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
One item that appears on an insurance company’s financial statements is a liability that represents an estimate of the claims reported and adjusted but not yet paid, claims reported and filed but not yet adjusted, and claims incurred but not yet reported to the company. This liability is called the insurer’s A) net income. B) […]
Date: September 19th, 2020
Which of the following statements about property and casualty insurance company operating results is (are) true? I. An insurance company can have a combined ratio greater than 1 (or 100 percent) and still be required to pay income taxes. II. By all measures, the property and casualty insurance industry is highly profitable when compared to […]
Date: September 19th, 2020
Life insurance policyholders may borrow the cash value from their life insurance policies. Where are life insurance policy loans shown on a life insurance company’s financial statements? A) as an asset B) as a liability C) as income D) as an expense ANSWER Answer: A
Date: September 19th, 2020
Which of the following statements is (are) true concerning investments of property and casualty insurers and life insurers? I. Property and casualty insurance companies place greater emphasis on liquidity than do life insurers. II. Life insurance company investments are, on average, of longer duration than property and casualty insurance company investments. A) I only B) […]
Date: September 19th, 2020
All of the following statements about business objectives in designing a rating system are true EXCEPT A) The rating system should encourage loss control activities. B) The rating system should be independent of long-run changes in economic conditions. C) The rating system should be simple to understand. D) The rating system should be stable over […]
Date: September 19th, 2020
To protect policyholders, state laws place limitations on a life insurance company’s investments. The assets backing interest-sensitive products, such as variable life insurance and variable annuities, are not subject to these restrictions. Assets backing interest-sensitive products are placed in a special account called the life insurer’s A) policy reserve account. B) policy loan account. C) […]
Date: September 19th, 2020
MedProf Insurance markets medical malpractice insurance. The company’s combined ratio in 2015 was 95.4. Its expense ratio was 25.4. What was the company’s loss ratio? A) 60.4 B) 70.0 C) 88.2 D) 120.8 ANSWER Answer: B
Date: September 19th, 2020
All of the following statements about regulatory objectives of insurance rate making are true EXCEPT A) One purpose of rate adequacy is to maintain the solvency of insurers. B) Rates unfairly discriminate if loss exposures that are similar with respect to losses and expenses are charged substantially different rates. C) Insurers know in advance if […]
Date: September 19th, 2020
Which of the following is an expense for a life insurance company? A) loss reserves B) death benefits paid to a beneficiary C) unrealized capital gains D) realized capital gains ANSWER Answer: B
Date: September 19th, 2020
