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Surplus Lines Licensing Exam: Questions and Answers, Exams of Insurance law

North Carolina Central University (NCCU)Insurance law

A series of questions and answers related to the surplus lines licensing exam. It covers various aspects of surplus lines insurance, including definitions, regulations, and requirements for eligible insurers. The document can be helpful for individuals preparing for the exam, but it lacks detailed explanations and context.

Typology: Exams

2024/2025

Available from 02/11/2025

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Surplus Lines Licensing Exam with
verified answers
Purpose |!|- |!|correct |!|answer |!|✔1. |!|PROTECT |!|PERSONS |!|seeking |!|insurance |!|in |!|PA
2. |!|PERMIT |!|surplus |!|lines |!|insurance |!|to |!|be |!|placed |!|with |!|reputable |!|and |!|financially |!|sound |!|non-
admitted |!|insurers |!|and |!|exported |!|from |!|this |!|Commonwealth |!|pursuant |!|to |!|this |!|article |!|
3. |!|Establishing |!|a |!|SYSTEM |!|OF |!|REGULATION |!|which |!|will |!|permit |!|orderly |!|access |!|to |!|surplus |!|lines |!|
insurance |!|in |!|this |!|Commonwealth |!|and |!|encouraging |!|insurers |!|to |!|make |!|NEW |!|AND |!|INNOVATIVE |!|
types |!|of |!|insurance |!|available |!|to |!|consumers |!|in |!|the |!|Commonwealth |!|
4. |!|PROTECT |!|REVENUES
admitted |!|user |!|- |!|correct |!|answer |!|✔insurer |!|licensed |!|to |!|do |!|an |!|insurance |!|business |!|in |!|this |!|
Commonwealth
affiliate |!|- |!|correct |!|answer |!|✔with |!|respect |!|to |!|any |!|insured, |!|any |!|entity |!|that |!|controls, |!|is |!|
controlled |!|by |!|or |!|is |!|under |!|common |!|control |!|with |!|the |!|insured
affiliated |!|group |!|- |!|correct |!|answer |!|✔any |!|group |!|of |!|entities |!|that |!|are |!|all |!|affiliated
business |!|entity |!|- |!|correct |!|answer |!|✔a |!|corporation, |!|partnership, |!|a |!|limited |!|liability |!|company, |!|a |!|
limited |!|liability |!|partnership, |!|a |!|business |!|trust |!|or |!|any |!|other |!|entity |!|doing |!|business |!|other |!|than |!|a
|!|natural |!|person
capital |!|- |!|correct |!|answer |!|✔the |!|term, |!|as |!|used |!|in |!|the |!|financial |!|requirements |!|section |!|1605, |!|
means |!|funds |!|paid |!|for |!|stock |!|or |!|other |!|evidence |!|of |!|ownership
commissioner |!|- |!|correct |!|answer |!|✔The |!|Insurance |!|Commssioner |!|of |!|the |!|Commonwealth
Control |!|- |!|correct |!|answer |!|✔An |!|entity |!|has |!|control |!|over |!|another |!|entity |!|if:
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Download Surplus Lines Licensing Exam: Questions and Answers and more Exams Insurance law in PDF only on Docsity!

Surplus Lines Licensing Exam with

verified answers

Purpose |!|- |!|correct |!|answer |!| ✔ 1. |!|PROTECT |!|PERSONS |!|seeking |!|insurance |!|in |!|PA

