CIP - C120 UNDERWRITING
ESSENTIALS
Business use - ANSWERS-a type of commercial use that combines
elements of personal and commercial use
Temporary substitute automobile - ANSWERS-is an automobile not
owned by the insured or anyone living in the insured's household and
being used as a substitute for the automobile described in the policy
because of that automobile's breakdown, repair, destruction, or sale
Other automobiles - ANSWERS-are defined in the Owner's policy as
automobiles other than the described automobile that meet all of
several conditions pertaining to the vehicle's size and use
Pure premium - ANSWERS-is the premium required to pay for
insured losses - to pay claims
Development factors - ANSWERS-are adjustments to current reserves
for claims that have yet to be settled to reflect the estimated final cost
of those claims
Trend Factors - ANSWERS-are adjustments applied to all losses to
reflect what they would probably cost if they were to occur next year
rather than having occurred at some time in the past
, Acquisition costs - ANSWERS-are the costs incurred by the insurer to
conclude a contract of insurance with a policy holder ie) commission
Administrative expenses - ANSWERS-are the general expenses the
insurer incurs to operate its business - ie) rent, salary, office supplies
profit - ANSWERS-the amount of money left to the insurer after it
has paid all its expenses
Underwriting Profit (or loss) - ANSWERS-arises out of insurance
operations - it is the amount by which earned premium exceed (or fall
short of) the cost of incurred claims & expenses
Investment income - ANSWERS-is income the insurer earns from
investing money that the insurer has received as premium but has not
yet earned, as wall as money it has set aside as a reserve to pay claims
Actuary - ANSWERS-is a professional skilled in the application of
mathematics to financial problems
Rate - ANSWERS-is the price of a unit of insurance for the policy
period (usually 1 yr)
Premium - ANSWERS-the total cost of the insurance - it is derived by
multiplying the rate of insurance by the amount of insurance
ESSENTIALS
Business use - ANSWERS-a type of commercial use that combines
elements of personal and commercial use
Temporary substitute automobile - ANSWERS-is an automobile not
owned by the insured or anyone living in the insured's household and
being used as a substitute for the automobile described in the policy
because of that automobile's breakdown, repair, destruction, or sale
Other automobiles - ANSWERS-are defined in the Owner's policy as
automobiles other than the described automobile that meet all of
several conditions pertaining to the vehicle's size and use
Pure premium - ANSWERS-is the premium required to pay for
insured losses - to pay claims
Development factors - ANSWERS-are adjustments to current reserves
for claims that have yet to be settled to reflect the estimated final cost
of those claims
Trend Factors - ANSWERS-are adjustments applied to all losses to
reflect what they would probably cost if they were to occur next year
rather than having occurred at some time in the past
, Acquisition costs - ANSWERS-are the costs incurred by the insurer to
conclude a contract of insurance with a policy holder ie) commission
Administrative expenses - ANSWERS-are the general expenses the
insurer incurs to operate its business - ie) rent, salary, office supplies
profit - ANSWERS-the amount of money left to the insurer after it
has paid all its expenses
Underwriting Profit (or loss) - ANSWERS-arises out of insurance
operations - it is the amount by which earned premium exceed (or fall
short of) the cost of incurred claims & expenses
Investment income - ANSWERS-is income the insurer earns from
investing money that the insurer has received as premium but has not
yet earned, as wall as money it has set aside as a reserve to pay claims
Actuary - ANSWERS-is a professional skilled in the application of
mathematics to financial problems
Rate - ANSWERS-is the price of a unit of insurance for the policy
period (usually 1 yr)
Premium - ANSWERS-the total cost of the insurance - it is derived by
multiplying the rate of insurance by the amount of insurance
