Reasons for the unearned premium reserve include which of the following? I. To pay losses that occur during the policy period. II. To pay premium refunds to policyholders in the event of cancellation. A) I only B) II only C) both I and II D) neither I nor II ANSWER Answer: C
Date: September 19th, 2020
The portion of an insurance premium allocated to expenses, profit, and a margin for contingencies is called the A) loading. B) pure premium. C) gross premium. D) experience rate. ANSWER Answer: A
Date: September 19th, 2020
A property and casualty insurer’s loss reserve includes estimates for all of the following EXCEPT A) claims anticipated but not yet incurred. B) claims reported and adjusted but not yet paid. C) claims reported and filed but not yet adjusted. D) claims incurred but not yet reported to the company. ANSWER Answer: A
Date: September 19th, 2020
The unit of measurement used in property and casualty insurance pricing is called the A) unit rate. B) premium. C) exposure unit. D) experience unit. ANSWER Answer: C
Date: September 19th, 2020
Which of the following would not appear in the asset section of an insurance company’s balance sheet? A) loss reserves B) bonds C) common stock D) real estate ANSWER Answer: A
Date: September 19th, 2020
All of the following statements about class rating are true EXCEPT A) Exposures with similar characteristics are placed in the same underwriting class. B) The rate charged for each class reflects the average loss experience for that class. C) The complexity of class rating makes it inappropriate for personal lines coverages. D) It is based […]
Date: September 19th, 2020
Which of the following items would appear in the income section of an insurance company’s income and expense statement? A) underwriting expense B) bonds C) loss reserves D) premiums ANSWER Answer: D
Date: September 19th, 2020
Under one type of merit rating, the class or manual rate is adjusted upward or downward based on past loss history. This type of merit rating is called A) schedule rating. B) judgment rating. C) experience rating. D) retrospective rating. ANSWER Answer: C
Date: September 19th, 2020
JKL Insurance Company reported the following information on its accounting statements last year: Premiums Written $90,000,000 Loss Adjustment Expenses $5,000,000 Underwriting Expenses $30,000,000 Premiums Earned $100,000,000 Incurred Losses $70,000,000 What was JKL’s loss ratio last year? A) 70.0 percent B) 75.0 percent C) 83.3 percent D) 90.0 percent ANSWER Answer: B
Date: September 19th, 2020
A loss reserve established for each individual claim when it is reported to a property and casualty insurance company is call a(n) A) admitted asset. B) incurred-but-not-reported (IBNR) reserve. C) unearned premium reserve. D) case reserve. ANSWER Answer: D
Date: September 19th, 2020
