Question 1

A property and liability insurance company's loss reserve and unearned premium reserve are

Accepted Answer

Loss reserve and unearned premium reserve are both liabilities, as they represent the company's obligations to pay out potential claims and provide coverage for future periods, respectively.

Question 2

A strip-mall includes eight identical-sized retail units.All of the units were built at the same time and each has an identical sprinkler system.Unit number two is a dry cleaning business.Unit number three is a bar and grill.Unit number four is a dress shop.The owners of these three units are all insured by the same insurance company,but the property insurance premiums vary significantly.Which of the following rating factors best explains the difference in premiums?

Accepted Answer

The primary rating factor that differentiates the premiums in this scenario is occupancy. The dry cleaning business, bar and grill, and dress shop are all different types of businesses with different levels of risk associated with their operations. The insurance company would have different rates for each business based on their occupancy classification.

Question 3

One life insurance company reserve is designed to smooth the company's reported surplus over time by absorbing fluctuations in security prices that are not attributable to changing interest rates.This reserve is called the

Accepted Answer

The reserve described here is known as the asset valuation reserve. It serves to absorb fluctuations in security prices that are unrelated to changing interest rates, thereby smoothing out the company's reported surplus over time. This reserve is typically listed as a liability on the balance sheet, and is subject to regulatory oversight to ensure that it is adequately funded.

Question 4

One liability on a property and liability insurance company's balance sheet is for the costs associated with settling and paying reserved claims.This liability is the

Accepted Answer

The answer of One liability on a property and liability...

Question 5

In schedule rating,each building is individually rated on several factors.One factor refers to the quality of the city's water supply and fire department,and the risk control devices installed in the building.This factor is called

Accepted Answer

The factor that refers to the quality of the city's water supply and fire department, as well as the risk control devices installed in the building, is called "protection." Therefore, choice C is the correct answer. "Exposure" refers to the property's surrounding environment, "Occupancy" refers to the building's intended use or purpose, and "Housekeeping" refers to the maintenance and cleanliness of the property.

Question 6

The assets of a property and liability insurance company are primarily

Accepted Answer

The assets of a property and liability insurance company are primarily investments such as stocks and bonds. These assets are used to generate income and to pay claims, expenses, and other liabilities.

Question 7

A property and liability insurance company's loss ratio and expense ratio,respectively,for 2016 - 2018 were:
2016: 74% 31%
2017: 68% 33%
2018: 66% 30%
Which of the following statements is true about the company's underwriting results for this time period?

Accepted Answer

The insurer's profitability from underwriting has been improving each year, as indicated by the decreasing loss ratio and generally decreasing expense ratio from 2016 to 2018, suggesting better management of claims and expenses relative to premiums.

Question 8

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

The answer of ABC Insurance Company's investment income ratio last...

Quiz 7: Financial Operations of Insurers