Indiana Surplus Lines Broker

What is the primary purpose of the surplus lines market?

• ATo provide coverage for risks that cannot be placed in the admitted market
• BTo offer lower premiums than admitted insurers
• CTo replace the standard insurance market for all commercial risks
• DTo provide reinsurance for admitted carriers

In Indiana, who must hold a surplus lines broker license?

• AAny agent who places insurance with a non-admitted insurer on behalf of an insured
• BOnly managing general agents who deal with Lloyd's of London
• CAll Property & Casualty producers regardless of the market they use
• DOnly insurers that are not admitted in Indiana

What is Lloyd's of London?

• AAn insurance marketplace where syndicates underwrite risks
• BA single insurance company based in London
• CA regulatory body that oversees surplus lines globally
• DA reinsurance company that backs all surplus lines policies

What prerequisite must a candidate meet before taking the Indiana surplus lines broker exam?

• AHold an active Indiana Property & Casualty producer license
• BComplete a 40-hour surplus lines pre-licensing course
• CHave at least 3 years of insurance industry experience
• DObtain a letter of recommendation from an admitted insurer

What is a 'diligent search' in the context of surplus lines insurance?

• AA documented effort to place coverage with admitted insurers before using a surplus lines…
• BA background check performed on the surplus lines insurer
• CA financial audit of the non-admitted insurer's reserves
• DAn investigation into the insured's claims history

What is the passing score for the Indiana surplus lines broker exam?

• A70%
• B65%
• C75%
• D77%

What is an 'alien insurer' in surplus lines terminology?

• AAn insurer domiciled outside the United States
• BAn insurer operating without any license in any state
• CA foreign insurer domiciled in another U.S. state
• DAn insurer that only writes reinsurance

What is the Nonadmitted and Reinsurance Reform Act (NRRA)?

• AFederal legislation that streamlined surplus lines taxation by establishing the home stat…
• BA state law that requires surplus lines brokers to register with the NAIC
• CAn international treaty governing Lloyd's of London operations in the U.S.
• DA regulation that prohibits surplus lines insurers from writing certain coverage types

What fee does an Indiana resident pay for a surplus lines broker license?

• A$80
• B$55
• C$120
• D$100

How does the NRRA's 'home state' rule affect surplus lines taxation in Indiana?

• AIndiana collects surplus lines tax only when the insured's home state is Indiana
• BIndiana collects tax on all surplus lines policies covering risks physically located in I…
• CIndiana splits the surplus lines tax with every state where the risk is located
• DIndiana does not collect any surplus lines tax under the NRRA

What is a surplus lines 'stamping office'?

• AAn organization that reviews and records surplus lines transactions for regulatory compli…
• BA government office that issues surplus lines broker licenses
• CA department within Lloyd's of London that stamps approved policies
• DA claims processing center for non-admitted insurer policies

Which of the following risks would most likely require placement in the surplus lines market?

• AA fireworks manufacturing facility seeking property and liability coverage
• BA standard homeowner seeking HO-3 coverage
• CA small retail store seeking a BOP policy
• DA sedan owner seeking personal auto liability coverage

What is the nonresident surplus lines broker license fee in Indiana?

• A$120
• B$80
• C$55
• D$150

What is the difference between an 'admitted' and a 'non-admitted' insurer?

• AAn admitted insurer is licensed by the state; a non-admitted insurer is not licensed but…
• BAn admitted insurer only writes personal lines; a non-admitted insurer only writes commer…
• CAn admitted insurer is a domestic company; a non-admitted insurer is always an alien comp…
• DThere is no meaningful difference — the terms are interchangeable

Which entity administers the Indiana surplus lines broker exam?

• APearson VUE
• BPSI
• CPrometric
• DThe Indiana Department of Insurance directly

A surplus lines broker in Indiana fails to perform a diligent search before placing coverage with a non-admitted insurer. What is the likely consequence?

• ARegulatory penalties including fines and potential license revocation
• BThe policy is automatically void from inception
• CThe broker must personally pay any claims on the policy
• DThe non-admitted insurer loses its eligibility to write in Indiana

What is a Lloyd's syndicate?

• AA group of underwriters at Lloyd's who pool capital to accept insurance risks
• BA department within Lloyd's that handles all claims
• CA regulatory committee that approves which risks Lloyd's can insure
• DA reinsurance pool that backs all Lloyd's policies

In Indiana, what is the primary regulatory body overseeing surplus lines insurance?

