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WorksheetsFlorida Surplus Lines Insurance Study Manual Worksheet
Total questions: 75
Worksheet time: 38mins
If cancellation is for non-payment of premium, the surplus lines insurer must give the named insured at least ___ days written notice of cancellation including the reason for cancellation.
45
15
30
10
Under 626.9372, F.S. (Disclosure statements of certain information required; liability claims), insurers are required to provide the name of the insurer, ________, the limits of liability coverage, a statement of any policy or coverage defense, and a copy of the policy for liability policies issued on or after October 1, 2009.
Address of the insurer
Name of each insured
Address of each insured
Name of the agent
Who is responsible for obtaining the signed Disclosure Statement and retaining it in the policy file?
Surplus lines agent
Retail agent
Insurer
Insured
The Disclosure Statement or insured’s acknowledgement is required for which type of coverage?
Commercial General Liability
Motor Truck Cargo
Commercial Aircraft Hull and/or Liability
Stevedores Legal Liability
A contract written in the surplus lines market is as __________ as a contract written in the admitted market.
Regulated
Valid
Unauthorized
Structured
Which of the following could apply when an agent or individual represents, aids, solicits or negotiates surplus lines insurance contracts with an ineligible, unauthorized insurer?
Agent or individual is responsible for payment of the surplus lines premium tax
Agent or individual has committed a third degree felony
Agent or individual may be liable for full amount of any claim or loss
All of the above
The EMPA Surcharge is imposed on certain residential and commercial _______ policies.
Property
Liability
Flood
Wind
Which two features make surplus lines coverage more attractive than the residual markets?
Policyholder surplus and liquidity
Policy issuance and claims handling
Terms of coverage and choice of limits
Lower price and higher capacity
If a surplus lines policy is cancelled “flat” and taxes were paid, how much of the tax is returned (assume no minimum earned premium)?
Only the unearned portion
90% pro rata
None, taxes are fully earned
All of the tax
In 2011 the Florida Legislature passed a bill that exempted surplus lines agents from having to complete the diligent effort search on certain commercial coverages, including the following:
Special events liability
Commercial general liability
Commercial residential property
Collateral protection (force placed coverage)
As a stipulation of being an eligible surplus lines insurer in Florida, who is the insurer required to appoint as its agent for service of process to protect residents of the state of Florida that hold insurance contracts issued by insurers domiciled in another state or jurisdiction outside of the United States?
Florida’s Chief Financial Officer
Florida’s Insurance Commissioner
Florida’s Secretary of State
Florida’s State Attorney
A surplus lines agent must file information on a policy with FSLSO within __ days from the effective date.
21
30
45
60
Which is a condition that must exist to export a risk in Florida?
Premium rate shall be lower than in the admitted market
Deductible amounts must be higher than admitted insurers
Diligent effort must be made by the producing agent to place coverage with three admitted insurers
Policy is more favorable as to coverage or rate than in the admitted market
Surplus lines agents are prohibited from making _______________ of business not directly procured by him/her from eligible surplus lines insurers, or out-of-state agents on behalf of Florida insureds.
Binders
Contracts
Claims
Courtesy filings
Which best illustrates how insurance is procured through surplus lines market access?
Insurance buyer – surplus lines agent – retail agent – surplus lines insurer
Insurance buyer – out of state agent – surplus lines agent – surplus lines insurer
Insurance buyer – Lloyd’s broker – retail agent – surplus lines agent – surplus lines insurer
Insurance buyer – retail agent – surplus lines agent – surplus lines insurer
Upon placement of surplus lines coverage, the surplus lines agent shall promptly issue and deliver to the named insured evidence of insurance consisting of the actual policy as issued by the insurer or, if the policy is not then available, ________________, ________________, ________________.
