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CHAPTER 22 Risk Management and the Insurance Industry True-False 1. Most turnover among insurers stems from involuntary liquidations. ANSWER: F 2. Property insurance generates less premium volume than does life and health insurance. ANSWER: T 3. The market share of reciprocal and Lloyd’s insurers is rising to the point of making serious inroads on the business done by stock and mutual insurers. ANSWER: F 4. The members of a reciprocal are both insurers and insureds at the same time. ANSWER: T 5. An ethical environment has little effect on the insurance industry. ANSWER: F 6. The bulk of property-liability insurance is written by mutual companies. ANSWER: F 7. The channel of distribution used by an insurance company depends on whether it is a stock or a mutual. ANSWER: F 8. Initially, a direct distribution system is more expensive for a company than an indirect one. ANSWER: T 9. Lloyd’s of London relies very little on capital from corporations. ANSWER: F 10. The fastest growing lines of property and liability insurance are liability coverages. ANSWER: T 11. Fire insurance accounts for more premium volume than automobile insurance. ANSWER: F 12. Only about 15 percent of all property and liability insurers operate nationwide in all states. ANSWER: T 13. The field of insurance is dominated by relatively few companies. ANSWER: T 14. Insolvency among insurance companies is relatively low. ANSWER: T 15. Direct distribution of property-liability insurance is becoming more common. ANSWER: T 16. Governments collect more premiums in personal insurance lines than do private insurers. ANSWER: T 17. Most insurance sold in the United States is required by law. ANSWER: F 18. Automobile insurance constitutes less than half of all private property-liability premiums. ANSWER: T 19. Farm mutuals often offer assessable policies. ANSWER: T 20. A mutual insurer is owned by policyholders and is organized as a nonprofit corporation. ANSWER: T 21. Lloyd’s of London specia