AIDA 182 EXAM | ALL QUESTIONS AND
CORRECT ANSWERS | GRADED A+ |
VERIFIED ANSWERS | LATEST
VERSION | JUST RELEASED
What involves an apples-to-apples exact matching of losses, premiums,
and exposure units to a specific policy? ---------CORRECT ANSWER---------
--------Policy-year data collection.
True or false, when using prospective loss costs supplied by advisory
organizations, each insurer must file its own loss cost multiplier to
determine its insurance rate. ---------CORRECT ANSWER-----------------
True.
True or false, class relativities are used to develop rates for each rating
class. ---------CORRECT ANSWER-----------------True.
Territorial relativities can be determined by comparing the estimated loss
ratio for each geographic territory to the statewide what? ---------CORRECT
ANSWER-----------------Average loss ratio.
The future development of losses can be estimated by several actuarial
methods. The most common method used applies loss development
factors to the what? ---------CORRECT ANSWER-----------------Current
experience.
,What is correct with respect to the policy-year ratemaking data collection
method? ---------CORRECT ANSWER-----------------It is the only method that
links losses, premiums, and exposure units to a specific policy.
Workers compensation insurance benefits are established by a statute. If
legislation or a court decision changes these benefits, past losses must be
adjust to what? ---------CORRECT ANSWER-----------------Current benefit
levels.
What ratemaking data collection method is the least accurate? ---------
CORRECT ANSWER-----------------Calendar-year.
When using prospective loss costs supplied by advisory organizations to
produce rates, each insurer must apply its own what? ---------CORRECT
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? ---------CORRECT 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? ---------CORRECT ANSWER-----------------
Determine territorial and c lass relativities.
,True or false, exponential trending assumes data will increase by a fixed
percentage. ---------CORRECT 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?
---------CORRECT ANSWER-----------------Loss development factors reflect
growth in incurred reported losses and in IBNR.
When an insurer is under-reserved, its surplus is what? ---------CORRECT
ANSWER-----------------Overstated.
Incurred losses = ---------CORRECT ANSWER-----------------Paid losses +
loss reserves + loss adjustment expense reserves
What is true of under-reserving and its effects on premium rates? ---------
CORRECT ANSWER-----------------Under-reserving makes incurred losses
appear too low and results in rates that are too low.
Incurred but not reported reserves do what? ---------CORRECT ANSWER---
--------------Account for future growth of known losses.
What is loss development? ---------CORRECT ANSWER-----------------The
increase or decrease of incurred losses over time.
, How are loss reserves handled on financial statements? ---------CORRECT
ANSWER-----------------They are liabilities on the balance sheet.
What is the purpose of loss reserves? ---------CORRECT 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? ---------
CORRECT ANSWER-----------------Amounts obligated in the future to pay
primary insurers.
When accounting for accident year losses for year 2016, what would be
included? ---------CORRECT 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? ---------CORRECT
ANSWER-----------------Policyholders' surplus will be reduced.
What is true of case reserves? ---------CORRECT 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? ---------
CORRECT ANSWER-----------------It may produce reserves that are too low
for insurance with wide variation in claims.
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