itty*\$itty Insurance Company+ -xpense ratio ./0 1oss ratio 230 Investment income ratio 450 'he overall operating ratio is:

A. B. C. D.

## BC.@@D E6D ..5D EFD (Correct Answer

Q.26) 'he two ma or types of liabilities found on the financial statements of insurers are: A. B. C. D. Policyholder surplus and assets *nearned premium reser!e and loss reser!e (Correct Answer Admitted asset and nonadmitted assets 8arned premiums and underwritin% e\$penses

Q.27) The World Insurance Report 2008 explores current distribution models and changes in channel usage, and

also takes an in-depth look at successful versus at-risk multi-channel strategies !ind out "hat#s driving multichannel usage in mature markets and ho" changing customer profiles and behaviors are impacting toda\$#s insurance practices The report identifies gro"th opportunities for leading insurance companies and features insightful approaches for transforming current insurance practices into tomorro"#s "inning strategies Which of the belo" organi%ations publish this report&

A. <ational Association of Insurance Commissioners (<AIC . B. American Authority of Insurance. Cap%emini and the 8uropean Financial ,ana%ement G ,ar(etin% Association (8F,A . C. (Correct Answer D. International Council for Insurance 9e%ulation and +e%islation (ICI9+ .

Q.28) \$asic form coverage A. Is used on all property policies. B. +ists co!ered causes of loss. (Correct Answer C. Is open peril. D. Co!ers all losses e\$cept those specifically e\$cluded.

Q.29) Some insurers now use e\$pert systems in the underwritin% process. #he primary purpose of these
e\$pert systems is to

A. 9educe claim e\$penses and loss ad4ustment e\$penses. B. 9eplace underwritin% decision-ma(in% and enhance accuracy. 8mulate the underwritin% decision-ma(in% process as it would be performed by e\$pert C. underwriters. (Correct Answer D. ,oderni&e insurance company information systems.

Q.30) A """""""" is a dia%ram that depicts the flow of a particular operation or set of related operations within an or%ani&ation. A. B. C. D. Process char Flow Chart (Correct Answer 0ata Chart Se)uence Chart

Q.31) A policy in which the insurer pays a stated amount in the e!ent of a specified loss (usually a total loss , re%ardless of the actual !alue of the loss is (nown as a A. B. 9eplacement policy.

## Halued policy. (Correct Answer C. Conditional policy. D. Specified policy.

Q.32) N D Tiwari has been stopped by LAPD for speeding and a ticket has been issued. Which statement
is true?

A. #iwari7s insurance company will automatically be notified by the state. #iwari7s insurance company will re!iew his dri!in% record and learn about the !iolation B. when his policy comes up for renewal. (Correct Answer C. #iwari7s insurance company will automatically raise his rates. <othin% will happen. #he insurance company cannot find out about the tic(et issued to D. #iwari.

Q.33) 1hat is the si%nificance of .BB5 <orthrid%e 8arth)ua(eA. B. C. D. /.st Century Insurance nearly went ban(rupt due to the claims resulted due to the earth)ua(e and shortly after stopped sellin% 'omeowners insurance policies. (Correct Answer *S Federal Insurance authority added the states of California and Florida to the list of co!ered states under the <ational 0isaster Insurance pro%rams. After the earth)ua(e, California State Insurance department 4oined <AIC committee. All the abo!e

Q.34) All of the following are correct, -6C-7': A. Insurance wor(s as a system of transferrin% and sharin% the costs of losses #he law of lar%e numbers assists the insurance mechanism by impro!in% the relati!e B. accuracy of prediction. Property loss e\$posures include ne%li%ence, real property, and personal property. (Correct C. Answer D. A liability loss e\$posure presents the possibility of a claim alle%in% le%al responsibility.

Q.35) 1hich of the below is <2# a step in 9is( mana%ement process A. B. C. D. Identifyin% and analy&in% loss e\$posures 8\$aminin% ris( mana%ement techni)ues Implementin% the 9is( (Correct Answer Selectin% the most appropriate techni)ues

Q.36) A """""""" is a ris( mana%ement tool in the form of a chec(list or )uestionnaire listin% potential loss e\$posures that a household or an or%ani&ation mi%ht face A. B. C. D. 8\$posure Chec(list loss e\$posure sur!ey (Correct Answer +oss Iuestionnaire 9is( chec( list

Q.37) Clara is insured by IIA Insurance Company+ 8ne night, on the way home from wor!, shewas

involved in an auto accident+ Clara ran a red light when her brand new Ma&da did not have any bra!es, and her car struc! the pic!up driven by \$ill, an employee of \$ig \$obs 7roduce Company+ \$ill was in ured, and a claim was filed with IIA Insurance Company for in ury to \$ob and damage to the pic!up+ \$ills claim will most li!ely be handled for IIA Insurance Company by a"n#

A. Inside staff claim representati!e. B. 2utside staff claim representati!e. (Correct Answer C. Insurance a%ent handlin% Clara;s account. D. Public ad4uster.

