Exam 6: Insurance Company Operations

Which of the following statements about claim settlement is (are)true? I.The fair payment of claims requires an insurer to adopt a very liberal claims policy. II.To prevent lawsuits,an insurer should provide no personal assistance to a claimant other than that which is required by contractual obligations.

Which of the following statements is (are)true about life insurance company investments? I.The majority of life insurance company general account assets are invested in bonds. II.The majority of life insurance company separate account assets are invested in stocks.

If an underwriter suspects moral hazard,the underwriter may ask an outside firm to investigate the applicant and make a detailed report to the insurer.This report is called a(n)

The function of an actuary is to

Which of the following statements about treaty reinsurance is true?

All of the following statements about reinsurance are true EXCEPT

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 the following purposes?

All of the following statements about claims settlement are true EXCEPT

Functions of an insurance company's legal department include which of the following? I.Lobbying for legislation favorable to the insurance industry. II.Drafting policy provisions.

The unearned premium reserve of an insurer is

Catastrophe bonds are made available to institutional investors in the capital markets through an entity that is specially created for that purpose.This is entity is called a

Easy Pay Insurance Company may require insureds who suffer a loss to submit a sworn statement to substantiate that a loss occurred and to describe the conditions under which the loss occurred.This sworn statement is called a

Amy heads the legal staff of a large property and liability insurance company.Amy's staff is likely involved in all of the following activities EXCEPT

All of the following are methods that a property and liability insurance company can use to protect against catastrophic losses EXCEPT

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

Which of the following statements about adjustment bureaus is (are)true? I.They are frequently used to settle claims when a large number of losses occur in a given geographic location as a result of a catastrophic event. II.Their major advantage is low cost because of the use of part-time adjustors.

Which of the following statements is (are)true with respect to catastrophe bonds? I.The bonds are issued by the U.S.Government. II.The bonds have relatively high interest (coupon)rates.

Which of the following statements about treaty reinsurance is true?

Which of the following statements is true regarding the information systems functional area of an insurance company? I.Computers and information systems are able to perform some tasks that previously were performed directly by employees. II.Information systems can speed the processing of policies by insurers.

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 with Delta suffers an $800,000 loss?