Granite Insurance Company entered into a treaty reinsurance agreement with Rock Solid Reinsurance (RSR). Granite’s retention limit is $400,000 and RSR agreed to provide reinsurance for up to $2.0 million. If Granite writes an $800,000 policy, RSR is responsible for 50 percent of the losses. If Granite insures a $1.6 million risk, RSR is responsible for 25 percent of any losses. What type of reinsurance arrangement did Granite enter into with RSR?

What is the practical effect of an insurance contract being a contract of adhesion?

Which of the following is a method used to help ensure the solvency of insurers?

The leaders of a religious group decided to start a life insurance organization to insure members of the religious group. The insurer will operate as a nonprofit organization, thus receiving favorable tax treatment. The insurer formed will be a

Which of the following statements is (are) true with respect to catastrophe bonds?I.The bonds are issued by the U.S. Government.II.The bonds have relatively high interest (coupon) rates.

Which of the following statements about an insurable interest in life insurance is (are) true?I.It is required of any person named as beneficiary.II.It may result from a pecuniary (financial) interest.

What is the legal significance of a material misrepresentation in an insurance application?

Amy heads the legal staff of a large property and liability insurance company. Amy’s staff is likely involved in which of the following activities?

Functions of an insurance company’s legal department include which of the following?I.Lobbying for legislation favorable to the insurance industry.II.Drafting policy provisions.

Factors that may result in more restrictive underwriting decisions include which of the following?I.Inadequate rates.II.The unavailability of reinsurance at favorable terms.