Q.38) All of the following are true of insurance company financial statements, -6C-7': #he ma4or e\$pense cate%ory for most insurance companies is payment for losses arisin% from claims. B. *nderwritin% e\$penses include ac)uisition e\$penses, %eneral e\$penses, and ta\$es and fees. 2n their financial statements, insurance companies add e\$penses from in!estment income C. to show the net income from in!estments. (Correct Answer An insurer;s net underwritin% %ain or loss is e)ual to its earned D. premiums minus its losses and underwritin% e\$penses for a specific period. A.

Q.39) Mar!eting management A. B. C. D. Pro!ides producer super!ision. Pro!ides producer moti!ation. Pro!ides product mana%ement and de!elopment All of the abo!e. (Correct Answer

## Q.40) )umongous Insurance Company is considering the purchase of Itty*\$itty Insurance

Company+ ,ollowing is financial data of Itty*\$itty Insurance Company+ -xpense ratio ./0 1oss ratio 230 Investment income ratio 450 'he combined ratio for Itty*\$itty Insurance Company is:

A. B. C. D.

## BCD (Correct Answer E6D ..5D EFD

Q.41) 1%ic% are &%e &%ird2"ar&y c +era\$es in &%e bel (3 A. Collision (C2++ , Comprehensi!e co!era%e (C2,P B. Bodily In4ury(BI , Property dama%e (P0 (Correct Answer C. ,edical Payments (,ed Pay , Personal In4ury Protection (PIP D. *ninsured and *nderinsured ,otorist Co!era%e (*,, *I,

Q.42) Jelly Blue Boo( is """""""""""""""" . An annual report of all the insurance policies issued by an insurance company sent to the respecti!e state 0epartments of ,otor Hehicles (0,H . A boo( of Insurance laws maintained by the State insurance commissioners in the early B. .B@@s in <orth America. C. An automoti!e !ehicle !aluation company in the *nited States. (Correct Answer A list of all dri!ers in California with more than C ma4or !iolations and C At-Fault D. accidents maintained by the State Insurance Authority. A.

Q.43) In insurance terminolo%y, which of the followin% refers to a boo( of businessA. B. C. D. All policies sold by an insurance company or a%ency All policies in a particular territory All policies pro!idin% a particular type of insurance All the abo!e (Correct Answer

Q.44) 1hat is an S9-// 0ocumentA. B. C. D. In the *nited States, an S9-// is a !ehicle liability insurance document used by some state 0epartment of ,otor Hehicles (0,H offices. It pro!ides proof that a dri!er has the minimum re)uired liability insurance co!era%e for that particular state. (Correct Answer An S9-// document is a si%ned statement from a dri!er con!icted of 0ri!in% *nder Influence (0*I declarin% that heKshe will not drin( a%ain. An S9-// document is a written consent %i!en by the Primary Insured on a policy to the Insurer statin% that the Insurer can initiate li)uidation of the Insured7s property in case of any claims raised a%ainst the Insured, amount to more than the co!ered limits. An S9-// is an alternati!e to the dri!ers license issued by the state7s 0,H.

Q.45) 9einsurance is a contractual agreement: In which one insurer transfers some or all of its loss e\$posures to another insurer. (Correct Answer #hat is formed as a subsidiary of its parent company for the purpose of writin% insurance B. on the parent company. C. #hat ideally insures lar%e numbers of similar e\$posure units. D. #hat insures throu%h an attorney-in-fact. A.

## Q.46) :aluation provisions may include

A. B. C. D.

9eplacement cost. Actual cash !alue. A%reed !alue. All of the abo!e. (Correct Answer

## Q.47) Tom Hanks has been insured by A. B. C. D.

armers !nsurance company for more than "# days. armers insurance cannot cance\$ Tom%s po\$icy under which of the fo\$\$owing circumstances?

#om %ets his first speedin% tic(et. (Correct Answer #om does not pay the premiums. #om lied on his insurance application. #om7s license has been suspended.

Q.48) Lim canceled his auto policy 3.6 days after the inception date. #he one-year premium is ?.,@B6. Assumin% that a year is 3C6 days, what is Lim7s pro rata premium refundA. B. C. D. ?6@ ?.6@ (Correct Answer ?EF@ ?B56

Q.49) Brown Company7s Policy includes a liberali&ation clause. Brown7s insurer introduces a policy chan%e that broadens co!era%e at no additional premium. 'ow will this chan%e apply to Brown7s e\$istin% policyA. #he broadened co!era%e does not apply to Brown Company7s policy. #he broadened co!era%e automatically applies to Brown Company7s policy. (Correct B. Answer C. #he broadened co!era%e will apply to Brown Company7s policy with an endorsement. D. #he broadened co!era%e will apply to Brown Company7s new policies as they are issued.

