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CAIB 2 Chapter 2 Practice test 2 Questions With Comprehensive answers CA$14.36   Add to cart
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CAIB 2 Chapter 2 Practice test 2 Questions With Comprehensive answers
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  • CAIB 2 Chapter 2

Define 'adverse selection' - CORRECT ANSWER-This happens when only those accounts exposed to certain perils are the accounts applying for coverage such as those near rivers are the only accounts applying for flood coverage What are four functions performed by underwriters - CORRECT ANSWER-1) Ris...

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  • August 12, 2024
  • 3
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

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  • caib 2 chapter 2 practice test 2 questions with co
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CAIB 2 Chapter 2 Practice test 2
Questions With Comprehensive answers

Define 'adverse selection' - CORRECT ANSWER-This happens when only those
accounts exposed to certain perils are the accounts applying for coverage such as
those near rivers are the only accounts applying for flood coverage



What are four functions performed by underwriters - CORRECT ANSWER-1) Risk
selection

2) Risk classification

3) Rating and rate making

4) Policyholder's services



Define 'Risk Classification" - CORRECT ANSWER-Taking all accounts similar to each
other and placing them in categories based on their likelihood for loss



What is the main advantage of risk classification? - CORRECT ANSWER-This allows
insurers to calculate proper premiums to charge



Identify an internal source underwriters utilize when rate making - CORRECT
ANSWER-Staff inspectors



Identify an external source underwriters utilize when rate making - CORRECT
ANSWER-Insurer's Advisory Organization (IAO)



What are two influences that cause premiums to change from year to year? -
CORRECT ANSWER-i) Increasing claims paid due to inflation

ii) Rates return on insurance company's investments



What are characteristics of soft markets? - CORRECT ANSWER-Heavy competition
among insurers as well as lower premiums

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