Which of the following statements about premium taxes is (are) true? I. They are levied by the federal government as a result of the McCarran-Ferguson Act. II. Their primary purpose is to provide funds for insurance regulation. A) I only B) II only C) both I and II D) neither I nor II […]
Date: September 19th, 2020
Nathan was hired as an actuary with ABC Insurance. Nathan was asked to calculate the annual premium for a new product and to explain his calculations to ABC’s director of ratemaking. Nathan calculated the pure premium and presented this value as the final premium. After Nathan’s presentation, the director of ratemaking said, “You left out […]
Date: September 19th, 2020
Small Town used to be just that—a small town 6 miles from Large City. Over the years, the area between Small Town and Large City has developed, and now Small Town is part of the suburbs surrounding Large City. An auto insurer that operated in the area had a large increase in auto claims from […]
Date: September 19th, 2020
XYZ Insurance Company uses class rating to determine the rate to charge for insurance. For one type of insurance, the pure premium XYZ actuaries calculated is $75 per unit. If XYZ’s expense ratio is 25 percent, what is the gross rate for this coverage? A) $37.50 B) $55.25 C) $75.00 D) $100.00 ANSWER […]
Date: September 19th, 2020
XYZ Insurance Company expects $500,000 in claims and loss adjustment expenses for each 1,000 properties that it insures in a certain category of business insurance. What pure premium should XYZ charge for each property insured? A) $69.99 B) $166.67 C) $350.00 D) $500.00 ANSWER Answer: D
Date: September 19th, 2020
An Econodeath Insurance Company actuary calculated the present value of the expected death claim the company will pay if it sells whole life insurance to a 30-year-old woman. This value is called the A) net level premium. B) gross premium. C) net single premium. D) life insurance policy reserve. ANSWER Answer: C
Date: September 19th, 2020
Which of the following statements concerning regulatory objectives of rate making is (are) true? I. Rates must not be unfairly discriminatory. II. Rates must be adequate. A) I only B) II only C) both I and II D) neither I nor II ANSWER Answer: C
Date: September 19th, 2020
A manufacturing company just hired a new risk manager, and she has instituted several employee safety programs. She has persuaded the insurer writing the company’s workers compensation insurance to base the premium on the company’s actual loss experience during the current coverage period rather than on the company’s historical performance. This type of plan is […]
Date: September 19th, 2020
In schedule rating, each building is individually evaluated based on several rating factors. One factor refers to the possibility that the building will be damaged or destroyed by a fire that starts at an adjacent property and spreads to the building. This rating factor is known as A) occupancy. B) protection. C) maintenance. D) exposure. […]
Date: September 19th, 2020
Which of the following statements about the combined ratio is true? A) It is equal to the loss ratio minus the expense ratio. B) A combined ratio greater than 1 (or 100 percent) means an underwriting loss has occurred. C) The combined ratio considers the company’s investment income. D) A combined ratio less than 1 […]
Date: September 19th, 2020
