Finance

Which of the following statements about treaty reinsurance is true? A

Which of the following statements about treaty reinsurance is true? A) The reinsurer is required to underwrite each individual applicant that is reinsured. B) The reinsurer must accept all business that falls within the scope of the treaty. C) The ceding insurer can choose which business falling within the scope of the treaty it wishes […]

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Date: September 19th, 2020

All of the following statements about life insurance company investmen

All of the following statements about life insurance company investments are true EXCEPT A) Funds for these investments are derived primarily from premium income, investment earnings, and maturing investments that must be reinvested. B) Income from these investments reduces the cost of insurance. C) A primary objective in making these investments is safety of principal. […]

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Date: September 19th, 2020

Huge Insurance Company is a property insurer that is interested in pro

Huge Insurance Company is a property insurer that is interested in protecting itself against cumulative losses that exceed $200 million during the year. This protection can best be obtained using a(n) A) quota-share reinsurance treaty. B) surplus-share reinsurance treaty. C) excess-of-loss reinsurance treaty. D) reinsurance pool.     ANSWER Answer: C

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Date: September 19th, 2020

Delta Insurance Company has a surplus-share treaty with Eversafe Reins

Delta Insurance Company has a surplus-share treaty with Eversafe Reinsurance. Delta has a retention limit of $200,000, and nine lines of insurance are ceded to Eversafe. How much will Eversafe pay if a $1,600,000 building insured by Delta suffers an $800,000 loss? A) $600,000 B) $700,000 C) $720,000 D) $800,000     ANSWER Answer: B

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Date: September 19th, 2020

Which of the following statements about the investments of property an

Which of the following statements about the investments of property and liability insurers is (are) true? I. Income from investments is important in offsetting any unfavorable underwriting experience. II. Because premium income is continually being received, the investment objective of liquidity is of little importance. A) I only B) II only C) both I and […]

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Date: September 19th, 2020

Antonio is a claims adjustor for LMN Insurance Company. After the insu

Antonio is a claims adjustor for LMN Insurance Company. After the insurer is notified that there has been a loss, Antonio meets with the insured. The first step in the claims process that Antonio should follow is to A) determine the amount of the loss. B) attempt to deny the claim regardless of whether he […]

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Date: September 19th, 2020

New Liability Insurance Company began operations last year and has bee

New Liability Insurance Company began operations last year and has been very successful. The company’s ability to grow is being restricted by an accounting rule that requires insurers to realize acquisition expenses immediately, while not realizing premiums received as income until some time has passed. Reinsurance is often used in such cases for which of […]

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Date: September 19th, 2020

Mark has been an underwriter for 20 years. An application he recently

Mark has been an underwriter for 20 years. An application he recently reviewed looked odd to him. The building value in the application seemed far too high, and Mark suspected the applicant might be planning to destroy the property after it is insured. Mark hired an outside firm to investigate the applicant and to prepare […]

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Date: September 19th, 2020