  1. |!|PERMIT |!|surplus |!|lines |!|insurance |!|to |!|be |!|placed |!|with |!|reputable |!|and |!|financially |!|sound |!|non- admitted |!|insurers |!|and |!|exported |!|from |!|this |!|Commonwealth |!|pursuant |!|to |!|this |!|article |!|
  2. |!|Establishing |!|a |!|SYSTEM |!|OF |!|REGULATION |!|which |!|will |!|permit |!|orderly |!|access |!|to |!|surplus |!|lines |!| insurance |!|in |!|this |!|Commonwealth |!|and |!|encouraging |!|insurers |!|to |!|make |!|NEW |!|AND |!|INNOVATIVE |!| types |!|of |!|insurance |!|available |!|to |!|consumers |!|in |!|the |!|Commonwealth |!|
  3. |!|PROTECT |!|REVENUES admitted |!|user |!|- |!|correct |!|answer |!| ✔ insurer |!|licensed |!|to |!|do |!|an |!|insurance |!|business |!|in |!|this |!| Commonwealth affiliate |!|- |!|correct |!|answer |!| ✔ with |!|respect |!|to |!|any |!|insured, |!|any |!|entity |!|that |!|controls, |!|is |!| controlled |!|by |!|or |!|is |!|under |!|common |!|control |!|with |!|the |!|insured affiliated |!|group |!|- |!|correct |!|answer |!| ✔ any |!|group |!|of |!|entities |!|that |!|are |!|all |!|affiliated business |!|entity |!|- |!|correct |!|answer |!| ✔ a |!|corporation, |!|partnership, |!|a |!|limited |!|liability |!|company, |!|a |!| limited |!|liability |!|partnership, |!|a |!|business |!|trust |!|or |!|any |!|other |!|entity |!|doing |!|business |!|other |!|than |!|a |!|natural |!|person capital |!|- |!|correct |!|answer |!| ✔ the |!|term, |!|as |!|used |!|in |!|the |!|financial |!|requirements |!|section |!|1605, |!| means |!|funds |!|paid |!|for |!|stock |!|or |!|other |!|evidence |!|of |!|ownership commissioner |!|- |!|correct |!|answer |!| ✔ The |!|Insurance |!|Commssioner |!|of |!|the |!|Commonwealth Control |!|- |!|correct |!|answer |!| ✔ An |!|entity |!|has |!|control |!|over |!|another |!|entity |!|if:
  1. |!|the |!|entity |!|directly |!|or |!|indirectly |!|involved |!|or |!|acting |!|through |!|one |!|or |!|more |!|other |!|persons |!| owns, |!|controls |!|or |!|has |!|the |!|power |!|to |!|vote |!|25% |!|or |!|more |!|of |!|any |!|class |!|of |!|voting |!|securities |!|of |!| the |!|other |!|entity |!|or;
  2. |!|the |!|entity |!|controls |!|in |!|any |!|manner |!|the |!|election |!|of |!|a |!|majority |!|of |!|the |!|directors |!|or |!|trustees |!|of |!|the |!|other |!|entity Department |!|- |!|correct |!|answer |!| ✔ The |!|Insurance |!|Department |!|of |!|the |!|Commonwealth Eligible |!|surplus |!|lines |!|insurer |!|- |!|correct |!|answer |!| ✔ a |!|nonadmitted |!|insurer |!|with |!|which |!|a |!|surplus |!| lines |!|licensee |!|may |!|place |!|surplus |!|lines |!|insurance |!|under |!|section |!| 1604 export |!|- |!|correct |!|answer |!| ✔ to |!|place |!|surplus |!|lines |!|insurance |!|with |!|either |!|a |!|nonadmitted |!|insurer |!|or |!|an |!|eligible |!|surplus |!|lines |!|insurer |!|in |!|accordance |!|with |!|their |!|home |!|state home |!|state |!|- |!|correct |!|answer |!| ✔ come |!|back independently |!|procured |!|insurance |!|- |!|correct |!|answer |!| ✔ any |!|insurance |!|directly |!|procured |!|by |!|an |!| insured |!|from |!|a |!|nonadmitted |!|user insurance |!|producer |!|- |!|correct |!|answer |!| ✔ a |!|person |!|that |!|is |!|licensed |!|to |!|sell |!|solicit |!|or |!|negotiate |!| contracts |!|of |!|insurance |!|with |!|admitted |!|insurers kind |!|of |!|insurance |!|- |!|correct |!|answer |!| ✔ one |!|of |!|the |!|types |!|of |!|insurance |!