AU 60 - Chpt 2 Key Items UPDATED
ACTUAL Questions and CORRECT
Answers
frequent misclassification could contribute to - CORRECT ANSWER - insurer insolvency
unfair discrimination can result from - CORRECT ANSWER - unfair application of
standards & UW decisions that are not supported by statistical evidence
types of UW regulation to help prevent unfair discrimination - CORRECT ANSWER -
regulations that constrain insurers' ability to accept/modify/decline loss exposures, regulations
that limit allowable classifications, & regulations that restrict the timing & conditions of
coverage cancellations & non-renewals
All UW regulations are meant to - CORRECT ANSWER - prevent insurer insolvency &
unfair discrimination
Which one of the following describes underwriting regulations that limit allowable
classifications? - CORRECT ANSWER - Regulations requiring unisex rating in personal
auto insurance
Underwriting regulations seek to ensure correct classification of insureds because - CORRECT
ANSWER - Misclassification can result in inadequate premiums and drain an insurer's
surplus.
An insurer receives two automobile insurance applications. The first applicant is age 35, male,
and has a clean driving record. The second applicant is age 35, female, has had three speeding
violations and a prior accident. The insurer accepts both risks, but charges the second applicant a
higher premium. Which one of the following statements about this scenario is correct? -
CORRECT ANSWER - Regulations allow the insurer to charge more for insureds with
poor driving experience
ACTUAL Questions and CORRECT
Answers
frequent misclassification could contribute to - CORRECT ANSWER - insurer insolvency
unfair discrimination can result from - CORRECT ANSWER - unfair application of
standards & UW decisions that are not supported by statistical evidence
types of UW regulation to help prevent unfair discrimination - CORRECT ANSWER -
regulations that constrain insurers' ability to accept/modify/decline loss exposures, regulations
that limit allowable classifications, & regulations that restrict the timing & conditions of
coverage cancellations & non-renewals
All UW regulations are meant to - CORRECT ANSWER - prevent insurer insolvency &
unfair discrimination
Which one of the following describes underwriting regulations that limit allowable
classifications? - CORRECT ANSWER - Regulations requiring unisex rating in personal
auto insurance
Underwriting regulations seek to ensure correct classification of insureds because - CORRECT
ANSWER - Misclassification can result in inadequate premiums and drain an insurer's
surplus.
An insurer receives two automobile insurance applications. The first applicant is age 35, male,
and has a clean driving record. The second applicant is age 35, female, has had three speeding
violations and a prior accident. The insurer accepts both risks, but charges the second applicant a
higher premium. Which one of the following statements about this scenario is correct? -
CORRECT ANSWER - Regulations allow the insurer to charge more for insureds with
poor driving experience