Certificate, payment coupon book, cover note
Cover note, other confirmation of insurance, certificate
Cover note, agent’s business card, other confirmation of insurance
Other confirmation of insurance, certificate, insurance agency brochure
Any individual who has been licensed by the Department of Financial Services as a surplus lines agent may be self-appointed without additional written examination if his or her application for appointment is filed with the Department within ________ months following the date of cancellation or expiration of the prior appointment.
30
48
12
24
Which of the following is considered to be premium for purposes of calculating taxes:
Retail agent policy fees
EMPA surcharge
Service Office fees
Surplus lines agent policy fees
Which is an area of regulation for a transaction placed in the surplus lines market?
Agent licensing
Policy rates approval
Insurer licensing
Policy forms approval
Florida’s surplus lines agents must be ________________ prior to transacting business.
Actuaries
Self-appointed
Company-appointed
Agency-appointed
Upon the declaration of an emergency pursuant to Florida Statute 252.36 and the filing of an order by the Commissioner of Insurance Regulation, a surplus lines insurer may not cancel or nonrenew a personal or commercial residential property insurance policy for a property located in this state which has been damaged as a result of a hurricane or wind loss for __ days after the property has been repaired:
90
45
60
75
Which risk is exempt from the premium receipts tax and service fee:
Wet marine
Aviation risks
Municipality
Religious structures
Which of the following is required to be listed on the face page of a surplus lines insurance policy?
Agency Name & Address
Producing Agent License Number
Surplus Lines Agent Name & Address
Agency License Number
Quarterly affidavits are required to be filed within ______ days of the end of the quarter.
60
30
45
90
If an insurer fails to provide written notice of cancellation or non-renewal, the coverage provided to the named insured shall remain in effect until ________ days after the notice is given or until the effective date of replacement coverage obtained by the named insured, whichever occurs first.
30
40
45
15
Bob, a surplus lines agent, was competing for an account. It was determined that if Bob could absorb the tax and service fee on the account, he would become more competitive and therefore able to get the account. How does the Surplus Lines Law address this situation?
Bob may pay the tax and service fee for the insured in order to obtain the account
Bob cannot pay the tax and service fee; however, he can reduce his commission to the portion of the tax
Bob is prohibited from absorbing the tax and service fee for any reason, or rebating all or any part of the tax, service fee or his commission
Bob may waive the tax and service fee, but not the per-policy fee
What are three responsibilities required of surplus lines agents?
Filing quarterly affidavits, notifying the FSLSO within 30 days after a change of principal business street address or mailing address, and filing a bond in favor of the FSLSO of not less than $50,000
Maintaining a record of confirmation numbers provided by FSLSO, filing quarterly affidavits, and notifying FSLSO within 45 days after a change of principal business street address or mailing address
Maintaining a full and accurate record of policy documentation for five years, filing quarterly affidavits, if applicable, and collecting taxes and service fees
Exporting insurance only with eligible unauthorized insurers after due diligence has been verified, filing quarterly report affidavits with the Florida Department of Financial Services, and maintaining a full and accurate record of policy documentation for five years
The surplus lines agent’s self-appointment must be renewed during the agent’s birth month every:
12 months
24 months
36 months
48 months
Who is entitled to charge and retain the per-policy fee?
Each agent involved in the transaction
Both the retail agent and the filing surplus lines agent
The Surplus Lines Service Office
The filing surplus lines agent
A managing general agent’s primary responsibility is to follow all of the guidelines of the broad __________ granted by the insurer.
Marketing plans
Claims processing
Commission plan
Binding authority
If an unauthorized insurer or person authorized by the insurer binds a risk as to surplus lines coverage placed under the Surplus Lines Law, and the premium is paid by the insured to the originating agent, which of the following statements is correct?
The premium received by the surplus lines agent, or the originating agent is deemed to have been received by the insurer and the insurer is liable to the insured for claims or unearned premiums
When the insurer gives permission to the surplus lines agent to represent them in an insurance contract, there is no binding authority; therefore, the insurance contract is invalid until the insurer receives the premium
There is no coverage because the premium received by the originating agent was not forwarded to the surplus lines agent
The originating agent is not a licensed surplus lines agent; therefore, the insured does not have any coverage until the insurer receives the premium
The regulatory framework for surplus lines protects both consumers and states in which of the following way?
