FREE AND STUDY GAMES ABOUT COMMERCIAL UW AU60

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FREE AND STUDY GAMES ABOUT COMMERCIAL UW AU60

EXAM QUESTIONS

Actual Qs and Ans Expert-Verified Explanation

This Exam contains:

-Guarantee passing score -52 Questions and Answers -format set of multiple-choice -Expert-Verified Explanation

Question 1: Specific fire rate

Answer:

An insurance rate that is developed by ISO field representatives through a physical visit to a property and development of an individual advisory loss cost.

Question 2: Loss adjustment expense (LAE)

Answer:

The expense that an insurer incurs to investigate, defend, and settle claims according to the terms specified in the insurance policy.

Question 3: Credibility factor

Answer:

The factor applied in ratemaking to adjust for the predictive value of loss data and used to minimize the variations in the rates that result from purely chance variations in losses.

Question 4: Risk charge

Answer:

An amount over and above the expected loss component of the premium to compensate the insurer for taking the risk that losses may be higher than expected.

Question 5: Class rate

Answer:

A type of insurance rate that applies to all insureds in the same rating category or rating class.

Question 6: Schedule rating plan

Answer:

A rating plan that awards debits and credits based on specific categories, such as the care and condition of the premises or the training and selection of employees, to modify the final premium to reflect factors that the class rate does not include.

Question 7: Stability

Answer:

A social goal of insurance stating that rates should remain firm and change only when underlying costs have changed substantially.

Question 8: Composite rating

Answer:

An optional insurance pricing approach that uses a premium base other than the one specified in the rating manual to price an entire account.

Question 9: Underwriting profit

Answer:

Income an insurer earns from premiums paid by policyholders minus incurred losses and underwriting expenses.

Question 10: Credibility

Answer:

The level of confidence an actuary has in projected losses; increases as the number of exposure units increases.

Question 11: Independence

Answer:

A situation in which the occurrence of one event has no effect on the likelihood of the occurrence of any other event.

Question 12: Investment income

Answer:

Interest, dividends, and net capital gains received by an insurer from the insurer's financial assets, minus its investment expenses.

Question 13: Rate

Answer:

The price per exposure unit for insurance coverage.

Question 14: Blanket limit

Answer:

The maximum dollar amount the insurer will pay for two or more items or classes of property at one or more locations.

Question 15: Blanket insurance

Answer:

Insurance that covers either of the following with one limit of insurance: (1) one type of property in one or more separately rated buildings or (2) two or more types of property in one or more separately rated buildings.

Question 16: Amount subject

Answer:

The total value exposed to loss at any one location from any one event.

Question 17: Ratemaking

Answer:

The process insurers use to calculate insurance rates, which are a premium component.

Question 18: Rebating

Answer:

The practice of giving a portion of the producer's commission or some other financial advantage to an individual as an inducement to purchase the policy.

Question 19: Expense provision

Answer:

The amount that is included in an insurance rate to cover the insurer's expenses and that might include loss adjustment expenses but that excludes investment expenses.

Question 20: Expense modification

Answer:

An insurance rating plan that modifies the expense portion of an insured's rate to reflect the actual cost of providing coverage to that insured.

Question 21: Premium

Answer:

The price of the insurance coverage provided for a specified period.

Question 22: Reinsurance---

Answer:

Transfer of insurance risk from 1 insurer to another thru contractual agreemt which 1 insurer (reinsurer) agrees, in return for a RI prem, to indemnify another insurer (primary insurer) for some or all of financial consequences of certain loss exposures c

Question 23: Basic limit

Answer:

The minimum amount of coverage for which a policy can be written; usually found in liability lines.

Question 24: Paid loss retrospective rating plan

Answer:

A retrospective rating plan in which the insured pays a deposit prem at the beginning of the policy period & makes addtl paymts; monthly, to reimburse insurer for insured's losses as they are pd & in which the ttl amt pd is subject to the min & max prem.

Question 25: Pure premium method

Answer:

A method for calculating insurance rates using estimates of future losses and expenses, including a profit and contingencies factor.