New Jersey Life Producer Law Practice Test

What is the main responsibility of the Insurer?

1. To conduct audits

2. To provide insurance policies

3. To manage claims

4. To set premiums

The correct answer is: To provide insurance policies

The primary responsibility of the insurer is to provide insurance policies. This function establishes the foundation of the insurer's business model, ensuring that individuals and businesses can transfer their risk to the insurance company. By offering insurance policies, the insurer outlines the terms of coverage, defines the conditions under which claims can be made, and provides financial protection against potential losses. This process is critical because it creates a contractual relationship between the insurer and the insured, specifying the rights and obligations of both parties. The provision of insurance policies not only protects the policyholders from financial hardships in the event of covered losses but also underpins the overall purpose of the insurance industry, which is to manage risk in society. While other activities like conducting audits, managing claims, and setting premiums are also important functions within the insurance framework, they serve to support the primary role of providing coverage through policies. Each of these activities contributes to the overall effectiveness and reliability of the insurance product but does not represent the insurer's core obligation.