AU
60 -
/ /
Complete
/
Set Exam Questions With Correct Answers
/ / / / / /
What
/are
/some
/examples
/of /adverse /selection /and /how /can /commercial /underwriters /minimize /the /effects /of /it?
1.3 /-
/correct
/answer(s)
/✔✔
/1.
/Business
/owners
/in
/areas
/prone
/to
/coastal
/storms /purchase /windstorm /coverage /or /increase /their /limits /only /before /hurricane /season—
when /they /expect /severe /losses.
2. /A /disproportionate /percentage /of /business /owners /in /an /earthquake-
prone /zone /purchase /earthquake /insurance, /compared /with /other /business /owners.
**Underwriters
/minimize /the /effects /of /adverse /selection /by /carefully /selecting /applicants /to /insure, /charging
/appropriate
/premiums
,/for
/the
/accepted
/loss
/exposures,
/and
/monitoring
/applications
/and
/books
/of
/business /for /unusual /patterns /of /policy /growth /or /loss /and /making /any /needed /adjustments.
Book /of /Business
1.3 /-
/correct
/answer(s)
/✔✔ /
A /group /of /policies /with /a /common /characteristic, /such /as /territory /or /type /of /coverage, /or /all
/policies /written /by /a /particular /insurer /or /agency.
Underwriting
1.3 /-
/correct
/answer(s)
/✔✔
/The
/process
/of
/selecting
/insureds,
/pricing
/coverage,
/determining
,/insurance
/policy /terms /and /conditions, /and /then /monitoring /the /underwriting /decisions /made.
** /Underwriters /are /an /insurer's /guard /against /adverse /selection
Adverse /Selection
1.3 /-
/correct
/answer(s) /✔✔ /In /general, /the /tendency /for /people /with /the /greatest /probability /of /loss /to /be
/the /ones /most /likely /to /purchase /insurance.
Policyholders' /Surplus
1.3 /-
/correct
/answer(s)
/✔✔ /Under /statutory /accounting /principles /(SAP), /an /insurer's /total /admitted /assets /minus /its
/total /liabilities.
Catastrophe /Model
1.4
/and
/1.14 /-
/correct
/answer(s)
/✔✔ /
A /type /of /computer /program /that /estimates /losses /from /future /potential /catastrophic /events
**
/These
/models
/help
/insurers
, /determine
/whether
/they
/are
/charging
/appropriate
/premiums
/for
/property
/exposures,
/have
/adequate /surplus /to /handle /claims /from /property /losses, /and /should /purchase /reinsurance.
Capacity
1.4 /- /correct /answer(s) /✔✔ /The /amount /of /business /an /insurer /is /able /to /write, /usually /based
/on /a /comparison /of /the /insurer's /written /premiums /to /its /policyholders' /surplus.
Field/line /underwriters /vs. /corporate /underwriters
1.5 /-
/correct
/answer(s)
/✔✔
/Underwriters
/in
/the
/field
/evaluate
/individual
/insurance
/applications
/and
/policy
/renewals
/and /manage /their /own /books /of /business. /They /are /responsible /for /much /of /the /day-to-
day
60 -
/ /
Complete
/
Set Exam Questions With Correct Answers
/ / / / / /
What
/are
/some
/examples
/of /adverse /selection /and /how /can /commercial /underwriters /minimize /the /effects /of /it?
1.3 /-
/correct
/answer(s)
/✔✔
/1.
/Business
/owners
/in
/areas
/prone
/to
/coastal
/storms /purchase /windstorm /coverage /or /increase /their /limits /only /before /hurricane /season—
when /they /expect /severe /losses.
2. /A /disproportionate /percentage /of /business /owners /in /an /earthquake-
prone /zone /purchase /earthquake /insurance, /compared /with /other /business /owners.
**Underwriters
/minimize /the /effects /of /adverse /selection /by /carefully /selecting /applicants /to /insure, /charging
/appropriate
/premiums
,/for
/the
/accepted
/loss
/exposures,
/and
/monitoring
/applications
/and
/books
/of
/business /for /unusual /patterns /of /policy /growth /or /loss /and /making /any /needed /adjustments.
Book /of /Business
1.3 /-
/correct
/answer(s)
/✔✔ /
A /group /of /policies /with /a /common /characteristic, /such /as /territory /or /type /of /coverage, /or /all
/policies /written /by /a /particular /insurer /or /agency.
Underwriting
1.3 /-
/correct
/answer(s)
/✔✔
/The
/process
/of
/selecting
/insureds,
/pricing
/coverage,
/determining
,/insurance
/policy /terms /and /conditions, /and /then /monitoring /the /underwriting /decisions /made.
** /Underwriters /are /an /insurer's /guard /against /adverse /selection
Adverse /Selection
1.3 /-
/correct
/answer(s) /✔✔ /In /general, /the /tendency /for /people /with /the /greatest /probability /of /loss /to /be
/the /ones /most /likely /to /purchase /insurance.
Policyholders' /Surplus
1.3 /-
/correct
/answer(s)
/✔✔ /Under /statutory /accounting /principles /(SAP), /an /insurer's /total /admitted /assets /minus /its
/total /liabilities.
Catastrophe /Model
1.4
/and
/1.14 /-
/correct
/answer(s)
/✔✔ /
A /type /of /computer /program /that /estimates /losses /from /future /potential /catastrophic /events
**
/These
/models
/help
/insurers
, /determine
/whether
/they
/are
/charging
/appropriate
/premiums
/for
/property
/exposures,
/have
/adequate /surplus /to /handle /claims /from /property /losses, /and /should /purchase /reinsurance.
Capacity
1.4 /- /correct /answer(s) /✔✔ /The /amount /of /business /an /insurer /is /able /to /write, /usually /based
/on /a /comparison /of /the /insurer's /written /premiums /to /its /policyholders' /surplus.
Field/line /underwriters /vs. /corporate /underwriters
1.5 /-
/correct
/answer(s)
/✔✔
/Underwriters
/in
/the
/field
/evaluate
/individual
/insurance
/applications
/and
/policy
/renewals
/and /manage /their /own /books /of /business. /They /are /responsible /for /much /of /the /day-to-
day