|required |!|to |!|be |!|reported |!|in |!|the |!|annual |!|statement |!|which |!|must |!|be |!|filed |!|with |!|the |!|department |!|by |!|admitted |!|insurers nonadmitted |!|insurer |!|- |!|correct |!|answer |!| ✔ an |!|insurer |!|not |!|authorized |!|and |!|not |!|licensed |!|to |!|do |!|an |!|insurance |!|business |!|in |!|this |!|Commonwealth. |!|The |!|term |!|includes |!|insurance |!|exchanges |!|as |!| authorized |!|under |!|the |!|laws |!|of |!|various |!|states. |!|The |!|term |!|does |!|not |!|include |!|a |!|risk |!|retention |!| group. person |!|- |!|correct |!|answer |!| ✔ a |!|natural |!|person |!|or |!|business |!|entity
  1. |!|the |!|property |!|has |!|reached |!|its |!|final |!|destination |!|as |!|specified |!|in |!|the |!|bill |!|of |!|lading |!|or |!|other |!| shipping |!|document
  2. |!|the |!|insured |!|no |!|longer |!|has |!|an |!|insurable |!|interest |!|in |!|the |!|property writing |!|producer |!|- |!|correct |!|answer |!| ✔ the |!|insurance |!|producer |!|which |!|brings |!|about |!|or |!|negotiates |!|contracts |!|of |!|insurance |!|directly |!|on |!|behalf |!|of |!|the |!|consumer |!|seeking |!|insurance unfair |!|insurance |!|practices |!|act |!|- |!|correct |!|answer |!| ✔ regulate |!|trade |!|practices |!|in |!|the |!|business |!|of |!| insurance |!|in |!|accordance |!|with |!|the |!|intent |!|of |!|congress |!|by |!|defining |!|or |!|providing |!|the |!| determination |!|of |!|all |!|such |!|practices |!|in |!|this |!|state |!|which |!|constitute |!|unfair |!|methods |!|of |!| competition |!|or |!|unfair/deceptive |!|acts |!|or |!|practices |!|and |!|by |!|prohibiting |!|the |!|trade |!|practices |!|so |!| defined |!|and |!|determined Requirements |!|for |!|eligible |!|surplus |!|lines |!|insurers |!|- |!|correct |!|answer |!| ✔ 1. |!|authorized |!|to |!|write |!|the |!|type |!|of |!|insurance |!|in |!|its |!|domiciliary |!|jurisdiction |!|
  3. |!|has |!|capital |!|and |!|surplus |!|or |!|its |!|equivalent |!|under |!|the |!|laws |!|of |!|its |!|domiciliary |!|jurisdiction |!| greater |!|than |!|or |!|equal |!|to |!| 15 |!|million |!|dollars; |!|exceptions |!|made |!|by |!|Commissioner |!|but |!|not |!| under |!|4.5 |!|million |!|dollars |!|
  4. |!|if |!|domiciled |!|outside |!|US: |!|must |!|be |!|listed |!|on |!|Quarterly |!|Listing |!|of |!|Alien |!|Insurers |!|
  5. |!|appear |!|on |!|most |!|recent |!|list |!|of |!|eligible |!|surplus |!|lines |!|insurers |!|published |!|by |!|department |!|(not |!|required) Grounds |!|for |!|Withdrawal |!|of |!|Surplus |!|Lines |!|Eligibility |!|- |!|correct |!|answer |!| ✔ 1. |!|in |!|unsound |!|financial |!|condition |!|
  6. |!|no |!|longer |!|eligible |!|under |!|section |!| 1605 |!|(requirements |!|for |!|eligible |!|surplus |!|lines |!|insurers) |!|
  7. |!|willfully |!|violated |!|the |!|laws |!|of |!|the |!|Commonwealth |!|
  8. |!|does |!|not |!|make |!|reasonably |!|prompt |!|payment |!|of |!|just |!|losses |!|and |!|claims |!|in |!|this |!| Commonwealth |!|or |!|elsewhere Notification |!|of |!|Ineligibility |!|- |!|correct |!|answer |!| ✔ Department |!|will |!|mail |!|notice |!|of |!|all |!|such |!| notification |!|to |!|each |!|surplus |!|lines |!|licensee |!|and, |!|in |!|the |!|event |!|of |!|nonpayment, |!|the |!|notice |!|shall |!|be |!|issued |!|at |!|least |!| 30 |!|days |!|prior |!|to |!|the |!|effective |!|date |!|of |!|the |!|withdrawal |!|of |!|eligibility