Permits consumers to access surplus lines insurers without physically leaving their state
Uses specially trained and licensed personal lines agents to assist consumers
Establishes a system for paying policy premiums
Maintain records of all Florida licensed insurance agents
The __________ brought conformity to multistate risks and eligibility requirements for non-admitted insurers.
NRRA
NAIC
FSLSO
OIR
Which of the following is a purpose of the Agent Compliance Review program?
Ensure that agencies have admitted markets
Verify the number of Customer Service Representatives licensed in the agency
Provide educational assistance
Verify the parties to each reinsurance treaty
Which of the following is exempt from the surplus lines tax?
Personal and pleasure aircraft
Commercial inland marine
Risks of county or municipality or any of their agencies
Risks of non-profit organizations
What information is required on the first page of the evidence of insurance delivered to the insured?
Name, address, and identification number of the surplus lines agent
Statement declaring the insured has protection under the Florida Insurance Guaranty Act
Statement declaring surplus lines insurers policy rates and forms are approved by a regulatory agency
Name and address of the Chief Financial Officer
According to 626.9201, F.S. (Notice of cancellation or nonrenewal), an insurer issuing a policy providing coverage for property, casualty, surety, or marine insurance shall give the named insured at least _______ days advance written notice of non-renewal.
30
60
15
45
All surplus lines insurance contracts procured through unauthorized insurers in accordance with the Surplus Lines Law shall be:
Fully valid and enforceable
Invalid and not enforceable
The responsibility of the surplus lines agent placing the coverage
Determined by the Department of Financial Services if the contract is valid or invalid
Insurance coverages on the following subjects of insurance exported pursuant to this section (626.917, F.S. - Eligibility for export; wet marine and transportation, aviation risks) are tax exempt, but are subject to the service fee and should be included in your monthly transaction reports as non-taxable:
Commercial boats, commercial automobiles, commercial aircraft, aviation and ocean marine cargo, and hangarkeepers liability
Commercial aircraft, commercial boats, hangarkeepers liability, aviation and ocean marine cargo, airport liability, and aviation products liability
Commercial aircraft, commercial boats, zookeepers liability, aviation and ocean marine cargo, airport liability, and products liability
Commercial boats, commercial advertising, commercial aircraft, aviation and ocean marine cargo, and hangarkeepers liability
An insurer domiciled outside the United States and operating in the U.S. on a surplus lines basis, who also must meet minimum capitalization requirements established in each state to receive placement eligibility from surplus lines licensees is a/an:
U.S. domiciled insurer
Foreign insurer
Admitted insurer
Alien insurer
Any ______________ who is an officer, employee, stockholder or director of an incorporated surplus lines insurance agency shall remain personally and fully liable and accountable for any wrongful acts, misconduct or violations of any provisions of the Surplus Lines Law committed by such licensee or by any person under their direct supervision and control while acting on behalf of the corporation.
Insurer
Wholesale agent
Surplus lines agent
Lloyd’s broker
How many days from the effective date of coverage should a copy of the policy, cover note or other confirmation of coverage be delivered to the insured?
30 days
60 days
90 days
10 days
The surplus lines agent shall pay interest on the amount of any delinquent fees due at the rate of ______ percent per year, compounded annually, beginning the day the fees become delinquent.
5
3
10
9
All Florida licensed surplus lines agents are subject to ______ reviews.
Compliance
Annual
Performance
Licensing
How much is the premium receipts tax assessed on all taxable gross premiums charged for surplus lines insurance exported by a surplus lines agent?
