PROPERTY AND CASUALTY INSURANCE
PRINCIPLES AND CONCEPTS Exam 100% Verified
Questions & Answers
Q: Property Insurance
Answer:
Contracts designed to transfer risk of unexpected financial loss from the property owner to the insurance company.
Q: Liability Contracts
Answer:
Also known as casualty policies, they focus on reimbursement to third parties for negligent acts leading to injury or
damage.
Q: Insurable Interest
Answer:
An individual has a financial stake in something and would experience monetary loss if that something was lost, damaged,
or destroyed.
Q: Underwriting
Answer:
The process of assessing risks to determine if they are acceptable and how much premium will be charged.
Q: Risk Appetite
Answer:
Describes what risks an insurer finds acceptable and is willing to underwrite.
Q: Sources of Information for Underwriting
Answer:
Include statements made by the applicant, underwriting maps, and third-party verification.
Q: Standard Rates
Answer:
Normal, average rates assessed on an average risk for coverage.
Q: Loss Ratio
Answer:
Compares a company's incurred losses to the amount of earned insurance premiums, expressed as a percentage.
Q: Expense Ratio
, Answer:
Shows what percentage of premiums collected has been used to pay expenses associated with insurance policies.
Q: Combined Ratio
Answer:
A combination of an insurance company's loss ratio and expense ratio.
Q: Insurer Reserves
Answer:
Funds set aside by an insurance company to meet financial obligations.
Q: Loss Reserve
Answer:
Estimated value of current outstanding claims and future claims an insurance company may need to pay.
Q: Statutory Funds
Answer:
Minimum funds that must be maintained by insurance companies as mandated by state regulators.
Q: Field Underwriting
Answer:
Allows producers to make underwriting decisions before the application is submitted to streamline the process.
Q: Insurance Score
Answer:
Developed using an applicant's credit information to predict future accidents and claims.
Q: Fair Credit Reporting Act (FCRA)
Answer:
Governs the use of consumer credit information to ensure safety and fairness.
Q: Insurance Rate
Answer:
The price charged per unit of exposure.
Q: Manual Rate
Answer:
Separates risk exposure units into predetermined classes with a uniform rate applied to each class.
Q: Merit Rating
PRINCIPLES AND CONCEPTS Exam 100% Verified
Questions & Answers
Q: Property Insurance
Answer:
Contracts designed to transfer risk of unexpected financial loss from the property owner to the insurance company.
Q: Liability Contracts
Answer:
Also known as casualty policies, they focus on reimbursement to third parties for negligent acts leading to injury or
damage.
Q: Insurable Interest
Answer:
An individual has a financial stake in something and would experience monetary loss if that something was lost, damaged,
or destroyed.
Q: Underwriting
Answer:
The process of assessing risks to determine if they are acceptable and how much premium will be charged.
Q: Risk Appetite
Answer:
Describes what risks an insurer finds acceptable and is willing to underwrite.
Q: Sources of Information for Underwriting
Answer:
Include statements made by the applicant, underwriting maps, and third-party verification.
Q: Standard Rates
Answer:
Normal, average rates assessed on an average risk for coverage.
Q: Loss Ratio
Answer:
Compares a company's incurred losses to the amount of earned insurance premiums, expressed as a percentage.
Q: Expense Ratio
, Answer:
Shows what percentage of premiums collected has been used to pay expenses associated with insurance policies.
Q: Combined Ratio
Answer:
A combination of an insurance company's loss ratio and expense ratio.
Q: Insurer Reserves
Answer:
Funds set aside by an insurance company to meet financial obligations.
Q: Loss Reserve
Answer:
Estimated value of current outstanding claims and future claims an insurance company may need to pay.
Q: Statutory Funds
Answer:
Minimum funds that must be maintained by insurance companies as mandated by state regulators.
Q: Field Underwriting
Answer:
Allows producers to make underwriting decisions before the application is submitted to streamline the process.
Q: Insurance Score
Answer:
Developed using an applicant's credit information to predict future accidents and claims.
Q: Fair Credit Reporting Act (FCRA)
Answer:
Governs the use of consumer credit information to ensure safety and fairness.
Q: Insurance Rate
Answer:
The price charged per unit of exposure.
Q: Manual Rate
Answer:
Separates risk exposure units into predetermined classes with a uniform rate applied to each class.
Q: Merit Rating
