AIAF 114 Chapter 4 Practice Exam Questions and Answers| New Update with
100% Correct Answers
Some premium payment plans may include additional payments that exceed the amount
required if the premium was paid in full at the policy inception. Such additional payments that
are a function of the amount of premium payment are treated under U.S. regulatory accounting
as Finance charges.
Under U.S. regulatory accounting, the liability for extended reporting endorsements covering a
definite period into the future is recorded as Unearned premium reserves
Retrospective premium adjustments Can continue for many years after the original policy
term has expired.
Deficiency in the loss reserves Does not necessarily indicate a deficiency in the unearned
premium reserve
The asset-liability approach may be used as a new accounting standard for insurance contracts,
rather than the deferral-matching approach. Under the asset-liability approach, revenue is
recognized When the insurer gains control of the asset resulting from the revenue
Which one of the following might be a reason for a regulatory accounting system to gross up
the reported premiums by the amount of credits for large deductible arrangements? To
avoid a negative impact on smaller insureds under a premium assessment system
Under a deferral-matching approach, the portion of written premium that relates to future
coverage periods is considered An unearned premium liability.
Which one of the following best describes loss reserves? The estimate of the ultimate cost
of incurred but unpaid losses
100% Correct Answers
Some premium payment plans may include additional payments that exceed the amount
required if the premium was paid in full at the policy inception. Such additional payments that
are a function of the amount of premium payment are treated under U.S. regulatory accounting
as Finance charges.
Under U.S. regulatory accounting, the liability for extended reporting endorsements covering a
definite period into the future is recorded as Unearned premium reserves
Retrospective premium adjustments Can continue for many years after the original policy
term has expired.
Deficiency in the loss reserves Does not necessarily indicate a deficiency in the unearned
premium reserve
The asset-liability approach may be used as a new accounting standard for insurance contracts,
rather than the deferral-matching approach. Under the asset-liability approach, revenue is
recognized When the insurer gains control of the asset resulting from the revenue
Which one of the following might be a reason for a regulatory accounting system to gross up
the reported premiums by the amount of credits for large deductible arrangements? To
avoid a negative impact on smaller insureds under a premium assessment system
Under a deferral-matching approach, the portion of written premium that relates to future
coverage periods is considered An unearned premium liability.
Which one of the following best describes loss reserves? The estimate of the ultimate cost
of incurred but unpaid losses
