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Finance 4201 questions and answers
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Finance 4201 questions and answers
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Finance 4201 questions and answersThe abilities of devices connected to the Internet of Things lie at the heart of the ongoing
shift in the insurance industry from risk transfer to - ANSWERS✔✔ Risk prevention
ABC Insurance Company's written premiums are $2,000,000 and its earned premiums are
$1,800,000. Losses total $1,000,000, and loss adjustment expenses are $350,000. Which one
of the following represents ABC's loss ratio? - ANSWERS✔✔ 75%
Which one of the following is the responsibility of the underwriting department of an
insurer? - ANSWERS✔✔ Helping the insurer avoid the problem of adverse selection
Which one of the following formulas calculates the return on equity? - ANSWERS✔✔ Net
income divided by owners' equity
ABC Insurance Company has written premiums of $3,000,000 and earned premiums of
$2,750,000. The company's incurred losses are $1,700,000 and loss adjustment expenses are
$225,000. ABC's incurred underwriting expenses total $750,000. Which one of the following
represents ABC's combined ratio? - ANSWERS✔✔ 95%
Which one of the following types of insurance has been particularly influenced by data
analytics and telematics devices? - ANSWERS✔✔ Automobile
The primary purpose of the claims function is to - ANSWERS✔✔ Fulfill the insurer's
promise.
Experts have identified factors that frequently contribute to insurer insolvencies. Which one
of the following is one of these factors? - ANSWERS✔✔ Rapid premium growth
, A nonadmitted insurer is typically a - ANSWERS✔✔ Surplus lines insurer.
Which one of the following statements is correct regarding rate regulation? - ANSWERS✔✔
Discrimination is essential to insurance rating.
Solvency regulation protects policyholders against the risk that insurers - ANSWERS✔✔
Will be unable to meet their financial obligations.
Which one of the following statements is correct with respect to a goal of rate regulation? -
ANSWERS✔✔ If loss exposures are different in terms of expected losses and expenses, then
different rates can be charged.
Which one of the following is a regulatory activity typically performed by state insurance
departments? - ANSWERS✔✔ Licensing producers
Which one of the following is a method used by state regulators to ensure solvency of
admitted insurers? - ANSWERS✔✔ Requiring each insurer to meet minimum financial
requirements
A commercial insurer has historically targeted small businesses. It is considering expanding
its market to middle market organizations. To succeed, the insurer will need to develop a
level of expertise in which one of the following areas? - ANSWERS✔✔ Risk financing
alternatives
An insurer that targets large middle-market and national accounts would most likely use
which one of the following distribution systems? - ANSWERS✔✔ Broker
The principal method of determining a prospect's insurance needs is through -
ANSWERS✔✔ Completing a risk management review for the prospect.
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