AD Banker Comprehensive Practice Exam

What term describes the party responsible for issuing insurance contracts?

1. Insured

2. Insurer

3. Agent

4. Brokers

The correct answer is: Insurer

The party responsible for issuing insurance contracts is known as the insurer. In the context of insurance, the insurer is the entity, typically a company, that provides coverage by assuming the risk of the policyholder (the insured) in exchange for premiums paid. The insurer is legally obligated to fulfill the terms of the insurance policy, which may include paying claims for covered losses or providing other agreed-upon benefits. Understanding the roles of different parties in the insurance market is crucial. The insured is the person or organization covered by the insurance policy. Agents are individuals or representatives authorized to sell an insurer's policies, acting on behalf of the insurer, while brokers work on behalf of clients to find the best insurance options. However, neither agents nor brokers issue the contracts themselves; that responsibility lies with the insurer. This distinction highlights the fundamental role of the insurer as the actual provider of insurance products and solutions.