WGU C16 BUSINESS OF INSURANCE
EXAM 2024 COMPLETE 250
QUESTIONS WITH 100%CORRECT
DETAILED AND VERIFIED ANSWERS
BRAND NEW EXAM ALREADY
GRADED A+
How are brokers affected by market cycles? -
....ANSWER...During a soft market cycle, brokers
enjoy the abundance of capacity, premium
rates decline and underwriters are less demanding.
However a decline in rates means a
decline in commission.
During a hard market cycle, brokers must labour
intensively find capacity for
their clients needs and must negotiate more diligently
to obtain reasonable prices.
Commission income rises when premium increases.
1
,How are consumers affected by market cycles? -
....ANSWER...During a soft market cycle, consumers are
simply more neutral in their reaction to
the insurance industry.
During a hard market cycle, consumers become wary,
distressed and often angry.
They are faced with premiums that are suddenly not
affordable, availability that is
restrictive and coverage terms that are limited.
Consumers are in an awkward
situation as they cannot afford to buy insurance that is
mandated by law.
What are some disadvantages that may flow from an
insurer exerting
excessive internal cost-cutting? - ....ANSWER...They
may find that the company's functional competence
suffers, questionable
risk selection occurs, succession plans cannot be
developed and the company's
financial results are negatively affected.
2
,Explain influences over Canadian marketplace -
....ANSWER...- Distribution channels (some support
multiple distribution channels)
- Companies' influence - product offerings, capacity,
rates, market consolidation (mergers)
- Reinsurance impacts primary market (insurers feel
impact of rate increase in reinsurance market)
- Consumer influences of supply and demand
-licensing
-level of government regulation
-international influences
Market cycle affect on insurers - ....ANSWER...soft
market - insurers begin to lose profitability
-aggressively look for new business
-existing business under attack
-hard market - insures gain profitability
but face anomisty of brokers and public if prices are
high or not accepting risk
market cycle on risk managers - ....ANSWER...soft market
- lower prices, easier underwriting, less demanding loss
control requirements
3
, -deliver risk protection more easily
-hard markets - need to be creative in offering options to
deal with risk
-alternative risk financing propositions like capitves
- reciprocal exahcnes, less convntial ways to deal with
risk
market cycle affects on government - .......... ANSWER...-
hard markets - impose measures to make it affordable
- focused on making mandatory insurance available
-establish backstops for cat loses
strategies for profitability - ....ANSWER... Approach
each risk very cautiously being offering to insure it
o Set more exacting underwriting standards
o Give loss control and loss prevention measures
significant consideration
o Tighten policy terms to limit exposures
o Make substantial rate increase
o Terminate relationships with brokers with
unprofitable results or with only a small volume of
business
4
EXAM 2024 COMPLETE 250
QUESTIONS WITH 100%CORRECT
DETAILED AND VERIFIED ANSWERS
BRAND NEW EXAM ALREADY
GRADED A+
How are brokers affected by market cycles? -
....ANSWER...During a soft market cycle, brokers
enjoy the abundance of capacity, premium
rates decline and underwriters are less demanding.
However a decline in rates means a
decline in commission.
During a hard market cycle, brokers must labour
intensively find capacity for
their clients needs and must negotiate more diligently
to obtain reasonable prices.
Commission income rises when premium increases.
1
,How are consumers affected by market cycles? -
....ANSWER...During a soft market cycle, consumers are
simply more neutral in their reaction to
the insurance industry.
During a hard market cycle, consumers become wary,
distressed and often angry.
They are faced with premiums that are suddenly not
affordable, availability that is
restrictive and coverage terms that are limited.
Consumers are in an awkward
situation as they cannot afford to buy insurance that is
mandated by law.
What are some disadvantages that may flow from an
insurer exerting
excessive internal cost-cutting? - ....ANSWER...They
may find that the company's functional competence
suffers, questionable
risk selection occurs, succession plans cannot be
developed and the company's
financial results are negatively affected.
2
,Explain influences over Canadian marketplace -
....ANSWER...- Distribution channels (some support
multiple distribution channels)
- Companies' influence - product offerings, capacity,
rates, market consolidation (mergers)
- Reinsurance impacts primary market (insurers feel
impact of rate increase in reinsurance market)
- Consumer influences of supply and demand
-licensing
-level of government regulation
-international influences
Market cycle affect on insurers - ....ANSWER...soft
market - insurers begin to lose profitability
-aggressively look for new business
-existing business under attack
-hard market - insures gain profitability
but face anomisty of brokers and public if prices are
high or not accepting risk
market cycle on risk managers - ....ANSWER...soft market
- lower prices, easier underwriting, less demanding loss
control requirements
3
, -deliver risk protection more easily
-hard markets - need to be creative in offering options to
deal with risk
-alternative risk financing propositions like capitves
- reciprocal exahcnes, less convntial ways to deal with
risk
market cycle affects on government - .......... ANSWER...-
hard markets - impose measures to make it affordable
- focused on making mandatory insurance available
-establish backstops for cat loses
strategies for profitability - ....ANSWER... Approach
each risk very cautiously being offering to insure it
o Set more exacting underwriting standards
o Give loss control and loss prevention measures
significant consideration
o Tighten policy terms to limit exposures
o Make substantial rate increase
o Terminate relationships with brokers with
unprofitable results or with only a small volume of
business
4
