Surplus Lines Practice Exam.
14 verified questions, instant feedback.

1. How much time is a candidate given to complete the Texas surplus lines examination?

• A. 30 minutes
• B. 60 minutes
• C. 90 minutes
• D. 120 minutes

2. What is the fee to sit for the Texas surplus lines examination?

• A. $19
• B. $29
• C. $39
• D. $49

3. What is the fee charged to sit for the surplus lines agent exam?

• A. $19
• B. $25
• C. $29
• D. $39

4. With exactly 30 minutes left on the 60-minute clock, what fraction of the total examination time has elapsed?

• A. One quarter
• B. One third
• C. One half
• D. Two thirds

5. A producer is attempting to place a commercial risk with a surplus lines carrier. What is a diligent search, as commonly required before this placement?

• A. A review of the insured's claims history over the past five years
• B. Soliciting and being declined by a specified minimum number of admitted insurers, commonly three, that ordinarily write that class of business
• C. A background check on the surplus lines broker's license status
• D. An audit of the insurer's capital and surplus by the state guaranty association

6. Under the federal Nonadmitted and Reinsurance Reform Act (NRRA) of 2010, which state has authority to require premium tax and regulate the placement of a nonadmitted policy?

• A. Only the state where the surplus lines broker is physically headquartered
• B. Every state in which the insured has any business operations
• C. Only the insured's home state
• D. Only the state where the insurer is domiciled

7. After receiving declinations from admitted insurers during a diligent search, what must a producer typically do with that documentation?

• A. Submit it directly to the state guaranty fund for approval
• B. Discard it once the surplus lines policy is bound
• C. Document it, typically on an affidavit or state diligent search/declination form, and retain it for regulatory examination
• D. Forward it to the admitted insurers' rate filing office

8. Why does the diligent search requirement exist as part of surplus lines regulation?

• A. To guarantee surplus lines brokers earn a minimum commission
• B. To ensure surplus lines is used as a market of last resort, not a route around admitted regulation for convenience or price
• C. To set the surplus lines premium tax rate for each transaction
• D. To determine which risks qualify for the state's export list

9. A risk is listed on a state's export list. What does this mean for the placing producer?

• A. The risk may be exported to surplus lines without performing a diligent search
• B. The risk must still be declined by three admitted insurers before placement
• C. The risk can only be placed with an admitted carrier
• D. The risk automatically qualifies for the state guaranty fund

10. A resident producer with an ordinary property and casualty license wants to place a commercial account with a surplus lines insurer. What licensing requirement applies?

• A. No additional license is needed beyond the ordinary resident producer license
• B. The transaction must be placed through a specially licensed surplus lines broker/producer
• C. Only a limited lines license is required
• D. The producer must instead hold a travel insurance producer license

11. Why do states levy a surplus lines premium tax on surplus lines transactions?

• A. Because non-admitted insurers do not pay the premium taxes that admitted carriers pay, so the tax recaptures that revenue
• B. Because surplus lines insurers are exempt from all other forms of regulation
• C. Because the stamping office requires it to fund its review services
• D. Because the state guaranty fund requires additional contributions from surplus lines insureds

12. An insurer has been granted a certificate of authority by the state insurance department. Under this authorization, what is the insurer generally required to do that a non-admitted insurer is not?

• A. File its rates and policy forms with the state for approval
• B. Obtain a diligent search declination before issuing any policy
• C. Deliver a disclosure notice stating the policy is not licensed
• D. Appear on the state's export list of eligible insurers

13. If a non-admitted insurer becomes insolvent, what generally happens to its policyholders' unpaid claims?

• A. They are paid from the state guaranty fund, the same as admitted insurer claims
• B. They are not protected by the state guaranty fund, so there is no state backstop
• C. They are paid automatically by the stamping office
• D. They are covered because the insurer appeared on the state's white list

14. A business insured has its principal place of business in State X but operates a branch office in State Y. For NRRA purposes, which state is generally the insured's home state?

• A. State Y, because the branch office generates the claim
• B. State X, the state of the insured's principal place of business
• C. Whichever state has the lower surplus lines tax rate
• D. The state where the surplus lines broker holds its stamping office filing