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As specified in RCW 48.15.150, each policy issued to an unauthorized insurer as a surplus line contract must designate _______ as the person upon whom service of process may be made. A. CFO B. SLB C. Commissioner D. Attorney ---------CORRECT ANSWER-----------------C - Commissioner Return premiums or claim payments will not be deemed to have been paid to the insured or claimant until the payments are actually received by the A) Insurance Producer B) Insured/Claimant C) SLB ---------CORRECT ANSWER-----------------B) Insured/Claimant How many days notice required for cancellation due to non-payment of premium? ---------CORRECT ANSWER-----------------10 days
How many days notice is required to cancel Surplus Line policy (other than non- pay)? ---------CORRECT ANSWER-----------------20 days The certification form must be filed within ___ days of the effective date: A) 30 B) 90 C) 60 D) 20 ---------CORRECT ANSWER-----------------C - 60 days Two key tools within IRIS (Insurance Regulatory Information System) A) Ratios B) Inspections C) Analyst Team System D) Examinations E) C, D F) A, C ---------CORRECT ANSWER-----------------IRIS ratios and Analyst Team System Alien Insurer- no certificate of authority unless they deposit assets in amount not less than it's outstanding liabilities arising out of its insurance transactions in the US PLUS assets equal too the larger of the following; A) the largest amount of deposit required under this title to be made in this state by any type of domestic insurer transacting like kinds of insurance B) $200,
Which ratio measures the adequacy of the policyholders surplus cushion, net of the effects of premiums ceded to reinsurers? (Usual range for this ratio includes results up to 300%) ---------CORRECT ANSWER-----------------Overall Ratio 2- Net Premiums Written to Policyholders Surplus (3 to 1) Material increases or decreases in net premiums written could indicate a lack of stability in the insurer's operations and/or management. A large increase in premiums could indicate what? A large decrease in premiums may indicate what? Usual range for change in net premiums written is? ---------CORRECT ANSWER------ -----------Large increase: entry into new lines of coverage or geographic locations- or insurer trying to increase cash flow to pay current losses Large decrease: may indicate a discontinuance of certain lines of business, scaled back writings due to large losses, or increased use of Reinsurance Usual range - 33% to 33% 'The use of surplus aid reinsurance treaties may be an indication that company management believes policyholders' surplus to be inadequate. The continued solvency of insurers with a large portion of policyholders' surplus resulting from surplus aid may depend on what? ---------CORRECT ANSWER----------------- Continued participation in the treaty with the reinsurer. The usual range for ratio 4 (Surplus Aid to Policyholders' Surplus) should include results less than 15% RE: Profitability Ratio (5) Two Year Overall Operating Ratio;
Usual range for the ratio includes results less than ____%. A Two-Year Overall Operating Ratio below ____% indicates an operating profit and a ratio result above ____% indicates an operating loss. ---------CORRECT ANSWER----------------- 100% (all 3) Investment earnings can help offset uw losses. Profitability Ratio 6- Investment Yield Ratio provides the percentage of annual income on an investment portfolio. The usual range for the ratio includes results greater than ___% and less than ___% ---------CORRECT ANSWER-----------------Greater than 3% and less than 6.5% The '______ _______' ratio is the ultimate measure of improvement or deterioration in the insurer's financial condition ---------CORRECT ANSWER----------- ------Profitability Ratio 7- Gross Change in Policyholders' Surplus The usual range for the 'Gross Change in Policyholders Surplus' includes results less than ___% and greater than ____% ---------CORRECT ANSWER----------------- Less than 50% Greater than - 10% The '_______ _______' ratio measures the improvement or deterioration in the insurer's financial condition during the year based on operational results. --------- CORRECT ANSWER-----------------Profitability Ratio 8- Change in Adjusted Policyholders' Surplus