15%
4.94%
10.94%
25%
One of the purposes of the Florida Surplus Lines Service Office (FSLSO) is:
Protect consumers seeking insurance in this state
Permit surplus lines insurance to be placed with insurers who hold a certificate of authority
Act as a regulatory agency on behalf of the Department of Revenue
Act as legal counsel for the Florida Department of Financial Services
All surplus lines licensees are required to notify DFS and FSLSO within _____ days after a change of name, residence address, principal business street address, mailing address, contact telephone numbers, including a business telephone number, or email address.
60
15
90
30
Surplus lines agents who have transacted business are required to file with FSLSO a __________ Affidavit confirming all surplus lines business transacted has been reported as required.
Monthly
Bi-weekly
Bi-monthly
Quarterly
Surplus lines agents’ actively transacting business must comply with which of the following requirements of the FSLSO?
Compile all policies written and report them at the end of each month
Report all transactions at the end of each quarter
Submit policy information within 30 days from the effective date of coverage
Submit policy information within 21 days from the effective date of coverage
Surplus lines insurance represents only a small segment of the overall ____________ market and is focused primarily on specialized risks.
Property-casualty
Personal liability
Commercial liability
Windstorm
Florida law requires most premiums charged for surplus lines coverages to be subject to what?
Premium receipts tax
Underwriting fees
Rate and form approval
None of the above
Which of the following is the wording that is specifically required by law to be placed on evidence of insurance providing coverage to the insured?
This insurance is issued pursuant to the Florida Surplus Lines Law. Persons insured by surplus lines carriers do not have the protection of the Florida Insurance Guaranty Act to the extent of any right of recovery for the obligation of an insolvent unlicensed insurer
This insurance is issued pursuant to the Florida Surplus Lines Law. Persons insured by surplus lines carriers have the protection of the Florida Insurance Guaranty Act to the extent of any right of recovery for the obligation of an insolvent unlicensed insurer
This insurance is issued pursuant to the Unauthorized Insurers Process Law. Persons insured by surplus lines carriers do not have the protection of the Florida Insurance Guaranty Act to the extent of any right of recovery for the obligation of an insolvent unlicensed insurer
This insurance is issued pursuant to the Florida Surplus Lines Law. Persons insured by surplus lines carriers may have the protection of the Florida Insurance Guaranty Act to the extent of any right of recovery for the obligation of an insolvent unlicensed insurer
As a condition of holding a Florida surplus lines license, all surplus lines agents are considered members of the ____________.
Department of Financial Services
Florida Association of Insurance Agents
Professional Insurance Agents Association
Florida Surplus Lines Service Office
It is the responsibility of the surplus lines agent to keep a full and true record of each surplus lines contract, for a period of _____ years following the expiration or cancellation of the contract.
3
5
10
2
Which of the following is a requirement an insurer must meet before they will be approved to provide coverage as an eligible surplus lines insurer in Florida?
Be approved by the courts to sell insurance in this state
Be a licensed insurer in their state or country of domicile for a period of at least five years
Be an authorized insurer in their state or country of domicile for at least three years and authorized to write the kind(s) of insurance they wish to write in this state
Be located in the United States
Surplus lines insurers are a stabilizing influence on the overall market due to which factors?
Tailoring coverage to meet insureds’ needs
Acting as safety valve to prevent public outrage if no market existed
Slow response to the needs of the market
A and B only
This term is defined as a means to place, with an unauthorized insurer under the Surplus Lines Law, insurance covering a subject of insurance resident, located or to be performed in this state.
Diligent effort
Export
Insurance policy
Stamp
An alien insurer must have and maintain in the U.S. a trust fund, for the protection of its policyholders in the U.S., in an amount not less than:
$25 million
$50 million
$10 million
$5.4 million
Coverage has been bound by an eligible, unauthorized insurer or a person authorized by the insurer to bind coverage and premium has been received by the originating agent or retail agent. If a loss should occur, who would be liable for payment of the loss and any unearned premiums?
Surplus lines agent
Insurer
Retail agent
Insured
Which is a significant difference between operating as an unauthorized insurer and an admitted insurer?