Q.50) 0a!id Bec(ham wants to Insure his feet to the tune of .@ million dollars each. 1hich of the followin% Insurance company will he most li(ely %o toA. B. C. D. Ban(ers mutual Insurance company Citi stoc( Insurance company Prudential +ife Insurance company +ords 8\$cess and Surplus Insurance ltd. (Correct Answer

Q.51) 4 adside assis&ance "lans "r +ides ser+ices 56C5/7 A. /5 'ours emer%ency towin% ser!ices B. /5 'ours lost (ey and loc(out ser!ices C. /5 'ours battery ser!ices /5 Car hi%ene ser!ices D. (Correct Answer

Q.52) Bein\$ a (ner ) % use in 89 A. It is mandatory to buy homeowner7s Insurance It is not mandatory to buy homeowner7s Insurance B. (Correct Answer C. State automatically pro!ides homeowner7s Insurance D. #he ban( which loaned should buy homeowners7s Insurance

Q.53) Ideally insurable loss exposures include: A. B. C. D. +osses those are accidental. +osses those are definite and measurable A lar%e number of similar e\$posure units. All of the abo!e. (Correct Answer

Q.54) A ratema!ing concept through which actuaries base rates on actuarially calculated loss
experience and place insureds with similar characteristics into the same rating class is

A. B. C. D.

Social e)uity Fle\$ ratin% laws Actuarial e)uity (Correct Answer 2pen competition

Q.55) 1oss reserves are #he lar%est and most important liabilities of property and liability insurance companies. B. An estimate of the amount of claims payments that an insurer will ma(e in the future C. Always an estimate. D. All of the abo!e. (Correct Answer A.

Q.56) 1hich of the followin% is one of the lar%est ,utual P G C Insurance companies operatin% in <orth AmericaA. B. C. D. State Farm Insurance (Correct Answer Citi :roup Insurance /.st Insurance Allian& A:

Q.57) 8ut*of*court settlements are A. Settled by the court system. Ad!anta%eous to the insurer because they eliminate uncertainty about the outcome of the B. claim. (Correct Answer C. <ot co!ered by liability co!era%e policies. D. Included in puniti!e dama%es.

Q.58) 1hich of the followin% is not one of the primary ob4ecti!es of Insurance re%ulationA. B. C. D. 9ate re%ulation Sol!ency sur!eillance Consumer protection ,ar(et capitali&ation of Insurance companies (Correct Answer

Q.59) 9ebating is 9e)uirin% that the purchase of insurance be tied to some other sale or financial arran%ement. B. ,isrepresentin% the benefits, ad!anta%es, conditions, or terms of any insurance policy. 2fferin% anythin% of !alue, other than the insurance itself, to an applicant as an C. inducement to buy or maintain insurance. (Correct Answer D. All of the abo!e. A.

Q.60) +oss fre)uency is A. B. C. D. a term used to indicate how often losses are not e\$pected to occur used to predict the li(elihood ofdifferent (ind of losses in the future a term used to indicate how often losses occur (Correct Answer All the abo!e

Q.61) #he use of standard forms by insurers leads to a more A. B. C. D. Consistent interpretation of insurance policies (Correct Answer Creati!e interpretation of insurance policies. Conser!ati!e interpretation of insurance policies. Coordinated interpretation of insurance policies.

Q.62) Implementation of the chosen 9is( mana%ement techni)ue re)uires that ris( mana%er ma(e decisions concernin%M A. B. C. D. 1hat should be done 1ho should be responsible 'ow to allocate the costs of the pro%ram All the abo!e (Correct Answer

Q.63) Claims*made coverage A. B. C. D. Is based on a retroacti!e date that determines when co!era%e starts. (Correct Answer Co!ers liability claims that are made to the insurer before the retroacti!e date. 0oes not limit the time period for whicha claim may be submitted. Includes a pro!ision for claims occurrin% after the policy period.

