Question 1

Which of the following statements about judgment rating is true?

Accepted Answer

A)  It involves the manual rating of exposures. 
B)  It is used when the loss exposures are so diverse that a class rate cannot be calculated. 
C)  It is a form of experience rating. 
D)  It is only used when credible loss statistics are available. 
A)  It involves the manual rating of exposures. 
B)  It is used when the loss exposures are so diverse that a class rate cannot be calculated. 
C)  It is a form of experience rating. 
D)  It is only used when credible loss statistics are available.

Question 2

A loss reserve established for each individual claim when it is reported to a property and casualty insurance company is call a(n)

Accepted Answer

A)  admitted asset. 
B)  incurred-but-not-reported (IBNR) reserve. 
C)  unearned premium reserve. 
D)  case reserve. 
A)  admitted asset. 
B)  incurred-but-not-reported (IBNR) reserve. 
C)  unearned premium reserve. 
D)  case reserve.

Question 3

The portion of an insurance premium allocated to expenses, profit, and a margin for contingencies is called the

Accepted Answer

A)  loading. 
B)  pure premium. 
C)  gross premium. 
D)  experience rate. 
A)  loading. 
B)  pure premium. 
C)  gross premium. 
D)  experience rate.

Question 4

ABC Insurance Company's investment income ratio last year was 4.2 percent. The company's combined ratio last year was 102.6 percent. What was ABC's overall operating ratio?

Accepted Answer

A)  96.8 percent 
B)  98.4 percent 
C)  103.2 percent 
D)  106.8 percent 
A)  96.8 percent 
B)  98.4 percent 
C)  103.2 percent 
D)  106.8 percent

Question 5

All of the following statements about business objectives in designing a rating system are true EXCEPT

Accepted Answer

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 short periods so that consumer satisfaction can be maintained. 
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 short periods so that consumer satisfaction can be maintained.

Question 6

In schedule rating, each building is individually evaluated based on several rating factors. One factor refers to the possibility that the building will be damaged or destroyed by a fire that starts at an adjacent property and spreads to the building. This rating factor is known as

Accepted Answer

A)  occupancy. 
B)  protection. 
C)  maintenance. 
D)  exposure. 
A)  occupancy. 
B)  protection. 
C)  maintenance. 
D)  exposure.

Question 7

The unit of measurement used in property and casualty insurance pricing is called the

Accepted Answer

A)  unit rate. 
B)  premium. 
C)  exposure unit. 
D)  experience unit. 
A)  unit rate. 
B)  premium. 
C)  exposure unit. 
D)  experience unit.

Question 8

LMN Mutual Insurance Company has total liabilities of $300 million. The company has total assets of $380 million. What is LMN's policyholders' surplus?

Accepted Answer

A)  $680 million 
B)  $340 million 
C)  $80 million 
D)  -$80 million 
A)  $680 million 
B)  $340 million 
C)  $80 million 
D)  -$80 million

Which of the following statements about judgment rating is true?

A loss reserve established for each individual claim when it is reported to a property and casualty insurance company is call a(n)

The portion of an insurance premium allocated to expenses, profit, and a margin for contingencies is called the

ABC Insurance Company's investment income ratio last year was 4.2 percent. The company's combined ratio last year was 102.6 percent. What was ABC's overall operating ratio?

All of the following statements about business objectives in designing a rating system are true EXCEPT

In schedule rating, each building is individually evaluated based on several rating factors. One factor refers to the possibility that the building will be damaged or destroyed by a fire that starts at an adjacent property and spreads to the building. This rating factor is known as

The unit of measurement used in property and casualty insurance pricing is called the

LMN Mutual Insurance Company has total liabilities of $300 million. The company has total assets of $380 million. What is LMN's policyholders' surplus?

Risk and Its Treatment

Insurance and Risk

Introduction to Risk Management

Enterprise Risk Management and Related Topics

Types of Insurers and Marketing Systems

Insurance Company Operations

Government Regulation of Insurance

Fundamental Legal Principles

Analysis of Insurance Contracts

Life Insurance

Life Insurance Contractual Provisions

Buying Life Insurance

Annuities and Individual Retirement Accounts

Health-Care Reform; Individual Health Insurance Coverages

Employee Benefits: Group Life and Health Insurance

Employee Benefits: Retirement Plans

Social Insurance

The Liability Risk

Auto Insurance

Auto Insurance (continued)

Homeowners Insurance, Section I

Homeowners Insurance, Section II

Other Property and Liability Insurance Coverages

Commercial Property Insurance

Commercial Liability Insurance

Crime Insurance and Surety Bonds

Filters

Exam 7: Financial Operations of Insurers

Which of the following statements about judgment rating is true?

A loss reserve established for each individual claim when it is reported to a property and casualty insurance company is call a(n)

The portion of an insurance premium allocated to expenses, profit, and a margin for contingencies is called the

ABC Insurance Company's investment income ratio last year was 4.2 percent. The company's combined ratio last year was 102.6 percent. What was ABC's overall operating ratio?

All of the following statements about business objectives in designing a rating system are true EXCEPT

In schedule rating, each building is individually evaluated based on several rating factors. One factor refers to the possibility that the building will be damaged or destroyed by a fire that starts at an adjacent property and spreads to the building. This rating factor is known as

The unit of measurement used in property and casualty insurance pricing is called the

LMN Mutual Insurance Company has total liabilities of $300 million. The company has total assets of $380 million. What is LMN's policyholders' surplus?

Risk and Its Treatment

Insurance and Risk

Introduction to Risk Management

Enterprise Risk Management and Related Topics

Types of Insurers and Marketing Systems

Insurance Company Operations

Government Regulation of Insurance

Fundamental Legal Principles

Analysis of Insurance Contracts

Life Insurance

Life Insurance Contractual Provisions

Buying Life Insurance

Annuities and Individual Retirement Accounts

Health-Care Reform; Individual Health Insurance Coverages

Employee Benefits: Group Life and Health Insurance

Employee Benefits: Retirement Plans

Social Insurance

The Liability Risk

Auto Insurance

Auto Insurance (continued)

Homeowners Insurance, Section I

Homeowners Insurance, Section II

Other Property and Liability Insurance Coverages

Commercial Property Insurance

Commercial Liability Insurance

Crime Insurance and Surety Bonds

Filters