Service |!|of |!|process |!|against |!|surplus |!|lines |!|insurer |!|- |!|correct |!|answer |!| ✔ 1. |!|may |!|be |!|sued |!|upon |!|any |!|cause |!|of |!|action |!|arising |!|in |!|this |!|Commonwealth |!|under |!|any |!|surplus |!|lines |!|insurance |!|contract |!| made |!|by |!|or |!|or |!|evidence |!|of |!|insurance |!|issued |!|and |!|delivered |!|by |!|the |!|surplus |!|lines |!|licensee |!|

  1. |!|Each |!|nonadmitted |!|insurer |!|accepting |!|surplus |!|lines |!|insurance |!|shall |!|be |!|deemed |!|thereby |!|to |!| have |!|subjected |!|itself |!|to |!|accepting |!|services |!|of |!|process
  2. |!|the |!|service |!|of |!|process |!|procedures |!|in |!|this |!|section |!|are |!|in |!|addition |!|to |!|any |!|other |!|methods |!| provided |!|by |!|law |!|for |!|service |!|of |!|process |!|upon |!|insurers 42 |!|Pa.C.S. |!|Ch. |!| 53 |!|Subch. |!|B |!|(Service |!|of |!|processes) |!|- |!|correct |!|answer |!| ✔ relates |!|to |!|the |!|service |!| of |!|processes |!|against |!|surplus |!|lines |!|insurer Requirements |!|for |!|a |!|placement |!|of |!|surplus |!|lines |!|insurance |!|- |!|correct |!|answer |!| ✔ 1. |!|each |!|insurer |!| is |!|an |!|eligible |!|surplus |!|lines |!|insurer |!|
  3. |!|the |!|placement |!|satisfies |!|at |!|least |!|one |!|of |!|the |!|following |!|criteria: |!| |!|-the |!|full |!|amount |!|or |!|kind |!|cannot |!|be |!|obtained |!|from |!|admitted |!|insurers |!|(must |!|provide |!|diligent |!|oversight) |!|-the |!|full |!|amount |!|or |!|kind |!|cannot |!|be |!|obtained |!|from |!|any |!|admitted |!|insurers |!|because |!|coverage |!|comparable |!|to |!|the |!|coverage |!|being |!|sought |!|is |!|not |!|available |!|in |!|the |!|authorized |!|market |!| |!|-the |!|kind |!|of |!|insurance |!|sought |!|to |!|be |!|obtained |!|requires |!|a |!|unique |!|form |!|of |!|coverage |!|not |!| available |!|in |!|the |!|admitted |!|market |!|
  4. |!|personal |!|lines |!|or |!|contract |!|forms: |!|the |!|policy |!|or |!|contract |!|form |!|does |!|not |!|differ |!|materially |!| from |!|policies |!|or |!|contracts |!|customarily |!|used |!|by |!|admitted |!|insurers |!| |!|-may |!|be |!|placed |!|using |!|a |!|unique |!|form |!|only |!|if |!|a |!|copy |!|of |!|such |!|form |!|is |!|at |!|first |!|filed |!|with |!|the |!|dept. |!|by |!|the |!|surplus |!|lines |!|licensee |!|desiring |!|to |!|use |!|it Diligent |!|search |!|process |!|- |!|correct |!|answer |!| ✔ assure |!|that |!|a |!|diligent |!|effort |!|was |!|made |!|to |!|place |!| the |!|coverage |!|in |!|the |!|admitted |!|or |!|licensed |!|market |!| |!|-requires |!|a |!|minimum |!|of |!|three |!|admitted |!|carriers |!|to |!|decline |!|the |!|risk |!| |!|-supports |!|the |!|fact |!|hat |!|the |!|surplus |!|lines |!|market |!|is |!|not |!|in |!|competition |!|with |!|the |!|admitted |!| market |!|and |!|is |!|to |!|be |!|viewed |!|as |!|a |!|second |!|level |!|market |!|that |!|is |!|allowed |!|but |!|never |!|encouraged How |!|to |!|document |!|declination |!|of |!|coverage |!|from |!|admitted |!|market |!|- |!|correct |!|answer |!| ✔ 1. |!| written |!|declination |!|from |!|the |!|admitted |!|insurer |!|

