RMIN 4000 - Chapter 5 Final Review
Exam Questions And Correct Answers.
Frequency - Answer - How often does a loss occur?
- The number of losses (such as fire, theft, collision) that occur within a specified time period.
- Probability of a loss occurring.
- Approximately 500,000 structure fires occur each year in the US. Over half are home fires.
Example: Probability of a fire is 0.0071 per loss exposure per year; trending downward.
Severity - Answer - How much does it cost when a loss does occur?
- The dollar amount of loss for a specific peril (fire, theft, collision).
Example: Average structure fire property damage loss is $22K.
Frequency (formula) - Answer Number of Losses / Number of Exposures
Severity (formula) - Answer Total Losses ($) / Number of Losses
Private Insurance Industry (2019) - Answer - U.S. insurance industry employed 2.8 M people.
- Insurers paid $23.6 B in premium taxes.
- P&C Premiums: $637.7 B
- Life/Health Premiums: $678.7B
Top 5 Global Insurers (2019) by NPW - Answer 1.UnitedHealth Group (US)
2.Ping An Insurance (Group) Company of China Ltd. (China)
3.AXA S.A. (France)
4.China Life Insurance (Group) Company (China)
, 5.Kaiser Foundation Group of Health Plans (US)
Largest P&C Insurers in US (2019) - Answer 1. State Farm Market Share: 9.27%
2. Berkshire Hathaway Market Share: 6.51%
3. Progressive Market Share: 5.54%
4. Liberty Mutual Market Share: 5.03%
5. Allstate Market Share: 4.95%
Major Types of Private Insurers - Answer - Stock Insurers
- Mutual Insurers
- Lloyd's of London
Stock Insurers - Answer - A corporation owned by stockholders.
- Objective is to earn profit for stockholders by increasing the value of the stock and paying dividends.
Mutual Insurers - Answer - A corporation owned by policyholders.
- Profits are distributed to policyholders by dividends or rate reductions.
Type of Mutual Insurers - Answer 1. Assessment Mutual
2. Advance Premium Mutual
3. Fraternal Insurer
Assessment Mutual - Answer Insurer has the right to assess policyholders an additional amount if the
insurer's financial operations are unfavorable.
Advance Premium Mutual - Answer Insurer does not issue assessable policies
Fraternal Insurer - Answer Provides life and health insurance to members of a social or religious
organization.
Exam Questions And Correct Answers.
Frequency - Answer - How often does a loss occur?
- The number of losses (such as fire, theft, collision) that occur within a specified time period.
- Probability of a loss occurring.
- Approximately 500,000 structure fires occur each year in the US. Over half are home fires.
Example: Probability of a fire is 0.0071 per loss exposure per year; trending downward.
Severity - Answer - How much does it cost when a loss does occur?
- The dollar amount of loss for a specific peril (fire, theft, collision).
Example: Average structure fire property damage loss is $22K.
Frequency (formula) - Answer Number of Losses / Number of Exposures
Severity (formula) - Answer Total Losses ($) / Number of Losses
Private Insurance Industry (2019) - Answer - U.S. insurance industry employed 2.8 M people.
- Insurers paid $23.6 B in premium taxes.
- P&C Premiums: $637.7 B
- Life/Health Premiums: $678.7B
Top 5 Global Insurers (2019) by NPW - Answer 1.UnitedHealth Group (US)
2.Ping An Insurance (Group) Company of China Ltd. (China)
3.AXA S.A. (France)
4.China Life Insurance (Group) Company (China)
, 5.Kaiser Foundation Group of Health Plans (US)
Largest P&C Insurers in US (2019) - Answer 1. State Farm Market Share: 9.27%
2. Berkshire Hathaway Market Share: 6.51%
3. Progressive Market Share: 5.54%
4. Liberty Mutual Market Share: 5.03%
5. Allstate Market Share: 4.95%
Major Types of Private Insurers - Answer - Stock Insurers
- Mutual Insurers
- Lloyd's of London
Stock Insurers - Answer - A corporation owned by stockholders.
- Objective is to earn profit for stockholders by increasing the value of the stock and paying dividends.
Mutual Insurers - Answer - A corporation owned by policyholders.
- Profits are distributed to policyholders by dividends or rate reductions.
Type of Mutual Insurers - Answer 1. Assessment Mutual
2. Advance Premium Mutual
3. Fraternal Insurer
Assessment Mutual - Answer Insurer has the right to assess policyholders an additional amount if the
insurer's financial operations are unfavorable.
Advance Premium Mutual - Answer Insurer does not issue assessable policies
Fraternal Insurer - Answer Provides life and health insurance to members of a social or religious
organization.