Q.64) A business installs a sprin(ler system to reduce the amount of fire dama%e from potential fires. 1hat (ind of 9is( mana%ement techni)ue is this A. B. C. D. +oss 9eduction (Correct Answer +oss 9etention +oss Pre!ention <one of the abo!e

Q.65) All of the following are true, -6C-7': #he standard mar(et refers collecti!ely to insurers who !oluntarily offer insurance co!era%es at mar(ets desi%ned for customers with a!era%e or better-than-a!era%e loss A. e\$posures. 8\$cess and surplus lines insurance consists of insurance co!era%es, usually a!ailable in the standard mar(et, that are written by unlicensed insurers. <onadmitted (or unlicensed insurers are insurers that are not licensed in many of the C. states in which they operate and that write e\$cess and surplus lines insurance co!ea%es #he e\$cess and surplus lines mar(et is not sub4ect to any state re%ulation. (Correct D. Answer B.

Q.66) (hich of the following statements best describes the way in which ;support
for credit< is a benefit of insurance?

A. Insurance is re)uired to %et a dri!ers license. B. Insurance satisfies lenders that their loans will be repaid. (Correct Answer C. Insurers lend money to fund new construction and other pro4ects. People who are indemnified by insurance don;t ha!e to borrow money to replace dama%ed D. property.

Q.67) In e!aluatin% an application, an underwriter thin(s that the class of business is not one that the

company wishes to write, but he would need to physically inspect it to be certain. 'e also reali&es that the business is located in an undesirable section of the city. Based on the location alone, the underwriter decides not to issue the policy. Accordin% to many state insurance laws, this would be an e\$ample of

## A. 0i!ersification. B. *nfair discrimination. (Correct Answer C. Fair discrimination. D. 9e%ulated discrimination.

Q.68) All of these statements about unfair claim practices are correct, -6C-7': *nfair claim practices specify claim practices that are ille%al accordin% to federal law. (Correct Answer ,isrepresentation of pertintent facts or insurance policy pro!isions B. relatin% to co!era%e at issue in a claim is an unfair claim practice. A. 9efusal to pay a claim without first conductin% a reasonable in!esti%ation based on all a!ailable information is an unfair claim practice. . Insurance re%ulators usually learn of unfair claim practices when they recei!e complaints D. from insureds and claimants. C.

Q.69) An independent agent A. B. C. D. *sually represents se!eral unrelated insurance companies (Correct Answer Is salaried by the insurance company. *ses only mail, telephone, or Internet to solicit business *sually does not own its e\$piration list.

Q.70) 7roducers can be compensated by A. B. C. D. Salary. Commissions. Contin%ency commissions. All of the abo!e. (Correct Answer

Q.71) Select the Correct statement with respect to Auto Insurance in America ,en Pay more for Insurance than 1omen due to their a%%essi!eness behind wheels (Correct Answer B. 1omen Pay more for Insurance than men due to their soft behind wheels C. Premium cannot be different for men and women D. <one of the abo!e A.

Q.72) A dispute between neighbours can turn into a never*ending feud+ (hich form of law
provides a forum for hearing disputes between private parties?

A. B. C. D.

Criminal law Statutory law Constitutional law Ci!il law (Correct Answer

Q.73) Insurance is a ris( mana%ement techin)ue called A. B. C. D. A!oidance #ransfer (Correct Answer +oss Control 9etention

Q.74) =tate insurance departments: 9e%ulate insurance rates to protect consumers from inade)uate, A. e\$cessi!e, or unfairly discriminatory rates. (Correct Answer B. Are located in most but not all states C. Pro!ide a source of in!estment funds. D. Answer to the federal %o!ernment insurance department.

Q.75) 'he parties that might be affected by a property loss include A. *sers of the property B. #he property owner. C. Secured lenders of money to the property owner. D. All of the abo!e. (Correct Answer

Q.1) 1hich of the followin% represents a pure ris(A. #erry places a bet on the outcome of a bas(etball %ame. ,ar%aret7s do% is temperamental. She7s afraid that it will bite a nei%hbor someday and she B. will be held responsible. (Correct Answer C. Sam transfers all of his retirement funds into a stoc( that he e\$pects to rise in !alue. Cindy, alon% with 3/ others, puts ?.@@ into an Indy 6@@ race pool at wor(. #he person D. holdin% the name of the winnin% dri!er will win the entire ?3,3@@. 5:"lana&i n B is correct. A pure ris( is one that in!ol!es only the possibility of loss. Choices A, C, and 0 are e\$amples of speculati!e ris(s in which there e\$ists both the possibility of %ain and the possibility of loss.

Q.2) #he law of lar%e numbers A. prohibits insurance with e\$tremely hi%h premiums. B. states that there must be a narrow spread of ris( for insurance to be effecti!e. states that the more e\$amples used to de!elop a statistic, the more reliable the statistic will C. be. (Correct Answer D. re)uires all members of society with insurance e\$posures to purchase insurance. 5:"lana&i n C is correct. #he law of lar%e numbers says that the more e\$amples used to de!elop a statistic, the more reliable the statistic will be