OTL EXAM CHAPTER 6 questions well
answered to pass
The degree of uncertainty of a prediction is reduced as the size of the sample is increased is one
of the reliability factors in which concept? - correct answer ✔✔Law of large numbers
What is an insurer's retention? - correct answer ✔✔The maximum amount that the insurer can
insure
What does an underwriter watch for when there are more than one loss payees named on an
insurance application? - correct answer ✔✔Financial hardship, poor property maintenance, and
temptation for fraud
Why do those who want to purchase insurance complete and submit an application? - correct
answer ✔✔To provide information for risk assessment and premium calculation
Which type of loss do actuaries find difficult to predict the future, even when there is
considerable data available from the past? - correct answer ✔✔Weather-related losses
Which national association is a main resource for and has a key initiative to create industry-
standard application forms? - correct answer ✔✔Centre for Study of Insurance
Operations/Centre D'Étude de la Pratique D'Assurance (CSIO/CEPA)
What are the three decisions an underwriter can make about a risk? - correct answer
✔✔Accept the risk; Reject the risk; Accept the risk with conditions
What is pure premium? - correct answer ✔✔Premium required to meet losses that occur
answered to pass
The degree of uncertainty of a prediction is reduced as the size of the sample is increased is one
of the reliability factors in which concept? - correct answer ✔✔Law of large numbers
What is an insurer's retention? - correct answer ✔✔The maximum amount that the insurer can
insure
What does an underwriter watch for when there are more than one loss payees named on an
insurance application? - correct answer ✔✔Financial hardship, poor property maintenance, and
temptation for fraud
Why do those who want to purchase insurance complete and submit an application? - correct
answer ✔✔To provide information for risk assessment and premium calculation
Which type of loss do actuaries find difficult to predict the future, even when there is
considerable data available from the past? - correct answer ✔✔Weather-related losses
Which national association is a main resource for and has a key initiative to create industry-
standard application forms? - correct answer ✔✔Centre for Study of Insurance
Operations/Centre D'Étude de la Pratique D'Assurance (CSIO/CEPA)
What are the three decisions an underwriter can make about a risk? - correct answer
✔✔Accept the risk; Reject the risk; Accept the risk with conditions
What is pure premium? - correct answer ✔✔Premium required to meet losses that occur