• AIndiana Department of Insurance
• BIndiana Secretary of State
• CNational Association of Insurance Commissioners
• DFederal Insurance Office

Why are surplus lines policies not protected by state guaranty funds?

• ABecause non-admitted insurers do not pay into state guaranty fund assessments
• BBecause surplus lines policies are too expensive to cover
• CBecause the federal government provides separate protection for surplus lines
• DBecause surplus lines insurers are required to maintain higher reserves instead

What disclosure must an Indiana surplus lines broker provide to the insured regarding guaranty fund protection?

• AThat the policy is not covered by the Indiana guaranty association in case of insurer ins…
• BThat the insured must purchase separate guaranty fund coverage
• CThat the guaranty fund coverage is limited to $100,000 per claim
• DNo disclosure is required regarding guaranty funds

What is the role of a managing general agent (MGA) in the surplus lines market?

• AAn intermediary with binding authority who manages business on behalf of surplus lines in…
• BA state regulator who manages the surplus lines eligibility list
• CA claims adjuster who handles all surplus lines claims
• DA broker who only works with admitted carriers

Under the NRRA, which state has the sole authority to regulate surplus lines premium taxation?

• AThe insured's home state
• BThe state where the risk is physically located
• CThe state where the surplus lines broker is licensed
• DThe state where the insurer is domiciled

What financial standard is commonly used to determine if a non-admitted insurer is eligible to write surplus lines?

• AMinimum capital and surplus requirements
• BThe insurer must have zero claims in the past year
• CThe insurer must be publicly traded on a major exchange
• DThe insurer must have a physical office in the state

Which of the following is a common type of coverage frequently placed in the surplus lines market?

• AEnvironmental liability insurance
• BStandard personal auto insurance
• CBasic homeowners insurance
• DWorkers compensation insurance

What is the purpose of surplus lines premium tax?

• ATo generate revenue for the state and ensure parity with taxes paid by admitted insurers
• BTo fund the state guaranty association for surplus lines claims
• CTo pay for the broker's licensing and examination fees
• DTo reimburse the admitted market for lost business

An Indiana surplus lines broker receives a request to insure a haunted house attraction. After contacting three admitted carriers who all decline, the broker places the coverage with an eligible surplus lines insurer. Was the diligent search adequate?

• AIt depends on Indiana's specific requirements for the number and type of declinations nee…
• BYes, three declinations always satisfies any state's diligent search requirement
• CNo, the broker must contact every admitted carrier in Indiana
• DNo diligent search is required for entertainment risks

What happens to a surplus lines policy if the non-admitted insurer becomes insolvent?

• AThe insured has no guaranty fund protection and must pursue claims through the insurer's…
• BThe state guaranty fund automatically covers all outstanding claims
• CThe surplus lines broker is personally liable for all unpaid claims
• DThe policy is automatically transferred to an admitted carrier

What is the role of a Lloyd's coverholding agent?

• AAn agent authorized by Lloyd's syndicates to bind coverage and issue policies on their be…
• BA regulatory official who approves Lloyd's operations in the United States
• CA claims adjuster employed directly by Lloyd's of London
• DA broker who exclusively works with one Lloyd's syndicate

Which type of insurer is domiciled in Indiana?

• AA domestic insurer
• BA foreign insurer
• CAn alien insurer
• DA surplus lines insurer

A surplus lines broker in Indiana places a policy but fails to collect and remit the surplus lines premium tax. What is the likely consequence?

• AThe broker faces penalties, fines, and potential license action from the Indiana Departme…
• BThe non-admitted insurer must pay the tax directly to the state
• CThe insured's policy is automatically cancelled
• DNo consequence unless the tax amount exceeds $1,000

What is an 'eligible' surplus lines insurer?

• AA non-admitted insurer that meets the state's financial and regulatory requirements to wr…
• BAny insurer that has been in business for at least 10 years
• CAn admitted insurer that also writes surplus lines policies
• DAn insurer that has agreed to participate in the state guaranty fund

What records must an Indiana surplus lines broker maintain for each surplus lines transaction?

• ADiligent search documentation, policy details, premium amounts, and tax filings
• BOnly the policy number and effective date
• COnly the premium amount and tax payment receipt
• DRecords are only required if the premium exceeds $50,000

What is the significance of the NAIC's International Insurers Department (IID) Quarterly Listing?

