RMIN 4000 Test 3 Questions & Answers (Graded A)

A combined ration grater than 1 (or 100 percent) means that an underwriting loss has occurred - ANSWER-Which of the following statements about the combined ratio is true? Because insurance contracts are conditional - ANSWER-Why can an insurer refuse to pay a claim if an insured fails to abide by the policy provisions? Experience rating - ANSWER-Under one type of merit rating, the class or manual rate is adjusted upward or downward based on past loss history. This type of merit rating is called Subrogation helps hold down the cost of insurance - ANSWER-Which of the following statements about subrogation is true? Liabilities - ANSWER-A property and liability insurance company's loss reserve and unearned premium reserve are Paul v. Virginia - ANSWER-The right of the states to regulate the business of insurance was first established by $8 million - ANSWER-AMB Mutual Insurance company has total assets of $10 million. The policyholders surplus is $2 million. What is AMB Mutals total liabilities? National insurers are at a competitive disadvantage under the present system - ANSWER-The major argument in favor of an optional federal charter for insurers is that to reduce moral hazard - ANSWER-Which of the following is a fundamental purpose of the principle of indemnity? Risk-based capital standards - ANSWER-Which of the following is a method used to help ensure the solvency of insurers? The McCarran-Ferguson Act - ANSWER-The basis for current state regulations of insurance The National Association of Insurance Commissioners (NAIC) can force states to adopt the model laws that it drafts - ANSWER-All of the following statements about insurance regulation are true except