'________ _________' Reserve Ratio provides an estimate on the adequacy of current reserves. This estimated deficiency is the difference between the estimated reserves required by the insurer and the actual reserves maintained. --- ------CORRECT ANSWER-----------------Reserve Ratio 13- EST. Current Reserve Deficiency to Policyholders Surplus Usual range for the ratio includes results less than 25% When are you required to file premium tax return for the previous calendar year by? ---------CORRECT ANSWER-----------------March 1st What does statutory accounting mean? ---------CORRECT ANSWER----------------- Rules state that certain assets are non-admitted (don't count) as you can't pay claims with them. Bonds rated ___________ and higher are considered investment grade. --------- CORRECT ANSWER-----------------1 & 2 What does IBNR stand for? ---------CORRECT ANSWER-----------------Incurred but not reported
True or false, individuals whose Surplus Line Brokers license was active and did not have an active affiliation with a business entity are required to file a premium tax return, even if no business was transacted? ---------CORRECT ANSWER------------ -----TRUE Which office assigns the bonds rating? ---------CORRECT ANSWER-----------------SVO (Securities Valuation Office) What is Combined Ratio? ---------CORRECT ANSWER-----------------Loss Incurred + Loss Expense / Earned Premium What are General Interrogatories? ---------CORRECT ANSWER-----------------General questions about the Company. Financials: what is Schedule P include? ---------CORRECT ANSWER----------------- Incurred & open losses What does NAIC stand for? ---------CORRECT ANSWER-----------------National Association of Insurance Commissioners
WA Surplus Lines Stamp should read: ---------CORRECT ANSWER-----------------"This contract is registered and delivered as a surplus line coverage under the insurance code of the state of Washington, Title 48 RCW. It is not protected by any Washington state guaranty association law." How long must a surplus line broker keep financial records of a foreign unauthorized insurer? ---------CORRECT ANSWER-----------------5 years RE: 48.18.180 'Stated Premium' which statements are TRUE: A. Premium shall be inclusive of all fees, charges, premium. B. Each violation of this statute is a gross misdemeanor C. If premium on policy differs from binder by less than $10, insurer not required to notify insured. D. All of the above ---------CORRECT ANSWER----------------- Max amount of time license can be suspended due to conviction of felony? --------
- CORRECT ANSWER-----------------Not to exceed 12 months When would WA State Insurance Commissioner waive the examination? --------- CORRECT ANSWER-----------------If nonresident person holds an equivalent surplus lines license in another state.
Max credit/surcharge for Account Premium Modification Plan ---------CORRECT ANSWER-----------------25% Available to risks that develop a 3 year premium of at least $5, Agreed amount eliminates the ______ clause ---------CORRECT ANSWER-------------- ---Coinsurance What organization decides alien insurers have fulfilled criteria and can be included on the Quarterly Listing of Alien Insurers'? A) NAIC B) IRIS C) IIDPO D) Lloyd's ---------CORRECT ANSWER-----------------C- International Insurers Department Plan of Operation What information can you find on the Quarterly Listing of Alien Insurers? A) location of trust account B) min required balance or trust account C) market value of trust account D) if account is funded by letter of credit E) all of the above ---------CORRECT ANSWER-----------------E - along with trustee bank contacts with telephone and fax #
Lloyd's of London can write on admitted paper in what states/territories? --------- CORRECT ANSWER-----------------Virgin Islands, Illinois, and Kentucky Which organization body is responsible for regulating Lloyd's (including direct supervision of managing agents and monitoring capital solvency)? --------- CORRECT ANSWER-----------------FSA - Financial Service Authority Which bank handles Lloyd's NY Trust Fund? ---------CORRECT ANSWER----------------- City Bank Gross Premiums Written to Policyholders Surplus should be what ratio? A) 9 to 1 B) 1 to 9 C) 3 to 1 D) 1 to 3 ---------CORRECT ANSWER-----------------Gross premiums should be 9 to 1 Is the term 'unusual value' on a financial ratio report good, bad, or not important? ---------CORRECT ANSWER-----------------Unusual values are BAD.
