Insurance level 1 Alberta exam Questions with Verified Solutions

Insurance level 1 Alberta exam Questions with Verified Solutions The philosophy behind insurance is to a) provide a vehicle through which wealthy individuals and corporations may protect their property against catastrophic loss b)allow insurers to grow larger and more stable, thus creating jobs and supporting the economy c) spread the losses of the few amongst the premiums of the many d) spread the losses of the many amongst the premiums of the few spread the losses of the few amongst the premiums of the many Once an underwriter decides to accept a risk, they must establish an appropriate premium. They apply base rates established by actuaries, add loadings, and then multiply the final rate by the amount insured to obtain the premium. A loading applied by an underwriter... A)Is an additional charge included in an insurance rate to reflect a hazard not contemplated in the basic rate for the class b)is accomplished by applying the established rates to the specific items that are to be insured c) is the rate multiplied by the amount of insurance d) reflects the danger of loss arising from what happens to other nearby risks Is an additional charge included in an insurance rate to reflect a hazard not contemplated in the basic rate for the class When an insurer pays a claim to its insured under a contract of insurance and attempts to recover the amount from a third party whom it believes is responsible for the damage, this is known as a) indemnity b)insurable interest c) coinsurance d) subrogation Subrogation What Are the differences between treaty and facultative reinsurance Treaty Reinsurance Automatic reinsurance Insurer must cede risk and reinsurer must accept risk Not Facultative Reinsurance Choice to reinsure or not Reinsurance is insurance for insurance companies. It is a method of spreading risk for insurers. Which of the following is NOT a reason for reinsuring? a) To reduce the effect of a catastrophic loss b) To increase the insurer's capacity to write business c) To promote the collection and pooling of loss information d) To provide stability in a fl uctuating market To promote the collection and pooling of loss information What is the difference between an agent and a broker? A broker is an independent business person who is authorized to sell insurance policies on behalf of an insurer. They usually represent many insurers. An agent represents