Processing
Agent licensing
Rate, rule, and form filings
Taxation
According to 626.916, F.S. (Eligibility for export), it is the responsibility of the __________ to verify that a diligent effort has been made by requiring a properly documented statement of diligent effort from the retail or producing agent.
Insured
Surplus Lines Agent
Florida Surplus Lines Service Office
Florida Department of Financial Services
Before insurance can be procured from unauthorized insurers, certain conditions must be met. Which of the following is incorrect?
The insurance must be eligible for export
The insurer must be an eligible surplus lines insurer
The insurance must be placed through a Florida licensed and appointed surplus lines agent
The full amount of coverage is available from authorized insurers; however, the rates are too high
The term “premium” includes any assessment, or any membership, policy, survey, inspection, service or similar fee or charge in consideration for an insurance contract. This includes the surplus lines agent policy fee but excludes the _______ fee.
Insurer
Risk Purchasing Group
Service Office
Underwriting
What types of risks are eligible for export by virtue of being placed by a licensed and appointed surplus lines agent and an insurer that is eligible?
Fire and windstorm insurance
Windstorm buy-back deductible
Wet marine, transportation, and aviation risks
Personal marine and personal aircraft
What is the maximum “Per-Policy Fee” that a surplus lines agent may charge in accordance with Florida Statute?
$75
There is no maximum; however, it must be reasonable
$50
$100
Which of the following conditions must exist before exporting a risk in Florida?
Risk is not procurable from admitted insurers
Premium rate is lower than the admitted market
Policy must not be more favorable as to coverage or rate
Deductible amounts must be different from admitted insurers
A and C only
What is the regulatory focal point of the surplus lines marketplace?
Volume of business written by surplus lines insurers
Surplus lines agent compliance
Percentage of surplus lines business compared to the overall admitted market
Property exposure for a given surplus lines insurer
Which example best describes Diligent Effort?
An individual licensed to handle the placement of insurance coverage with unauthorized insurers and to place such coverages with authorized insurers
An unauthorized insurer which has been made eligible by the Department to issue insurance coverage under the Surplus Lines Law
To place with an unauthorized insurer, insurance covering a subject of insurance resident, located or to be performed in this state
Seeking coverage and having been rejected by at least three authorized insurers
Which of the following is a possible penalty for aiding and abetting an unauthorized insurer?
Liability for all unpaid claims
Conviction of a third-degree felony
Suspension or revocation of all insurance licenses
All of the above
According to the Florida diligent effort requirement, how many rejections in the admitted market must be received for a residential property exposure with a replacement cost of $700,000 or more before placing a policy in the surplus lines market?
One
Three
Four
Five
Which definition best describes the term foreign insurer in the Florida surplus lines market?
Formed according to the requirements of a foreign country and is domiciled in that foreign country
Insurers that satisfy specific statutory and regulatory financial criteria
U.S. domiciled unauthorized insurer eligible to operate in a state other than the state in which it is domiciled
U.S. domiciled unauthorized insurer licensed in the insured’s home state and in another U.S. state
What is the purpose of the Florida Surplus Lines Law?
To subject certain insurers and persons representing or aiding such insurers to the jurisdiction of the courts in suits by insureds or beneficiaries under insurance contracts
To provide orderly access for the insuring public of this state to insurers not authorized to transact insurance in this state, through only qualified licensed surplus lines agents
To allow for self-procurement of coverage from unauthorized insurers
To allow for competition by unauthorized insurers with authorized insurers
A Florida surplus lines insurer is required to have and maintain surplus as to policyholders of not less than _______.
$5 million
$20 million
$15 million
$50 million
What three risks are typically written in the non-admitted market?
a. Distressed, unique, standard
b. Distressed, unique, high-capacity
c. Distressed, high-capacity, standard
d. None of the above
Which coverage is commonly written by surplus lines insurers?
Health
Personal auto liability
Workers’ compensation
Special event liability
