One liability on a property and liability insurance company’s balance sheet is for the costs associated with settling and paying reserved claims. This liability is the A) pre-paid expense reserve. B) loss reserve. C) unearned premium reserve. D) loss adjustment expense reserve. ANSWER Answer: D
Date: September 19th, 2020
Which of the following statements is (are) true about the loss ratio method of class rating? I. The pure premium is calculated, and it is loaded to cover expenses, profit, and contingencies. II. The actual loss ratio is compared to the expected loss ratio, and the rate is adjusted accordingly. A) I only B) II […]
Date: September 19th, 2020
A property and liability insurance company’s loss reserve and unearned premium reserve are A) assets. B) liabilities. C) income. D) expenses. ANSWER Answer: B
Date: September 19th, 2020
Which of the following statements about schedule rating is (are) true? I. It involves the determination of a basis rate for each exposure, which is then modified by credits or debits. II. It is based on the assumption that certain physical characteristics of the insured’s operations will influence the insured’s future loss experience. A) I […]
Date: September 19th, 2020
In schedule rating, each building is individually rated on several factors. One factor refers to the quality of the city’s water supply and fire department, and the risk control devices installed in the building. This factor is called A) exposure. B) occupancy. C) protection. D) housekeeping. ANSWER Answer: C
Date: September 19th, 2020
Monopoly Insurance is the only company marketing a certain line of insurance in a state. After complaints from several consumers, the State Insurance Department investigated Monopoly’s rates. The regulators determined that Monopoly was taking advantage of being the only insurer offering the line by charging more than double the actuarial cost of the coverage. Which […]
Date: September 19th, 2020
A strip-mall includes eight identical-sized retail units. All of the units were built at the same time and each has an identical sprinkler system. Unit number two is a dry cleaning business. Unit number three is a bar and grill. Unit number four is a dress shop. The owners of these three units are all […]
Date: September 19th, 2020
Ratemakers at ABC Insurance Company calculated the pure premium to be $280 for a risk they were considering insuring. What is the gross rate for this risk, assuming a 30 percent expense ratio? A) $364 B) $400 C) $430 D) $520 ANSWER Answer: B
Date: September 19th, 2020
A property and liability insurance company’s loss ratio and expense ratio, respectively, for 2013 – 2015 were: 2013: 74% 31% 2014: 68% 33% 2015: 66% 30% Which of the following statements is true about the company’s underwriting results for this time period? A) The insurer made money from its underwriting activities each year. B) The […]
Date: September 19th, 2020
Which of the following statements about retrospective rating is true? A) The premium for the current period is determined by the loss experience in prior periods. B) The premium for the current period is determined by the loss experience during the current period. C) The premium for the current period is determined by predicted future […]
Date: September 19th, 2020
