API 321 Chapter 2 Practice Test
Questions with Complete Solutions2
Insurers often base a strategy on selective growth, which includes - ANSWERS-Selling enhanced
coverage to policyholders
Which one of the following is an example of a variable underwriting cost? - ANSWERS-State
premium taxes
By offering property insurance in both hurricane-prone and noncoastal areas, an insurer is using
which one of the following methods to manage catastrophe exposures? - ANSWERS-
Diversification of risk within a portfolio
Reason: A company that offers property insurance in both hurricane-prone and noncoastal
areas is using the method of diversifying risks within a portfolio to manage catastrophe
exposures.
type of insurance marketing system that includes more than one distribution system or channel
is known as a(n) - ANSWERS-Mixed marketing system
Which one of the following statements regarding creating new product lines is true? -
ANSWERS-Insurance accounting rules require insurers must immediately recognize policy
acquisition costs, even though the insurers gradually earn premiums.
Insurers improve underwriting expenses by spending less or by increasing productivity. Which
one of the following is an example of how an insurer could improve the productivity of current
resources? - ANSWERS-Offer services on a contract basis to other insurers
Questions with Complete Solutions2
Insurers often base a strategy on selective growth, which includes - ANSWERS-Selling enhanced
coverage to policyholders
Which one of the following is an example of a variable underwriting cost? - ANSWERS-State
premium taxes
By offering property insurance in both hurricane-prone and noncoastal areas, an insurer is using
which one of the following methods to manage catastrophe exposures? - ANSWERS-
Diversification of risk within a portfolio
Reason: A company that offers property insurance in both hurricane-prone and noncoastal
areas is using the method of diversifying risks within a portfolio to manage catastrophe
exposures.
type of insurance marketing system that includes more than one distribution system or channel
is known as a(n) - ANSWERS-Mixed marketing system
Which one of the following statements regarding creating new product lines is true? -
ANSWERS-Insurance accounting rules require insurers must immediately recognize policy
acquisition costs, even though the insurers gradually earn premiums.
Insurers improve underwriting expenses by spending less or by increasing productivity. Which
one of the following is an example of how an insurer could improve the productivity of current
resources? - ANSWERS-Offer services on a contract basis to other insurers