|!|-must |!|file |!|with |!|the |!|department |!|a |!|written |!|declaration |!|reporting |!|the |!|transaction |!|on |!|a |!|form |!| prescribed |!|by |!|the |!|department |!|within |!| 45 |!|days exempt |!|commercial |!|purchaser |!|- |!|correct |!|answer |!| ✔ any |!|person |!|purchasing |!|commercial |!|insurance |!|that: |!|

  1. |!|person |!|employs |!|or |!|retains |!|a |!|qualified |!|risk |!|manager |!|to |!|negotiate |!|insurance |!|coverage |!|
  2. |!|the |!|person |!|has |!|paid |!|aggregate |!|nationwide |!|commercial |!|P&C |!|insurance |!|premiums |!|above |!| 100K |!|in |!|the |!|last |!| 12 |!|months |!|
  3. |!|meets |!|at |!|least |!|one |!|of |!|the |!|following |!|criteria: |!| |!|-net |!|worth |!|above |!|$20 |!|million |!| |!|-annual |!|revenues |!|above |!|$50 |!|million |!| |!|-employs |!|more |!|than |!| 500 |!|employees |!| |!|-not |!|for |!|profit |!|with |!|annual |!|budget |!|expt. |!|over |!| 30 |!|million |!| |!|-person |!|= |!|municipality |!|with |!|more |!|than |!|50, admitted |!|insurer |!|- |!|correct |!|answer |!| ✔ an |!|insurer |!|with |!|a |!|valid |!|certificate |!|of |!|authority |!|to |!|do |!| insurance |!|business |!|in |!|this |!|Commonwealth Commissioner |!|- |!|correct |!|answer |!| ✔ the |!|Insurance |!|Commissioner |!|of |!|the |!|Commonwealth completed |!|operations |!|liability |!|- |!|correct |!|answer |!| ✔ liability |!|arising |!|out |!|of |!|the |!|installation, |!| maintenance, |!|or |!|repair |!|of |!|any |!|product |!|at |!|a |!|site |!|which |!|is |!|not |!|controlled |!|or |!|owned |!|by: |!|any |!| person |!|who |!|performs |!|this |!|work, |!|any |!|person |!|who |!|hires |!|an |!|independent |!|contractor |!|to |!| perform |!|that |!|work; |!|but |!|shall |!|include |!|liability |!|for |!|activities |!|which |!|are |!|completed |!|or |!| abandoned |!|before |!|the |!|date |!|of |!|occurrence |!|giving |!|rise |!|to |!|the |!|liability department |!|- |!|correct |!|answer |!| ✔ the |!|Insurance |!|Department |!|of |!|the |!|Commonwealth doing |!|business |!|- |!|correct |!|answer |!| ✔ those |!|acts |!|which |!|constitute |!|the |!|doing |!|of |!|insurance |!| business |!|in |!|this |!|Commonwelath |!|except |!|that |!|risk |!|retention |!|groups |!|and |!|purchasing |!|groups |!|are |!|not |!|doing |!|business |!|when |!|responding |!|to |!|a |!|request |!|for |!|coverage |!|received |!|directly |!|from |!|a |!|PA |!|resident |!|and |!|not |!|as |!|a |!|result |!|of |!|a |!|solicitation

domicile |!|- |!|correct |!|answer |!| ✔ for |!|the |!|purposes |!|of |!|determining |!|the |!|state |!|in |!|which |!|a |!|purchasing |!|group |!|is |!|domiciled;

