C16 BUSINESS OF INSURANCE EXAM (II) QUESTIONS WITH
COMPLETE SOLUTIONS GUARANTEED PASS BRAND NEW
2025
C16 BUSINESS OF INSURANCE EXAM (II) QUESTIONS WITH
COMPLETE SOLUTIONS GUARANTEED PASS BRAND NEW
2025
5 Ways Insurance companies spread risk - ANSWER - >-Share risk with
other insurance companies (for very large risk, several insurers
subscribe to percentage of risk)
-Reinsure the risk
-deductible
-spread risk over diverse geographical region (soften risk of localized
disasters)
-form risk pools (syndicates of insurance and reinsurance companies,
organized to underwrite particular risk)
Two principles of insurance - ANSWER - >1. Premiums of the many are
used to pay the losses of the few
(risk transferred to insurer, deductible, company shares and spreads
risk, geographic spread of risk, forming risk pools)
Premium shall be commensurate with the risk
(Capital meets probabilities of loss, premiums must be adequate to pay
future claims, fierce competition, adverse selection, long and short tail
lines, time gaps in pricing)
Short tail and Long tail compared - ANSWER - >Tail refers to the amount
of time between the incident and the determination of claim -Short
C16 BUSINESS OF INSURANCE EXAM (II) QUESTIONS WITH
COMPLETE SOLUTIONS GUARANTEED PASS BRAND NEW
2025
, C16 BUSINESS OF INSURANCE EXAM (II) QUESTIONS WITH
COMPLETE SOLUTIONS GUARANTEED PASS BRAND NEW
2025
tail-lines are those where the injury or other harm becomes known
quickly (relatively short period of time between event and resolution)
-Long tail-lines feature claims separated from the circumstances that
caused it by 10, 15, 20 yrs or more
-to price risks time gaps must be considered for long-tail lines
-to pay claims from many years ago
-to pay for claims in the future with today's premium
Negative consumer perceptions of industry and how to improve -
ANSWER - >-prices go up/down as capacity tightening
-left customers with poor opinion
-media portrays negative image (politicatians promise to do something
about rates)
-insurers want to educate insurance people about how insurance
industry works
-can provide more information on questions like (good risk vs bad, how
is a risk priced, why rates go up, why a profitable industry benefits
everyone0
-feel if a claim not made, premium should be returned/reduced
-present services in postitive light
-insurance protection intangible
-
10 ways insurance affects society and economy - ANSWER - >-banks
willing to issue mortgages on buildings that are insured
-developers willing to advance funds to building contractors on projects
guaranteed by surety bonds
C16 BUSINESS OF INSURANCE EXAM (II) QUESTIONS WITH
COMPLETE SOLUTIONS GUARANTEED PASS BRAND NEW
2025
, C16 BUSINESS OF INSURANCE EXAM (II) QUESTIONS WITH
COMPLETE SOLUTIONS GUARANTEED PASS BRAND NEW
2025
-retailers more willing to accept commercial risks with liability
insurance
-professionals more willing to provide services when insured against
risk of malpractice
-manufacturers more willing to accept risks associated with shipping
goods (when insured)
-members of society more willing to use automobiles
-peace of mind
-provides employment
-contributes to economy
-investments help finance governments
-claim payments boost local economies and create jobs
Goal of reinsurance - ANSWER - >-gives peace of mind to insurers -
confidence instilled that financial ruin will not occur is a major
unplanned event were to occur
Four basic functions of Insurance - ANSWER - >Financing - offers a
unique method of financing to insurance companies, frees up capital
that would be otherwise tied up, meet solvency regulations, expansion
of operations
Stabilization - keep insurer's growth and development, used to keep
operational results reasonable without fluctuations, can help maintain
confidence from stakeholders, attract new capital
C16 BUSINESS OF INSURANCE EXAM (II) QUESTIONS WITH
COMPLETE SOLUTIONS GUARANTEED PASS BRAND NEW
2025
, C16 BUSINESS OF INSURANCE EXAM (II) QUESTIONS WITH
COMPLETE SOLUTIONS GUARANTEED PASS BRAND NEW
2025
Capacity - require ability to insure businesses beyond their resources,
take on risks higher than they would normally write, may not want to
be limited to small lines, cater to needs of big producers
Reinsurance used to protect against catastrophic loss - look to protect
resources such as their capital and surplus,their loss ratio and their
investment position
Five areas of challenge facing insurance industry - ANSWER -
>Globalization
Rapid advances in technology
Public image issues
Volatile investment markets Increasingly
severe weather growing competition
mounting shareholder and regulatory
scrutiny
downloading and offloading by government
Long-tail catastrophic auto injury exposures affect reinsurers and
insurers - ANSWER - >- severe injuries
-long-tail trends for prior accident years
-inadequate reserving
-
Law of Large numbers: - ANSWER - >mathematical premise which
states that the degree of certainty in probabilities increases as the
C16 BUSINESS OF INSURANCE EXAM (II) QUESTIONS WITH
COMPLETE SOLUTIONS GUARANTEED PASS BRAND NEW
