NYPCL New york Property and Causality license exam - Set 1 - Part 2

Test your knowledge of technical writing concepts with these practice questions. Each question includes detailed explanations to help you understand the correct answers.

Question 21: Several lines of insurance in New York require companies to maintain special investigation units and to report suspected fraudulent claims to the state. Which body receives those fraud reports?

The federal Department of Justice

The National Association of Insurance Commissioners

The local district attorney only

The Insurance Frauds Bureau

Question 22: An insurer wants to share a customer's nonpublic personal financial information with an outside company for marketing. New York privacy rules generally require the insurer to first do what?

Obtain Department approval

Publish the information publicly

Give notice and an opt-out opportunity

Cancel the customer's policy

Question 23: New York limits a producer from obtaining a license mainly to write insurance on the producer's own property, family, or business interests. This restriction targets what?

Controlled business

Commission sharing

Fiduciary duty

Twisting

Question 24: A producer collects premium dollars from clients that belong to the insurer until they are remitted. The duty to keep these funds properly and not treat them as personal money is known as what?

Controlled business

Fiduciary responsibility

Utmost good faith

Apparent authority

Question 25: New York rules require producers to keep their license available and to show it when a client or the Department asks to see it. This obligation concerns what?

Display of the license

Continuing education

Controlled business

Rebating

Question 26: When an insurer ends its appointment of an agent, New York generally requires the insurer to notify the Department and, in many cases, the agent. This filing concerns what event?

License renewal

A rate increase

Termination of the appointment

A consumer privacy breach

Question 27: An insurer uses a consumer credit report when deciding whether to issue a policy. A federal law governs how that report may be used and gives consumers certain rights. Which law applies?

The Fair Credit Reporting Act

The Insurance Frauds Prevention Act

The Gramm-Leach-Bliley privacy rule

The McCarran-Ferguson Act

Question 28: A person previously convicted of a felony involving dishonesty wants to work in the insurance business. Federal law generally bars this unless the person first obtains what?

A surplus lines authorization

A certificate of authority

A temporary license

Written consent under the federal statute

Question 29: Insurance is designed to address situations involving only the chance of loss or no loss, with no possibility of gain. What type of risk does this describe?

Pure risk

Speculative risk

Financial gain risk

Dynamic profit risk

Question 30: A homeowner becomes careless about locking doors because insurance will cover any theft. This attitude of indifference that increases the chance of loss is best described as what?

A peril

Morale hazard

Moral hazard

Physical hazard

Question 31: An insurance policy lists fire, windstorm, and theft as covered events that can cause damage or loss. In insurance terms, these covered causes of loss are called what?

Hazards

Exposures

Losses

Perils

Question 32: A business buys an insurance policy so that the financial consequences of a possible large loss shift to the insurer. Which risk management technique does buying insurance represent?

Risk retention

Risk transfer

Risk avoidance

Risk reduction

Question 33: Insurers prefer risks where the loss is accidental, measurable, and not catastrophic to the company, and where many similar units exist. A loss caused intentionally by the insured fails which requirement?

It must be catastrophic

It must be speculative

It must be unmeasurable

It must be due to chance

Question 34: People who know they face a higher chance of loss tend to seek insurance more eagerly than low-risk people do. Insurers guard against this tendency, which is known as what?

The law of large numbers

Adverse selection

Risk retention

Indemnity

Question 35: An insurer can predict losses more accurately as it insures a greater number of similar, independent exposures. This statistical principle underlying insurance is called what?

The law of large numbers

Adverse selection

The principle of indemnity

Subrogation

Question 36: An insurer transfers part of the risk it has accepted to another insurer to protect itself against large or accumulated losses. This arrangement between insurers is called what?

Coinsurance

Self-insurance

Reinsurance

Subrogation

Question 37: An insurance company is owned by its shareholders, who supply its capital and may receive taxable dividends from its profits. Which type of insurer is this?

A stock insurer

A mutual insurer

A reciprocal insurer

A fraternal benefit society

Question 38: An insurer is owned by its policyholders, who may receive a return of unused premium in the form of policy dividends. Which type of insurer best fits this description?

A stock insurer

A reciprocal insurer

A surplus lines insurer

A mutual insurer

Question 39: An insurer organized under the laws of another country sells coverage in New York. Relative to New York, how is this insurer classified?

An alien insurer

A foreign insurer

A domestic insurer

A nonadmitted insurer

Question 40: A company has received a certificate of authority from New York and may transact the lines listed on it. Relative to New York, this insurer is best described as what?

An alien insurer

An admitted insurer

A nonadmitted insurer

A reciprocal insurer

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