State X’s premium tax rate is 2 percent. State Y’s premium tax rate is 3 percent. State X insurers are required to pay the 3 percent rate on business written in State Y. State X requires insurers from State Y to pay a 3 percent premium tax on business written in State X, even though the premium tax rate is only 2 percent in State X. This practice is known as a

Mutual Property Insurance Company has a surplus of $2 million. According to a conservative rule, how much in new net premiums can Mutual Property Insurance Company safely write?

The local franchise of a national bar and grill chain continued to serve a drunk customer. The drunk customer tried to drive home. He hit and killed two people who were riding bicycles. The representatives of those who were killed filed a lawsuit against the national chain. As jury awards in the area where the incident occurred are high, insurers selling liquor liability insurance refused to issue new coverage until the case was resolved. Because no admitted insurers sell the coverage, liquor liability insurance in this case is considered a(n)

Which of the following statements is (are) true about savings bank life insurance (SBLI)?I.Each depositor at the savings bank receives life insurance equal to his or her savings account balance. II.The goal of SBLI is to provide low-cost life insurance to consumers.

Under one life insurance marketing system, agents conduct sales interviews at the workplace with the approval of the management of the business. There are few direct costs to the employer, and this marketing system is especially appropriate for low-income and middle-income workers. This life insurance marketing system is called the

Advantages of the direct response system for marketing life insurance include which of the following?I.Advertising can be specifically directed to selected markets.II.Complex products can be easily sold.

As an alternative to demutualizing, Big Mutual Insurance Company reorganized itself into a corporate form that can directly or indirectly own a stock insurance company. This form of organization is called a(n)

All of the following statements about insurance regulation are true EXCEPT

Which of the following statements is (are) true regarding insurance agents and insurance brokers? I.A property and liability insurance agent has the authority to bind the insurer for certain types of coverage. II.A licensed broker who is not a licensed agent has the legal authority to bind an insurer.

In a Cobb-Douglas function we