• AIt identifies alien insurers that meet NAIC standards for surplus lines eligibility
• BIt lists all admitted insurers in every U.S. state
• CIt provides quarterly financial ratings for domestic insurers
• DIt tracks surplus lines premium tax collections by state

What is 'excess and surplus lines' (E&S) insurance?

• AA segment of the insurance market that provides coverage for risks not available in the s…
• BInsurance that covers amounts above a deductible on standard policies
• CA special government program for uninsurable risks
• DReinsurance purchased by admitted insurers to manage their exposure

Which of the following is TRUE about surplus lines rate regulation?

• ASurplus lines insurers are generally exempt from state rate filing and approval requireme…
• BSurplus lines rates must be filed and approved by the state before use
• CSurplus lines rates must be identical to admitted market rates for the same coverage
• DSurplus lines rates are set by the NAIC and cannot be modified by individual insurers

An insured located in Indiana has operations in Indiana, Ohio, and Illinois. Under the NRRA, which state receives the surplus lines premium tax?

• AIndiana, because it is the insured's home state
• BThe tax is split equally among all three states
• COhio and Illinois share the tax based on payroll allocation
• DEach state collects tax on the portion of risk located within its borders

What is the purpose of the surplus lines broker's fiduciary duty regarding premiums?

• ATo ensure collected premiums are held in trust and properly remitted to the insurer and t…
• BTo maximize commission income from each surplus lines placement
• CTo invest premium funds for the benefit of the insured
• DTo guarantee the insured will receive a return of premium if no claims are filed

What is a 'declination' in the surplus lines diligent search process?

• AA formal refusal by an admitted insurer to provide the requested coverage
• BThe insured's decision to reject a surplus lines quote
• CA surplus lines insurer's refusal to accept the risk
• DA state regulator's denial of a surplus lines broker application

Which federal act included the NRRA provisions that reformed surplus lines regulation?

• AThe Dodd-Frank Wall Street Reform and Consumer Protection Act
• BThe McCarran-Ferguson Act
• CThe Gramm-Leach-Bliley Act
• DThe Sarbanes-Oxley Act

What is the 'London market' in the context of surplus lines insurance?

• AThe international insurance marketplace centered in London that includes Lloyd's and comp…
• BA single insurance company headquartered in London
• CA British government regulatory body for international insurance
• DAn exchange where surplus lines policies are traded like securities

A surplus lines broker discovers that the non-admitted insurer used for a placement has been removed from the eligible list. What should the broker do?

• ANotify the insured immediately and work to find replacement coverage with an eligible ins…
• BContinue the policy as-is since it was eligible at inception
• CCancel the policy without notifying the insured
• DTransfer the policy to the state guaranty fund

What is the primary benefit of surplus lines insurance for consumers?

• AAccess to coverage that is unavailable in the admitted market
• BLower premiums than admitted insurance for the same coverage
• CState guaranty fund protection for all policies
• DStandardized policy forms that are identical to admitted market forms

What does the term 'binding authority' mean for a surplus lines intermediary?

• AThe power to commit an insurer to a risk without prior approval for each individual policy
• BThe legal requirement to bind coverage for any risk presented
• CThe authority to collect premium taxes on behalf of the state
• DThe obligation to bind coverage only with admitted insurers

In Indiana, what is the exam fee for the surplus lines broker exam administered by Pearson VUE?

• A$50
• B$55
• C$64
• D$120

What is the purpose of a 'white list' or 'eligible list' maintained by a state insurance department?

• ATo identify non-admitted insurers that meet the state's financial and regulatory requirem…
• BTo list all admitted insurers authorized to write business in the state
• CTo track surplus lines brokers who have had disciplinary actions
• DTo record all surplus lines policies written in the state each year

Which of the following is NOT a typical surplus lines coverage?

• AStandard personal auto liability insurance
• BDirectors and officers (D&O) liability for startups
• CCyber liability insurance for technology companies
• DEvent cancellation insurance for large festivals

What is the 'home state' of an insured under the NRRA for individuals?

• AThe state where the individual's principal residence is located
• BThe state where the insured risk is physically located
• CThe state where the surplus lines broker is licensed
• DThe state where the surplus lines insurer is domiciled