  1. |!|for |!|a |!|corporation: |!|the |!|state |!|in |!|which |!|the |!|purchasing |!|group |!|is |!|incorporated |!|
  2. |!|for |!|an |!|unincorporated |!|entity: |!|the |!|state |!|of |!|its |!|principal |!|place |!|of |!|doing |!|business eligible |!|surplus |!|lines |!|insurer |!|- |!|correct |!|answer |!| ✔ a |!|nonadmitted |!|insurer |!|doing |!|business |!|in |!|this |!|Commonwealth hazardous |!|financial |!|condition |!|- |!|correct |!|answer |!| ✔ a |!|condition |!|in |!|which, |!|based |!|on |!|its |!|present |!| or |!|reasonably |!|anticipated |!|financial |!|condition, |!|a |!|risk |!|retention |!|group, |!|although |!|not |!|yet |!| financially |!|impaired |!|or |!|insolvent, |!|is |!|unlikely |!|to |!|be |!|able: |!|
  3. |!|to |!|meet |!|obligations |!|to |!|policyholders |!|
  4. |!|to |!|pay |!|other |!|obligations |!|in |!|the |!|normal |!|course |!|of |!|doing |!|business insurance |!|- |!|correct |!|answer |!| ✔ primary |!|insurance, |!|excess |!|insurance, |!|reinsurance, |!|surplus |!|lines |!| insurance |!|and |!|any |!|other |!|arrangement |!|for |!|shifting |!|and |!|distributing |!|risk |!|which |!|is |!|determined |!| to |!|be |!|insurance |!|under |!|the |!|laws |!|of |!|this |!|Commonwealth liability |!|- |!|correct |!|answer |!| ✔ the |!|term |!|means |!|legal |!|liability |!|for |!|damages |!|because |!|of |!|injuries |!|to |!|other |!|persons, |!|damage |!|to |!|their |!|property, |!|or |!|other |!|damage |!|or |!|loss |!|arising |!|out |!|of: |!|
  5. |!|any |!|business, |!|trade, |!|product, |!|services, |!|premises |!|or |!|operations |!|
  6. |!|any |!|activity |!|in |!|an |!|state |!|or |!|local |!|gov't, |!|agency, |!|or |!|political |!|subdivision |!|thereof |!| |!|-does |!|not |!|include |!|personal |!|risk |!|liability |!|and |!|an |!|employer's |!|liability |!|with |!|respect |!|to |!|its |!| employees nonadmitted |!|insurer |!|- |!|correct |!|answer |!| ✔ an |!|insurer |!|that |!|does |!|not |!|have |!|a |!|certificate |!|of |!| authority |!|to |!|do |!|insurance |!|business |!|in |!|this |!|Commonwealth; |!|includes |!|insurance |!|exchanges |!| authorized |!|under |!|laws |!|of |!|various |!|states personal |!|risk |!|liability |!|- |!|correct |!|answer |!| ✔ a |!|liability |!|for |!|damages |!|because |!|of |!|injury |!|to |!|any |!| person, |!|damage |!|to |!|property |!|or |!|other |!|loss |!|or |!|damage |!|resulting |!|from |!|any |!|personal, |!|familial |!| or |!|household |!|responsibilities |!|or |!|activities, |!|rather |!|that |!|from |!|responsibilities |!|or |!|activities |!| referred |!|to |!|in |!|the |!|definition |!|of |!|liability