CIA CIA Insurance Market & Industry Practices 1

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 carriers are licensed by and subject to state rate and form regulation, while non-admitted (surplus lines) carriers are not bound by the same rules and cover risks that standard markets decline.

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

Indemnity is the foundational insurance principle that limits recovery to the insured's actual financial loss, preventing unjust enrichment.

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 binder is a temporary, legally binding confirmation of insurance coverage issued before the formal policy is prepared and delivered.

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

Reinsurance is insurance purchased by insurers to spread risk, protect against catastrophic losses, and stabilize their underwriting results.

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

The Associate in Claims (AIC) designation, offered by The Institutes, is specifically focused on property and casualty claims handling and appraisal skills.

(CIA) Certified Insurance Appraiser Practice Test

(CIA) Certified Insurance Appraiser Practice Test

CIA CIA Insurance Market & Industry Practices 1