CIA CIA Insurance Market & Industry Practices

Question 1

What distinguishes a 'admitted' insurer from a 'non-admitted' (surplus lines) insurer in the US?

Accepted Answer

Admitted insurers are licensed by the state and subject to rate/form regulation; non-admitted operate outside standard state regulation

Answer

Admitted insurers only cover commercial risks; non-admitted cover personal lines

Answer

Non-admitted insurers are government-backed; admitted are private

Answer

Admitted insurers offer only life insurance products

Question 2

The principle of 'indemnity' in insurance means the insured should:

Accepted Answer

Be restored to approximately the same financial position as before the loss, no better and no worse

Answer

Profit significantly from every covered loss

Answer

Receive full replacement value regardless of the property's age

Answer

Always receive a cash payout equal to policy limits

Question 3

What is an 'insurance binder' in US property insurance practice?

Accepted Answer

A temporary, short-term agreement confirming coverage is in force while the formal policy is being issued

Answer

A physical folder holding all policy documents

Answer

A discount certificate for multi-policy holders

Answer

A state-required document for policy renewals only

Question 4

In the US insurance market, 'reinsurance' primarily serves to:

Accepted Answer

Enable primary insurers to transfer a portion of their risk to another insurer to manage exposure

Answer

Allow policyholders to switch carriers mid-term

Answer

Provide direct coverage to end consumers at lower premiums

Answer

Guarantee state-mandated minimum coverage limits

Question 5

Which professional designation is specifically relevant to property and casualty claims and appraisal work in the US?

Accepted Answer

Associate in Claims (AIC)

Answer

Chartered Financial Analyst (CFA)

Answer

Certified Public Accountant (CPA)

Answer

Project Management Professional (PMP)

Question 6

What is the function of an insurance 'deductible' in loss settlements?

Accepted Answer

It is the amount the insured must pay out-of-pocket before insurance benefits apply

Answer

It increases the payout the insurer owes the policyholder

Answer

It sets the maximum amount an insurer will pay on a claim

Answer

It is a penalty assessed for late premium payments