Exam FX - CH 4 - Property Insurance Basics Questions With Complete Solutions

Insurable Interest correct answer: Stand to suffer an economic loss - follows ownership! Has to be known when loss occurs Underwriting correct answer: Underwriters function is to evaluate risks - reviewing the application. Risk selection process Formula for Loss Ratio? correct answer: Loss Ratio = Incurred Losses + Loss Adjusting Expense / Earned Premium Rates correct answer: Amount charged Class Rates correct answer: All applicants based on certain characteristics: Same, age, sex, dwelling Individual Rates (5) correct answer: Unique risks Judgment Rating Schedule Rating Experience Rating Retrospective Rating Merit Rating Individual Rates - Judgment Rating correct answer: Rely on UW's judgment Individual Rates - Schedule Rating correct answer: Commercial buildings, +/- Credits or debits to come up with rates Individual Rates - Experience Rating correct answer: Based on past experience decides if rate increases/decreases Individual Rates - Retrospective Rating correct answer: Deposit premium, auditing accounts to increase/decrease rates Individual Rates - Merit Rating correct answer: Bas