RMIN 4000 Exam 3 2026 Questions and
Answers
Ratemaking - Correct answer-the pricing of insurance, done by actuaries, using
past claim data from this & other insurance companies, adjusted to take into
account expectations about how future claims may differ from past claim
rate - Correct answer-the price per unit of insurance
exposure unit - Correct answer-the unit of measurement used in insurance pricing
Underwriting - Correct answer-Refers to the process of selecting, classifying, and
pricing applicants for insurance.
Actuary - Correct answer-An officer, of an insurance company, who calculates and
states the risks and premiums
Production - Correct answer-the sales and marketing activities of insurers
Reinsurance - Correct answer-an arrangement by which the primary insurer that
initially writes the insurance transfers to another insurer part or all of the potential
losses associated with such insurance
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, Ceding Company - Correct answer-the primary insurer that initially writes the
insurance
Reinsurer - Correct answer-the insurer that accepts the insurance from the ceding
company
Retention Limit - Correct answer-the amount of insurance retained by the ceding
company
cession - Correct answer-the amount of insurance ceded to the reinsurer
Retrocession - Correct answer-is when a reinsurer insures part or all of a risk with
another insurer
What is reinsurance used for? - Correct answer--Increase underwriting capacity
-Stabilize profits
-Reduce the unearned premium reserve, which represents the unearned portion of
gross premiums on all outstanding policies at the time of valuation
-Provide protection against a catastrophic loss
-To access the technical expertise of the reinsurer, especially in lines where the
companydoes not have much experience itself
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
Answers
Ratemaking - Correct answer-the pricing of insurance, done by actuaries, using
past claim data from this & other insurance companies, adjusted to take into
account expectations about how future claims may differ from past claim
rate - Correct answer-the price per unit of insurance
exposure unit - Correct answer-the unit of measurement used in insurance pricing
Underwriting - Correct answer-Refers to the process of selecting, classifying, and
pricing applicants for insurance.
Actuary - Correct answer-An officer, of an insurance company, who calculates and
states the risks and premiums
Production - Correct answer-the sales and marketing activities of insurers
Reinsurance - Correct answer-an arrangement by which the primary insurer that
initially writes the insurance transfers to another insurer part or all of the potential
losses associated with such insurance
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
, Ceding Company - Correct answer-the primary insurer that initially writes the
insurance
Reinsurer - Correct answer-the insurer that accepts the insurance from the ceding
company
Retention Limit - Correct answer-the amount of insurance retained by the ceding
company
cession - Correct answer-the amount of insurance ceded to the reinsurer
Retrocession - Correct answer-is when a reinsurer insures part or all of a risk with
another insurer
What is reinsurance used for? - Correct answer--Increase underwriting capacity
-Stabilize profits
-Reduce the unearned premium reserve, which represents the unearned portion of
gross premiums on all outstanding policies at the time of valuation
-Provide protection against a catastrophic loss
-To access the technical expertise of the reinsurer, especially in lines where the
companydoes not have much experience itself
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
