CPCU 520 Chapter 7 Exam Questions and Answers| New Update with 100% Correct Answers
Data mining The process of extracting hidden patterns from data that is used in a wide
range of applications for research and fraud detection
Ratemaking The process insurers use to calculate insurance rates, which are a premium
component
Rate The price per exposure unit for insurance coverage
Premium The price of the insurance coverage provided for a specified period
Pure premium The average amount of money an insurer must charge per exposure unit in
order to be able to cover the total anticipated losses for that line of business
Expense provision The amount that is included in an insurance rate to cover the insurer's
expenses and that might include loss adjustment expenses but that excludes investment
expenses
Underwriting expenses Costs incurred by an insurer for operations, taxes, fees, and the
application of new policies
Loss adjustment expense (LAE) The expense that an insurer incurs to investigate, defend,
and settle claims according to the terms specified in the insurance policy
Allocated loss adjustment expense (ALAE) The expense an insurer incurs to investigate,
defend, and settle claims that are associated with a specific claim
Unallocated loss adjustment expense (ULAE) Loss adjustment expense that cannot be
readily associated with a specific claim
Data mining The process of extracting hidden patterns from data that is used in a wide
range of applications for research and fraud detection
Ratemaking The process insurers use to calculate insurance rates, which are a premium
component
Rate The price per exposure unit for insurance coverage
Premium The price of the insurance coverage provided for a specified period
Pure premium The average amount of money an insurer must charge per exposure unit in
order to be able to cover the total anticipated losses for that line of business
Expense provision The amount that is included in an insurance rate to cover the insurer's
expenses and that might include loss adjustment expenses but that excludes investment
expenses
Underwriting expenses Costs incurred by an insurer for operations, taxes, fees, and the
application of new policies
Loss adjustment expense (LAE) The expense that an insurer incurs to investigate, defend,
and settle claims according to the terms specified in the insurance policy
Allocated loss adjustment expense (ALAE) The expense an insurer incurs to investigate,
defend, and settle claims that are associated with a specific claim
Unallocated loss adjustment expense (ULAE) Loss adjustment expense that cannot be
readily associated with a specific claim
