Exam 23: Functions and Organization of Insurers

Match the descriptions with their terms: -In property-liability insurance, _________________ represent the insurer and public adjusters represent the insured.

Match the descriptions with their terms: -The ratio of the loss cost to the gross premium is called the _________________.

Match the descriptions with their terms: -In life insurance a rate deviation is often granted for __________, while extra premiums may be charged for substandard risks.

If an insured group develops loss experience deemed to be 50 percent credible, for rate-making purposes the future pure premium for that group

Match the descriptions with their terms: -A method of rate-making recognizing individual hazards of a specific exposure is called _________________.

The loss ratio method of rate making is a way to revise rates rather than make rates.

Match the descriptions with their terms: -A reinsurance treaty in which losses are paid by the reinsurer only when losses exceed some predetermined deductible or retention is called a/an _________________.

A type of reinsurance treaty in which an insurer accepts a given amount of loss before the reinsurers must pay anything is a feature of all but one of the following:

Merit rating is aimed at adjusting an insurance rate for specific features deemed to affect expected loss experience.

Match the descriptions with their terms: -The statistical formula for _________________ describes the degree to which a rate maker can rely on the accuracy of loss experience.

Match the descriptions with their terms: -In property-liability insurance _______________ is employed to recognize specific features affecting probability severity of loss.

Which of the following generalizations is most accurate concerning underwriting?

An excess-of-loss treaty is a form of facultative reinsurance.

The cost of doing business in insurance is called loading.

If the pure premium is $100 and the loading is 25 percent, the gross premium would be $133.33.

Match the descriptions with their terms: -In insurance the function of pricing is called _________________.

A retrospective rating method affects the premium paid for a past time period.

Match the descriptions with their terms: -A/An _________________, the simplest type of reinsurance, is a specific reinsurance on an optional basis.

The main difference between pricing insurance and pricing other commodities is

Failure to investigate a claim promptly is classed as an unfair claim settlement practice.