1. Agent liability can be created by the status of an

1 1. Agent liability can be created by the status of anagent. The law of _____ is the area of the lawthat determines producer starts and binds theagent/broker for his acts and Reversible OmissionsB. AgencyC. Professional StatusD. Professional Agents2. A producer s status can be classed as an agencyrelationship or as a principal- Agent there is an agreement to the contrary, thelaw generally considers most insurancetransactions to beA. Agency RelationshipsB. Principal- Agent RelationshipsC. Null and voidD. Unenforceable3. Agent liability can be created by contract disputesand Agent promises. Producers can be liableunder two primary proof centers _____&_____A. Caveat emptor & Primas FaciaB. The existence of an insurance contract or Breach of contract or B&C only4. Agent liability can be created by Agent torts orwrongdoings.

2 The applicable proofs of center hereare _____& Applicable professional standardsB. Agent /broker acts or omissions that do notmeet standard professional A & BD. Not applicable5. Agent liability can be created by agentrelationships with clients and insurers. In someinstances, an Agent is considered a form of liability is contributory liability which can occur whenA. An Agent holds himself out to be an expert B. An Agent earns credentials that establisheshimself as a professional (CLU, CFP, etc)C. An Agent has a history of ALWAYS handling theclient s business over a long period of timeD. All of the above6. Agent liability is created when insurers file claimsagainst agents. Following are examples of caseswhere an insurance company might sue an agentA. Misappropriating client premiumsB. Failing to disclose risks to the insurerC.

3 Failure to notify client of policy cancellationD. All of the above7. Agent liability is created by insurer failures whenfacts about a company have been misrepresentedor when special circumstances/relationships existin an insurance transaction. The general rule concerning insurer failures, however, is thatagents areA. Fully responsible for any insurer failureB. Not guarantors of the financial condition orsolvency of an Not capable of making a decision on thesolvency of insurance Never liable8. Concerning an existing policy, an Agent can createliability through breach of contract under whichof the following methodsA. Failure to act to procure coverageB. Failure to notify lack of available coverageC. Failure to place coverage at best availableterms but not necessarily the lowest priceD. All of the above9.

4 Breach of contract disputes can create liabilityfor agents under which of these collateral issues A. Policy promises & provisionsB. Agent & advertising promises outside thepolicyC. Policy interpretations and minimum standardsD. All of the above10. Examples of Agent bad faith actions that havetriggered liability includeA. Transactions where agents exhibited unfairconduct, fraud, deceit, misrepresentedproduct/companyB. Transactions where Agent violated statuesdealing with unfair settlement practices liketalking a client out of a claim or suggesting alower claim payment to keep premiums Personally communication client claims to A & B Agent negligence & misrepresentation situationsthat cause Agent /broker liability includeA. Failure to procure complete coverage aspromisedB. Failure to advise coverage when it was knownto the Agent it was neededC.

5 Replacement of an old policy with a new policyhaving LESS coverage without disclosureD. All of the above12. An Agent who handles pension plans can beclassed an ERISA fiduciary if heA. Receives a consulting fee for establishing ormanaging the pension planB. Maintains an on-going relationship with thepension trustees who accept and rely on hisadviceC. Acts only in the capacity of an Agent , offering achoice of productsD. A&B only13. Agent due care is best defined asA. The systematic and detailed financial planningof a clients complete estateB. Ethical handling and choice of company,product and sales presentation to best serve aclient s financial Care in filling our insurance applicationsD. Selective review, on a periodic bases, of aclient s income tax return14. Agent due care in choosing a company for a clientcenters onA.

6 The company s brochureB. The ability to direct a client to an insurer that issolvent at the time of purchase and able tomeet its contractual obligationsC. Methods to predict which insurers will besolvent in ten yearsD. The Agent s desire to do a good job15. The primary reason why professional agentassociations and regulators want new rulesconcerning Agent due care quote and illustration methods is becauseA. Agents can make more income usingcomputerized illustrations and quotesB. Regulators and professional groups want tocontrol every aspect of the insurancetransactionC. The sophistication and high quality ofproposals have caused agents and clients todepend more on the face value of illustrationsand quote rather than the actual policy itselfD. No one is using them16. The Unfair Trade and Practices Law prohibitsagents and insurance companies fromA.

7 B&C onlyB. Engaging in unfair methods of competition anddeceptive actsC. Circulating any oral of written statement that isfalse or critical to the financial condition of aninsurance company or person engaged in thebusiness of insuranceD. Competing aggressively17. No matter how clear the language, most insurancepolicies contain areas of ambiguity. The universalrule regarding policy ambiguity that is upheld bymost courts statesA. Ambiguous statements favor the insurerB. Ambiguous statements will void the entirepolicyC. If the policy could imply to a reasonable personthat coverage is in force, yet that exactlanguage does not exist in the policy, thecoverage DOES extend to the All of the above18. Risked based capital is one method wherebyagents practicing due care in choosing an insurerfor a client. In essence, risked based capital is atest ofA.

8 Capital sufficiencyB. Asset-default possibilitiesC. Surplus minimumsD. All of the above19. Concerning Agent vs. broker issues, the purposeof determining whether an insurance producer isacting as an Agent or a brokerA. Determines who will prevail in courtB. Helps establish theories of liability that theclient may plead and what defenses the agentor his insurer may Has no value in any court proceedingD. Helps decide who is right20. Dual agency can occur where an Agent assumesadditional duties by agreement or professing tohave special expertise. When a dual agencyexists, the Agent may be held liableA. Only to the insurerB. Only to the clientC. To both the client and the insurer for breach ofdutyD. All of the above21. Contributory liability of an Agent occurs when theagent holds himself out to be an expert orspecialist beyond normal standards.

9 Some of thelegal strategies that help create contributoryliability includeA. Prospective clients rely on agents for who profess to be insuranceprofessionals, experts, planners, etc, assume ahigher standard of careB. Agents who advertise their specialknowledge create reasonable expectations byclients, thus added liabilityC. In the course of most insurance transactions,the role of dual Agent is generally attained bymost producers intentionally or unintentionallyD. All of the above22. Agent illustration due care is the process oftreating the client fairly under which of thefollowing guidelinesA. All of the followingB. Always have a copy of a specimen policy onfile to answer client questionsC. Before doing business with a specificcompany, request a copy of all policyillustrations and clear up any questions beforeusing them with clientsD.

10 Be certain that ALL illustration pages areprinted and that all projections/assumptionsare disclosed and discussed with the The Armstrong report was part of a Congressionalinvestigation involvingA. Insurance premiumsB. Insurance policiesC. Insurance company financial reporting abuseD. Insurance fraud24. Reinsurance is defined asA. Insurance that has already been placedB. Insurance for insurance companiesC. Insurance for life companies onlyD. Insurance for casualty companies only25. An insurer s z-score A. Is measured over a four year periodB. Is a model to determine stabilityC. Is a measurement used by Standard & Poor sD. All of the above26. The purpose of State Guaranty FundsA. Is to underwrite all promises of an insurerB. Is to fully guarantee reasonable expectations ofpolicyholdersC. Is to reimburse the state for lossesD.