2025
COMPLETE SOLUTIONS GUARANTEED PASS BRAND NEW
2025
C16 BUSINESS OF INSURANCE EXAM (II) QUESTIONS WITH
COMPLETE SOLUTIONS GUARANTEED PASS BRAND NEW
2025
5 Ways Insurance companies spread risk - ANSWER - >-Share risk with
other insurance companies (for very large risk, several insurers
subscribe to percentage of risk)
-Reinsure the risk
-deductible
-spread risk over diverse geographical region (soften risk of localized
disasters)
-form risk pools (syndicates of insurance and reinsurance companies,
organized to underwrite particular risk)
Two principles of insurance - ANSWER - >1. Premiums of the many are
used to pay the losses of the few
(risk transferred to insurer, deductible, company shares and spreads
risk, geographic spread of risk, forming risk pools)
Premium shall be commensurate with the risk
(Capital meets probabilities of loss, premiums must be adequate to pay
future claims, fierce competition, adverse selection, long and short tail
lines, time gaps in pricing)
Short tail and Long tail compared - ANSWER - >Tail refers to the amount
of time between the incident and the determination of claim -Short
C16 BUSINESS OF INSURANCE EXAM (II) QUESTIONS WITH
COMPLETE SOLUTIONS GUARANTEED PASS BRAND NEW
2025
, C16 BUSINESS OF INSURANCE EXAM (II) QUESTIONS WITH
COMPLETE SOLUTIONS GUARANTEED PASS BRAND NEW
2025
tail-lines are those where the injury or other harm becomes known
quickly (relatively short period of time between event and resolution)
-Long tail-lines feature claims separated from the circumstances that
caused it by 10, 15, 20 yrs or more
-to price risks time gaps must be considered for long-tail lines
-to pay claims from many years ago
-to pay for claims in the future with today's premium
Negative consumer perceptions of industry and how to improve -
ANSWER - >-prices go up/down as capacity tightening
-left customers with poor opinion
-media portrays negative image (politicatians promise to do something
about rates)
-insurers want to educate insurance people about how insurance
industry works
-can provide more information on questions like (good risk vs bad, how
is a risk priced, why rates go up, why a profitable industry benefits
everyone0
-feel if a claim not made, premium should be returned/reduced
-present services in postitive light
-insurance protection intangible
-
10 ways insurance affects society and economy - ANSWER - >-banks
willing to issue mortgages on buildings that are insured
-developers willing to advance funds to building contractors on projects
guaranteed by surety bonds
C16 BUSINESS OF INSURANCE EXAM (II) QUESTIONS WITH
COMPLETE SOLUTIONS GUARANTEED PASS BRAND NEW
2025
, C16 BUSINESS OF INSURANCE EXAM (II) QUESTIONS WITH
COMPLETE SOLUTIONS GUARANTEED PASS BRAND NEW
2025
-retailers more willing to accept commercial risks with liability
insurance
-professionals more willing to provide services when insured against
risk of malpractice
-manufacturers more willing to accept risks associated with shipping
goods (when insured)
-members of society more willing to use automobiles
-peace of mind
-provides employment
-contributes to economy
-investments help finance governments
-claim payments boost local economies and create jobs
Goal of reinsurance - ANSWER - >-gives peace of mind to insurers -
confidence instilled that financial ruin will not occur is a major
unplanned event were to occur
Four basic functions of Insurance - ANSWER - >Financing - offers a
unique method of financing to insurance companies, frees up capital
that would be otherwise tied up, meet solvency regulations, expansion
of operations
Stabilization - keep insurer's growth and development, used to keep
operational results reasonable without fluctuations, can help maintain
confidence from stakeholders, attract new capital
C16 BUSINESS OF INSURANCE EXAM (II) QUESTIONS WITH
COMPLETE SOLUTIONS GUARANTEED PASS BRAND NEW
2025
, C16 BUSINESS OF INSURANCE EXAM (II) QUESTIONS WITH
COMPLETE SOLUTIONS GUARANTEED PASS BRAND NEW
2025
Capacity - require ability to insure businesses beyond their resources,
take on risks higher than they would normally write, may not want to
be limited to small lines, cater to needs of big producers
Reinsurance used to protect against catastrophic loss - look to protect
resources such as their capital and surplus,their loss ratio and their
investment position
Five areas of challenge facing insurance industry - ANSWER -
>Globalization
Rapid advances in technology
Public image issues
Volatile investment markets Increasingly
severe weather growing competition
mounting shareholder and regulatory
scrutiny
downloading and offloading by government
Long-tail catastrophic auto injury exposures affect reinsurers and
insurers - ANSWER - >- severe injuries
-long-tail trends for prior accident years
-inadequate reserving
-
Law of Large numbers: - ANSWER - >mathematical premise which
states that the degree of certainty in probabilities increases as the
C16 BUSINESS OF INSURANCE EXAM (II) QUESTIONS WITH
COMPLETE SOLUTIONS GUARANTEED PASS BRAND NEW
2025
