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1) A drug being sold by a pharmaceutical company is being prescribed to hundreds of millions of people
1) A drug being sold by a pharmaceutical company is being prescribed to hundreds of millions of people. Liability coverage for this exposure would most likely be written in the surplus lines market because the risk is
- Standardized
- Distressed
- Unique
- High-capacity
2) Which of the following statements is true regarding surplus lines insurers?
- Surplus lines insurers are ineligible to obtain reinsurance for the types of risk they write
- Surplus lines licensees are able to place insurance with any nonadmitted insurer
- Surplus lines insurers rarely employ risk control personnel because of the nature of the exposures that they insure
- Only surplus lines insurers that are eligible in a particular state can insure risks in that state
3) Nonadmitted insurers benefit consumers by
- Providing coverage for loss exposures that admitted insurers are unable to insure profitably
- Reducing the need for admitted insurers for coverages such as workers compensation and automobile liability
- Complying with state insurance department regulations regarding rate, form, and underwriting rules
- Charging lower rates than admitted insurers charge for the same coverage
Expert Solution
Knwoledge required:
Surplus Lines Insurance:
It is an insurance which protects a person against a risk which is that high that a regular insurance company cannot bear.Anyone can buy the insurance from an insurer not licensed in the insured’s state. However, the surplus lines insurer requires a license in the state.
Answer 1:
4. High capacity
Drug specified by the Company imapcts millions of people, that is why it is high capacity risk and is insured by surpolus lines market.
Answer 2:
4. Only surplus lines insurers that are eligible in a particular state can insure risks in that state
Answer 3:
1. Providing coverage for loss exposures that admitted insurers are unable to insure profitably
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