AIDA 182 FINAL - EXAMINATION COMPLETE QUESTIONS AND DETAILED SOLUTIONS LATEST UPDATE THIS YEAR JUST RELEASED

AIDA 182 FINAL - EXAMINATION COMPLETE
QUESTIONS AND DETAILED SOLUTIONS LATEST
UPDATE THIS YEAR JUST RELEASED

Question 1: Rate regulation is generally based on having rates that
are adequate, not unfairly discriminatory, and what?
Answer:
Not excessive.


Question 2: What happens when sudden, large rate changes
occur?
Answer:
Regulatory or legislative action may occur.


Question 3: Primary goal of ratemaking for an insurer?
Answer:
Develop a rate structure that enables the insurer to compete effectively while earning a
reasonable profit.


Question 4: What is true of the five ideal characteristics of rates?
Answer:
Some often conflict with one another and compromises are necessary.


Question 5: What is the rate multiplied by the number of exposure
units?
Answer:
Premium.

,Question 6: What is the component in ratemaking to pay future
claims and loss adjustment expenses?
Answer:
Prospective loss costs.


Question 7: What component in ratemaking is for premium taxes
and fees paid to regulatory organizations?
Answer:
Expense provision.


Question 8: The pure premium is the amount included in the rate
per exposure unit required to pay losses. This component is also
called what?
Answer:
Loss cost.


Question 9: With regards to investment operations, what is true?
Answer:
Loss reserves for liability insurance are much greater than for property insurance.


Question 10: What is pure premium?
Answer:
The amount included in the rate per exposure unit required to pay losses.


Question 11: What are expenses associated with adjust claims?
Answer:
Loss adjustment expenses.


Question 12: A property-casualty insurer has what two operations?

,Answer:
Insurance operations and investment operations.


Question 13: True or false, prospective loss costs are supplied by
advisory organizations or developed by insurers with large enough
pools of loss data.
Answer:
True.


Question 14: What describes components of an insurance rate?
Answer:
Amounts to pay future claims, loss adjustment expenses, other expenses, and an amount
for profit and contingencies.


Question 15: An earned exposure unit is what?
Answer:
An exposure unit that has provided a full year of coverage, by the insurer.


Question 16: The amount in rates to protect against claims or
expenses being high is what?
Answer:
The loading for profits and contingencies.


Question 17: What is true of rate calculations?
Answer:
Some states require investment income to be considered explicitly in rate calculations.


Question 18: Future acquisition costs, overhead, and premium
taxes is what?
Answer:

, The expense provision of a rate.


Question 19: The amount to pay future claims and loss adjustment
expenses is what?
Answer:
Prospective loss costs.


Question 20: Investment return depends on loss reserves, the
associated unearned premium reserves, and what?
Answer:
The types of insurance written.


Question 21: In house adjusters salaries are part of what?
Answer:
Loss adjustment expenses


Question 22: The value being insured in a $100,000 homeowners
policy is what?
Answer:
The exposure base.


Question 23: The delay in reflecting loss experience in rates stems
from what?
Answer:
Time period during which rates are in effect, usually a full year.


Question 24: What is a starting point to estimate future losses?
Answer:
Past loss experience.