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AIDA 182 EXAM NEW VERSION UPDATE ACTUAL EXAM QUESTIONS AND CORRECT DETAILED ANSWERS (VERIF
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AIDA 182 EXAM NEW VERSION UPDATE ACTUAL EXAM QUESTIONS AND CORRECT DETAILED ANSWERS (VERIF
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AIDA 182 EXAM 2024What ratemaking data collection method is the least accurate? - ANSWER>>Calendar-year.
When using prospective loss costs supplied by advisory organizations to produce rates, each insurer must
apply its own what? - ANSWER>>Loss cost multiplier.
When creating or revising insurance rates, an insurer's staff or an advisory organization on behalf of the
insurer follows a series of steps. Generally the first step in this process is to what? - ANSWER>>Collect
data.
During which one of the following steps in the ratemaking data development process does an insurer
review which areas in a state deserve higher or lower rates? - ANSWER>>Determine territorial and c lass
relativities.
True or false, exponential trending assumes data will increase by a fixed percentage. -
ANSWER>>True
As a key step in the process of developing insurance rates, actuaries adjust the premium and loss data
that they have collected from past years. Which one of the following statements concerning this
adjustment process is true? - ANSWER>>Loss development factors reflect growth in incurred reported
losses and in IBNR.
When an insurer is under-reserved, its surplus is what? - ANSWER>>Overstated.
Incurred losses = - ANSWER>>Paid losses + loss reserves + loss adjustment expense reserves
What is true of under-reserving and its effects on premium rates? - ANSWER>>Under-reserving makes
incurred losses appear too low and results in rates that are too low.
Incurred but not reported reserves do what? - ANSWER>>Account for future growth of known losses.
What is loss development? - ANSWER>>The increase or decrease of incurred losses over time.
,How are loss reserves handled on financial statements? - ANSWER>>They are liabilities on the balance
sheet.
What is the purpose of loss reserves? - ANSWER>>To estimate the liability for losses that have occurred
but have not yet been settled.
What best describes the reserves a reinsurer must have? - ANSWER>>Amounts obligated in the future to
pay primary insurers.
When accounting for accident year losses for year 2016, what would be included? - ANSWER>>A reserve
change in 2017 for a loss that occurred in 2016.
PIC had loss reserves at year end last year of $28 million. During the first quarter of this year, PIC's
reserves were reevaluated to be $32 million. What is the financial impact of loss reserve increases? -
ANSWER>>Policyholders' surplus will be reduced.
What is true of case reserves? - ANSWER>>Reinsurers may supplement the primary insurer's case
reserves for their own financial reporting purposes.
What is a negative of the average method of case reserves? - ANSWER>>It may produce reserves that are
too low for insurance with wide variation in claims.
The average method of case reserving is best for what insurance? - ANSWER>>Insurance with claims that
are reported and paid promptly.
The tabular method of determining case loss reserves would be best for what? - ANSWER>>A structured
settlement amount for a liability insurance claim.
What case reserving method establishes average amount for all claims with similar characteristics such as
age, health, and marital status? - ANSWER>>Tabular method.
, What reserving method should be used for a large book of first party automobile policies? -
ANSWER>>Average method.
What method uses historical relationships between incurred but not reported reserves and reported
losses in incurred but not reported forecasts? - ANSWER>>Percentage method.
What do INBR reserves represent the different between? - ANSWER>>Ultimate losses and reported
incurred losses.
The difference between incurred losses and ultimate losses is? - ANSWER>>INBR reserves
Who sets the level of bulk reserves for an insurer? - ANSWER>>Actuary.
What is true of the loss ratio method in establishing bulk reserves for INBR losses? - ANSWER>>The loss
ratio method should only be used for the first year or two after losses are incurred.
Which one of the following statements regarding the calculation of the reserve for unallocated loss
adjustment expenses is accurate? - ANSWER>>It is usually estimated as a percentage of the sum of
incurred losses and allocated loss adjustment expenses.
Hazard analysis is what? - ANSWER>>A method that identifies conditions that increase the frequency or
severity of loss.
What is the least effective method of identifying all personal property loss exposures? - ANSWER>>Loss
histories.
What document helps identify bottlenecks? - ANSWER>>Flowcharts.
To estimate adverse financial affects from business interruption due to accidental loss, what should you
use? - ANSWER>>Balance sheet.
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