RMIN 4000 EXAM 2 - CH 6/7 questions
and answers passed
what are the major operations of insurance companies - correct answer ✔✔rate making,
underwriting, production, claims settlement, reinsurance, investments
pricing of insurance and the calculation of insurance premiums - correct answer ✔✔rate making
person who uses statistical methods to analyze loss and other data to determine
rates/premiums - correct answer ✔✔actuary
components of gross rate - correct answer ✔✔prospective loss costs
expense provision
profit and contingencies
prospective loss costs aka - correct answer ✔✔pure premium
expense provision aka - correct answer ✔✔load
profit and contingencies aka - correct answer ✔✔risk charge
amount needed to pay future claims and loss adjustment expenses - correct answer
✔✔prospective loss costs (pure premium)
amount needed to pay future expenses (acquisition, overhead, premium taxes) - correct answer
✔✔expense provision (load)
, amount needed to protect against the possibility that actual claims/expenses exceed
projections - correct answer ✔✔profit and contingencies (risk charge)
expenses associated with adjusting claims - correct answer ✔✔loss adjustment expenses (LAE)
unit of measurement used in pricing (ex. car years, per $100 in coverage, etc.) - correct answer
✔✔exposure unit
gross rate x # of exposure units - correct answer ✔✔gross premium
what are the 4 types of ratemaking methods - correct answer ✔✔class (manual) rating
loss ratio method
merit rating
judgement method
pure premium method, rates developed based on past experience (frequency x severity) -
correct answer ✔✔class (manual) rating
modifies existing rates by comparing the actual loss ratio to the expected loss ratio - correct
answer ✔✔loss ratio method
rates are adjusted upward or downward based on experience (three types - schedule,
experience, and retrospective) - correct answer ✔✔merit rating
rates determined by the judgement of the underwriter (when data is limited) - correct answer
✔✔judgement method
and answers passed
what are the major operations of insurance companies - correct answer ✔✔rate making,
underwriting, production, claims settlement, reinsurance, investments
pricing of insurance and the calculation of insurance premiums - correct answer ✔✔rate making
person who uses statistical methods to analyze loss and other data to determine
rates/premiums - correct answer ✔✔actuary
components of gross rate - correct answer ✔✔prospective loss costs
expense provision
profit and contingencies
prospective loss costs aka - correct answer ✔✔pure premium
expense provision aka - correct answer ✔✔load
profit and contingencies aka - correct answer ✔✔risk charge
amount needed to pay future claims and loss adjustment expenses - correct answer
✔✔prospective loss costs (pure premium)
amount needed to pay future expenses (acquisition, overhead, premium taxes) - correct answer
✔✔expense provision (load)
, amount needed to protect against the possibility that actual claims/expenses exceed
projections - correct answer ✔✔profit and contingencies (risk charge)
expenses associated with adjusting claims - correct answer ✔✔loss adjustment expenses (LAE)
unit of measurement used in pricing (ex. car years, per $100 in coverage, etc.) - correct answer
✔✔exposure unit
gross rate x # of exposure units - correct answer ✔✔gross premium
what are the 4 types of ratemaking methods - correct answer ✔✔class (manual) rating
loss ratio method
merit rating
judgement method
pure premium method, rates developed based on past experience (frequency x severity) -
correct answer ✔✔class (manual) rating
modifies existing rates by comparing the actual loss ratio to the expected loss ratio - correct
answer ✔✔loss ratio method
rates are adjusted upward or downward based on experience (three types - schedule,
experience, and retrospective) - correct answer ✔✔merit rating
rates determined by the judgement of the underwriter (when data is limited) - correct answer
✔✔judgement method
