AINS 21 Chapter Two Review Questions with Correct Answers
Question 1:
What does marketing involve?
Answer:
Marketing involves the determining the products and services customers want and need and
delivering them to those customers.
Question 2:
What is the goal of underwriting when determining the price for insurance?
Answer:
The goal of underwriting is to charge a premium commensurate with the loss exposure. (In
other words, each insured's premium should set at a label that is adequate to enable the total
premiums paid by a large group of similar insureds to pay losses and expenses of that group
and to allow the insurer to achieve a reasonable profit).
Question 3:
What is the purpose of the claims handling process?
Answer:
The purpose of the claim handling process is to achieve a fair and equitable settlement based
on the circumstance of the loss.
Question 4:
What observations about policyholders might premium auditors be able to refer to insurer
underwriters because of their direct contact with policyholders?
Answer:
Premium auditors can notify underwriters of larger loss exposures than originally
contemplated, unacceptable operations, new products, new operations or financial problems.
Question 5:
What is the purpose for which a stock insurer is formed?
Answer:
A stock insurer is formed for the purpose of making a profit for its owners.
, Question 6:
What is the role of a stock insurer's board of directors?
Answer:
A stock insurer's board of directors, which has the authority to control the insurer's activities,
creates and oversees corporate goals and objectives and appoints a chief executive officer
(CEO) to carry out the insurer's operations.
Explain 2 similarities between mutual insurers and stock insurers regarding earnings.
Two examples of similarities between mutual insurers and stock insurers regarding earnings
are: 1.)
Question 7:
What is the role of a stock insurer's board of directors?
Answer:
A stock insurer's board of directors, which has the authority to control the insurer's activities,
creates and oversees corporate goals and objectives and appoints a chief executive officer
(CEO) to carry out the insurer's operations.
Explain 2 similarities between mutual insurers and stock insurers regarding earnings.
Two examples of similarities between mutual insurers and stock insurers regarding earnings
are: 1.)
Mutual insurers generally seek to earn profits in their ongoing operations, as do stock insurers.
2.) A stock insurer may choose to share profits with its stockholders by the payment of
dividends, which are a return on the stockholders' investment. Mutual insurers may also opt to
share profits, but pay dividends instead to policyholders as a return of a portion of premium
paid.
Mutual insurers generally seek to earn profits in their ongoing operations, as do stock insurers.
2.) A stock insurer may choose to share profits with its stockholders by the payment of
dividends, which are a return on the stockholders' investment. Mutual insurers may also opt to
share profits, but pay dividends instead to policyholders as a return of a portion of premium
paid.
Mutual insurers generally seek to earn profits in their ongoing operations, as do stock insurers.
2.) A stock insurer may choose to share profits with its stockholders by the payment of
dividends, which are a return on the stockholders' investment. Mutual insurers may also opt to
share profits, but pay dividends instead to policyholders as a return of a portion of premium
paid.
Mutual insurers generally seek to earn profits in their ongoing operations, as do stock insurers.
2.) A stock insurer may choose to share profits with its stockholders by the payment of
dividends, which are a return on the stockholders' investment. Mutual insurers may also opt to
share profits, but pay dividends instead to policyholders as a return of a portion of premium
paid.
Question 1:
What does marketing involve?
Answer:
Marketing involves the determining the products and services customers want and need and
delivering them to those customers.
Question 2:
What is the goal of underwriting when determining the price for insurance?
Answer:
The goal of underwriting is to charge a premium commensurate with the loss exposure. (In
other words, each insured's premium should set at a label that is adequate to enable the total
premiums paid by a large group of similar insureds to pay losses and expenses of that group
and to allow the insurer to achieve a reasonable profit).
Question 3:
What is the purpose of the claims handling process?
Answer:
The purpose of the claim handling process is to achieve a fair and equitable settlement based
on the circumstance of the loss.
Question 4:
What observations about policyholders might premium auditors be able to refer to insurer
underwriters because of their direct contact with policyholders?
Answer:
Premium auditors can notify underwriters of larger loss exposures than originally
contemplated, unacceptable operations, new products, new operations or financial problems.
Question 5:
What is the purpose for which a stock insurer is formed?
Answer:
A stock insurer is formed for the purpose of making a profit for its owners.
, Question 6:
What is the role of a stock insurer's board of directors?
Answer:
A stock insurer's board of directors, which has the authority to control the insurer's activities,
creates and oversees corporate goals and objectives and appoints a chief executive officer
(CEO) to carry out the insurer's operations.
Explain 2 similarities between mutual insurers and stock insurers regarding earnings.
Two examples of similarities between mutual insurers and stock insurers regarding earnings
are: 1.)
Question 7:
What is the role of a stock insurer's board of directors?
Answer:
A stock insurer's board of directors, which has the authority to control the insurer's activities,
creates and oversees corporate goals and objectives and appoints a chief executive officer
(CEO) to carry out the insurer's operations.
Explain 2 similarities between mutual insurers and stock insurers regarding earnings.
Two examples of similarities between mutual insurers and stock insurers regarding earnings
are: 1.)
Mutual insurers generally seek to earn profits in their ongoing operations, as do stock insurers.
2.) A stock insurer may choose to share profits with its stockholders by the payment of
dividends, which are a return on the stockholders' investment. Mutual insurers may also opt to
share profits, but pay dividends instead to policyholders as a return of a portion of premium
paid.
Mutual insurers generally seek to earn profits in their ongoing operations, as do stock insurers.
2.) A stock insurer may choose to share profits with its stockholders by the payment of
dividends, which are a return on the stockholders' investment. Mutual insurers may also opt to
share profits, but pay dividends instead to policyholders as a return of a portion of premium
paid.
Mutual insurers generally seek to earn profits in their ongoing operations, as do stock insurers.
2.) A stock insurer may choose to share profits with its stockholders by the payment of
dividends, which are a return on the stockholders' investment. Mutual insurers may also opt to
share profits, but pay dividends instead to policyholders as a return of a portion of premium
paid.
Mutual insurers generally seek to earn profits in their ongoing operations, as do stock insurers.
2.) A stock insurer may choose to share profits with its stockholders by the payment of
dividends, which are a return on the stockholders' investment. Mutual insurers may also opt to
share profits, but pay dividends instead to policyholders as a return of a portion of premium
paid.