Where can you find the amount of Direct Premiums Written, Reinsurance Assumed - Affiliates, & Reinsurance Assumed - Non-Affiliates? ---------CORRECT ANSWER-----------------On the Underwriting & Investment Exhibit page (8) Where can you find the amount of Policyholders Surplus? ---------CORRECT ANSWER-----------------The Liabilities, Surplus, and Other Funds page (3) How do you find the ratio for 'Gross Premiums Written to Policyholders Surplus'? ---------CORRECT ANSWER-----------------Direct Premiums Written + Reinsurance Assumed - Affiliates + Reinsurance Assumed Non-Affiliates / Policyholders Surplus
- 100 (A + B + C) / D * 100 Should be 9 to 1 How many days until uncollected Premium/agents' balances in the course of collection is moved to the NonAdmitted Assets column? ---------CORRECT ANSWER-----------------90 days How do you find the ratio for 'Net Premiums Written to Policyholders Surplus'? --- ------CORRECT ANSWER-----------------Net written premium / Policyholders Surplus
- 100 (should be 3 to 1 ratio)
What info can you find under the 'Summary of Significant Accounting Policies'? --- ------CORRECT ANSWER-----------------Common stocks of wholly owned US Subsidiaries, corrections/errors, Discontinued Ops, Repurchase Agreements, Restricted Assets, Income Taxes, Real Estate and REINSURANCE info What info can you find on the General Interrogatories page? ---------CORRECT ANSWER-----------------State Regulating Date of last financial examination Name of Investment Manager Stock/Bond info 'Largest Net Aggregate amount insured on one risk' What info can you find on the Jurat Page? ---------CORRECT ANSWER----------------- NAIC group code State of Domicile Year Incorporated Name/address/phone/website Officers/Directors/Trustees Sworn statement (3 officers) Notarized
Common changes made by Surplus Line companies to GL form: ---------CORRECT ANSWER-----------------Punitive damage exclusion Defense inside the limit Deductible applies to defense costs Contractual is limited Limited to designated ops/location Major differences between SIRs & Deductibles concern: ---------CORRECT ANSWER-----------------Insurer responsibilities in the event of a loss Collateral requirements Defense Costs COI's Limits erosion Definitions of 'claim' can include: ---------CORRECT ANSWER-----------------Written demand Any demand of money or relief Filing of suit Lodging complaint with regulatory body Policy limit is increased (refreshed) if tail coverage is purchased; True or False? ---- -----CORRECT ANSWER-----------------False- continuation of limit; does not refresh
A) UW's decide on behalf of its Members which risks a Syndicate will underwrite and what terms B) Business is conducted in an UW room (face to face negotiations) C) A & B D) none of the above ---------CORRECT ANSWER-----------------C - both are true Responsibilities of a Cover Holder include issuing insurance documentation on behalf of the Members of a Syndicate, True or False? ---------CORRECT ANSWER---- -------------True - Cover Holders are companies authorized by a Managing Agent A Members Agent will advise Members on which Syndicates to participate in; True or False? ---------CORRECT ANSWER-----------------True Which governing body assign's the Syndicate # ---------CORRECT ANSWER------------ -----The Council of Lloyd's What does FSA stand for? ---------CORRECT ANSWER-----------------Financial Service Authority Loss Limit means; A) total amount of loss
B) any limit less than total property values C) highest limit on a SOV D) none of the above ---------CORRECT ANSWER-----------------B - (total value of all properties to large; loss limit is enough to cover total loss at any one location) What form is the DIC written on? ---------CORRECT ANSWER-----------------Named Perils What is the purpose of the FAIR plan? ---------CORRECT ANSWER----------------- Provide insurance for properties located in a less desirable area. Must be inspected PRIOR to placing coverage Coinsurance is waived with Agreed Amount; True or False? ---------CORRECT ANSWER-----------------True Earth Movement includes: A) Landslide B) Mudslide C) Sinkhole D) all of the above ---------CORRECT ANSWER-----------------D
