1|Page
C11 - FINAL EXAM REVIEW 1 2025 |BRAND
NEW QUESTIONS WITH VERIFIED SOLUTIONS
Chance and insurance - Correct-answer-chance - the probability of a certain event
happening
can be expressed by a fraction
numerator = the number of times the event HAS happened
denominator = the number of times the even COULD happen
if statistics are kept on the losses suffered by a large number of people, the
number of losses by a similar group can be predicted
Rate-making factors - Correct-answer-size of the sample - larger the better
time period over which the sample was taken - longer the better
conditions in the past relative to future conditions - if conditions not the same,
that needs to be factored
Rate-making - Correct-answer-process of establishing rates for each class
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Rate determination - Correct-answer-classify the risk - categories / sub-classes
gather statistics - loss data per class - determine avg cost per loss and frequency
determine pure premium - to pay losses that occur
determine total premium - pure premium + loadings
determine rate - per $100 of insurance
Underwriting steps - Correct-answer-receive request for insurance
examine the risk & gather information on the risks - technicians or specialists
accept, accept with conditions or deny the risk
determine retention - the maximum amount that the insurer can insure
Lloyd's Insurance Market - Correct-answer-Edward Lloyd opened a coffee house
in London, which became a gathering place for people buying and selling Marine
insurance.
Now, consists of corporate and individual members who provide capital to the
market and underwrite in syndicates.
Not an insurance company but an insurance market
, 3|Page
Agency/Brokerage agreements - Correct-answer--set out terms and conditions
under which an agent or broker will bring business tot he names insurance
company
-brokers may have agreements with many or few insurers
-should clearly document everything, nothing left to memory or chance
-should clearly outline the exact responsibilities and obligations of both parties
Basic items included in an agency/brokerage agreement - Correct-answer--
parties to the agreement
- classes of business being written
- binding authority
- premium collection and credit terms
- remuneration
- termination
- other addenda
express vs. implied contracts - Correct-answer-express contract - terms of the
contract have been specifically stated and agreed to by both parties, can be oral or
in writing
C11 - FINAL EXAM REVIEW 1 2025 |BRAND
NEW QUESTIONS WITH VERIFIED SOLUTIONS
Chance and insurance - Correct-answer-chance - the probability of a certain event
happening
can be expressed by a fraction
numerator = the number of times the event HAS happened
denominator = the number of times the even COULD happen
if statistics are kept on the losses suffered by a large number of people, the
number of losses by a similar group can be predicted
Rate-making factors - Correct-answer-size of the sample - larger the better
time period over which the sample was taken - longer the better
conditions in the past relative to future conditions - if conditions not the same,
that needs to be factored
Rate-making - Correct-answer-process of establishing rates for each class
,2|Page
Rate determination - Correct-answer-classify the risk - categories / sub-classes
gather statistics - loss data per class - determine avg cost per loss and frequency
determine pure premium - to pay losses that occur
determine total premium - pure premium + loadings
determine rate - per $100 of insurance
Underwriting steps - Correct-answer-receive request for insurance
examine the risk & gather information on the risks - technicians or specialists
accept, accept with conditions or deny the risk
determine retention - the maximum amount that the insurer can insure
Lloyd's Insurance Market - Correct-answer-Edward Lloyd opened a coffee house
in London, which became a gathering place for people buying and selling Marine
insurance.
Now, consists of corporate and individual members who provide capital to the
market and underwrite in syndicates.
Not an insurance company but an insurance market
, 3|Page
Agency/Brokerage agreements - Correct-answer--set out terms and conditions
under which an agent or broker will bring business tot he names insurance
company
-brokers may have agreements with many or few insurers
-should clearly document everything, nothing left to memory or chance
-should clearly outline the exact responsibilities and obligations of both parties
Basic items included in an agency/brokerage agreement - Correct-answer--
parties to the agreement
- classes of business being written
- binding authority
- premium collection and credit terms
- remuneration
- termination
- other addenda
express vs. implied contracts - Correct-answer-express contract - terms of the
contract have been specifically stated and agreed to by both parties, can be oral or
in writing
