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Download WA SURPLUS LINES BROKER PRACTICE EXAM QUESTIONS WITH CORRECT ANSWERS GRADED A+ 2025/2026 and more Exams Insurance law in PDF only on Docsity!
A program manager surplus lines intermediary usually performs functions related to the program business, such as - Correct Answer Marketing the program to retail agents and sometimes to wholesalers. Surplus lines laws hold the surplus lines intermediary responsible for filing a diligent search affidavit for each account it writes, confirming that - Correct Answer Coverage has been declined by admitted insurers. A program manager is a surplus lines intermediary that - Correct Answer Creates a special, or niche, program that fits a particular market. Surplus lines intermediaries counsel customers in a process that is similar to the risk management process producers perform. However, surplus lines intermediaries take their counseling process even more seriously than producers because the intermediary - Correct Answer Must offer advice on appropriate existing coverage as well as unique or new coverage that becomes available. As surplus lines intermediaries, underwriting managers act on behalf of a single insurer and have - Correct Answer Broad authority to bind the insurer, place reinsurance on its behalf, and settle claims. As surplus lines intermediaries, managing general agents (MGAs) are best described as which one of the following? - Correct Answer MGAs are generally authorized to bind the insurer on loss exposures that fit the insurer's underwriting guidclines. Tn most cases, a surplus lines intermediary acts as an intermediary between - Correct Answer A surplus lines insurer and a retail producer to procure insurance for the retail producer's customer. Which onc of the following describes the fiduciary responsibility of the surplus lines intermediary? - Correct Answer Collecting premiums and taxes from policyholders and holding those funds in trust. A managing general agents (MGA's) most important responsibility to the insurer(s) it represents is to - Correct Answer Follow the underwriting guidelines and binding authority the insurer has specified. Ifall agents and brokers are permitted to obtain a surplus lines license to place insurance directly with surplus lines insurers, why do many of these agents and brokers seek the services of a surplus lines broker as an intermediary? - Correct Answer They do not hold a surplus lines license. For surplus lines insurers, freedom from form and rate regulation - Correct Answer Reduces the time and expense required to bring that new insurance products to the market. Without freedom from form and rate filing regulations, surplus lines insurers - Correct Answer Would not have the flexibility to accept the types of risks submitted to them. To protect the public, surplus lines laws in cach state restrict surplus lines licensees to placing coverage only with insurers that satisfy specific criteria. What must the surplus lines licensees verify for each nonadmitted insurer providing coverage? - Correct Answer Their financial strength and viability Surplus lines laws do not regulate the insurers to which risks are exported because those insurers are - Correct Answer Not within the state's jurisdiction or subject to its authority. Retail producers may obtain a surplus lines license, which allows them to place surplus lines business - Correct Answer Directly with a surplus lines insurer. Most of the business written by Lloyd's is submitted by Lloyd's broker. A Lloyd's broker - Correct Answer Negotiates competitive terms and conditions with Lloyd's underwriters on behalf of insurance applicants. As surplus lines intermediaries, national wholesalers that are subsidiaries of larger organizations - Correct Answer Have access to the exclusive surplus lines products or programs owned by the larger organization. Independent wholesale brokers usually - Correct Answer Opcrate within their state of domicile or region and practice niche marketing to gain a competitive advantage. Ifa surplus lincs broker determines that a surplus lines policy has not been issued in accordance with the quote and the binder, the broker - Correct Answer Must resolve any differences quickly to avoid an errors and omissions claim. When a surplus lines intermediary submits a highly unusual account - Correct Answer Approaching many insurers might prove most successful. The first step in the surplus lines intermediary transaction process is qualifying the underwriting submission. Which one of the following best describes this step? - Correct Answer Gathering information and evaluating the account The federal Nonadmitted and Reinsurance Reformed Act (NRRA) of 2011 simplified the surplus lines market by doing which one of the following? - Correct Answer Imposing national cligibility standards for surplus lines insurers domiciled in any United States jurisdiction Licensed surplus lines intermediaries are permitted to place business with alicn insurers that meet which one of the following requirements? - Correct Answer They appear on the Quarterly Listing of Alien Insurers published by the International Insurers Department (IID) of the National Association of Insurance Commissioncrs (NAIC). Which one of the following statements is correct with respect to the solvency of surplus lines insurers? - Correct Answer Over the past ten years, U.S. surplus lines insurers have consistently performed better financially than the overall property-casualty industry. Which one of the following statements is correct with respect to surplus lines insurers' operations? - Correct Answer The expertise of a surplus lines insurers' underwriters may influence the classes of business the insurer writes. Most states require that automobile liability insurance be written by admitted insurers to ensure that policyholders have - Correct Answer State guaranty fund protection. Facultative reinsurance is important for surplus lines insurers because - Correct Answer It can cover exposures excluded under insurers’ reinsurance treaties. Which onc of the following statements is correct with respect to the effect of the insurance underwriting cycle on surplus lines insurers? - Correct Answer Surplus lines premiums typically expand during a hard market and contract during a soft market. Which one of the following statements is correct with respect to taxation and surplus lines insurers? - Correct Answer Surplus lines insurers consider tax rates when determining what products to offer in which states. The classes of business that a surplus lines insurer will offer depend on management's willingness to accept which one of the following? - Correct Answer Underwriting risk Generally, in a relationship in which a surplus lines intermediary has binding authority, the insurer sces the application - Correct Answer Several wecks after the policy is in effect. Which one of the following statements is correct with respect to underwriting? - Correct Answer Rather than a predetermined underwriting guidelines, surplus lines underwriters use specialized knowledge and judgment in risk selection. In the simplest case, a policy premium is calculated by multiplying the applicable insurance rate by the - Correct Answer Number of exposure units. The rate an insurer charges for a particular product is based on - Correct Answer Loss costs, expenses, contingencies, and profits. After a surplus lines policy is issued but before any losses occur, the insurer may - Correct Answer Send an experienced claim representative to meet with the intermediary and the insured. A surplus lines intermediary's services are as integral to the insurance product as those performed by the insurer when the intermediary's services include - Correct Answer Underwriting and pricing. Property-casualty insurers frequently provide which one of the following types of services to insureds as part of the insurance product? - Correct Answer Risk control services A local service club brings a circus to town each summer as a fundraising activity. The club's admitted insurer excludes liability coverage for the event because it's underwriting staff does not have the expertise or coverage forms to write the risk. A surplus lines underwriter probably would be able to write the special event liability coverage profitably by taking which one of the following approaches? - Correct Answer Obtaining a certificate of insurance showing the circus has adequate coverage and requiring the service club to be added to the policy as an insured Which one of the following statements is correct with respect to coverage for organizations that do busincss over the Internet? - Correct Answer Because of its expertise in handling unusual risks, the surplus lines market has been able to respond to this new coverage need. The losses that result when a virus attack damages an insured's software and corrupts its associated data are commonly known as which one of the following? - Correct Answer Cyber risk The town of Williamston is planning a baseball tournament and a barbecue to celebrate its centennial anniversary. Unfortunately, town managers and unionized workers are in wage negotiations, and there is a risk that a strike might force the town to cancel the celebrations. Which one of the following surplus lines products would best meet the town's needs? - Correct Answer Event cancellation insurance 
