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

Quizplus · Accepted Answer

It is not true that the rating system should be independent of long-run changes in economic conditions. In fact, it is important for the rating system to take into account economic conditions to ensure that premiums charged are adequate to cover potential losses during times of economic downturns.

All of the Following Statements About Business Objectives in Designing