What is good faith?
What is bad faith? correct answers Good faith: requires the insurer to give consideration to the insured's interests that is at least equal to the consideration it gives to it's own interests.
Bad Faith: breach of the duty of good faith and fair dealing
How do good fai...
RMI 310 Final || Already Passed.
What is good faith?
What is bad faith? correct answers Good faith: requires the insurer to give consideration to the
insured's interests that is at least equal to the consideration it gives to it's own interests.
Bad Faith: breach of the duty of good faith and fair dealing
How do good faith insurers look to pay claims? Bad faith insurers? correct answers Good: Good
faith insurers look for and find ways to accept and pay claims properly and promptly
Bad faith: insurers unlawfully look for and find ways to not pay, delay, diminish, disapprove and
deny payment of claims
What are the differences between earned and written premiums? correct answers Earned:
represents the portion of the written premium that was "earned" in a period. Earning pattern is
proportionately over the term of the policy.
Written: premiums aggregated by the year the business was written
A policy written on 7/1/x expiring on 6/30/x+1 for $1000
What is the earned premium in each year? Written? correct answers Written Prem in year x is
$1000; in year x+1 is $0
Earned Prem in year x is $500; in year x+1 is $500
Define Case Reserves correct answers amount for individual reported/known claims or incidents
Define Policy Year Data
Define Accident Year data
Define Calender Year correct answers Policy year data - losses and premiums aggregated by
policy year
Accident year - losses aggregated by Date of Loss (really accident year) and annual earned
premium
Calendar year - paid losses and change in loss reserves regardless of policy or accident year and
annual earned premiums
Define Bulk Reserves correct answers Provision for Unreported (or late reported) claims -
Incurred but Not (yet) Reported - IBNR or IBNYR
, What is loss development? correct answers as time passes unreported or late reported losses
emerge (are reported) and reported losses mature. Measured with accident year data (or policy
year
is ALAE based on case reserves or bulk reserves? ULAE? correct answers ALAE: sometimes
case; sometimes bulk
ULAE: Always bulk
Define rate. What is it comprised of? correct answers is the price per exposure unit for insurance
coverage and is comprised of:
Prospective loss cost
Expense provision
Profit and contingency load
What are the different types of ownership? correct answers Proprietary
cooperative insurers
other types of insurers
Describe stock companies correct answers largest class of owners
owned by stockholders
BOD makes all of the decisions
Describe lloyds of London correct answers market full of syndicates
limited liability companies
What are the different types of proprietorship correct answers stock
lloyds
insurance exchanges
describe insurance exchanges correct answers acts like a marketplace
Members with limited liability belong to syndicates managed by a syndicate manager
What are the different types of cooperative insurers? correct answers Mutuals
reciprocals captives
Describe mutuals correct answers policyholders own insurer (no stock)
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