Exam (elaborations)
AU 60 Missed Practice Test Questions _ (DETAILED 100- SURE ANSWERS) 2024 - DISTINCTION
- Course
- Institution
AU 60 Missed Practice Test Questions _ (DETAILED 100- SURE ANSWERS) 2024 - DISTINCTION
[Show more]
Seller
Follow
Content preview
8/5/24, 8:31 AMAU 60 Missed Practice Test Questions
Jeremiah
Terms in this set (168)
When insuring a partnership, it is essential to A. The partnership
identify which one of the following on the
policy declaration page?
Choose one answer.
A. The partnership
B. All partners
C. General partners only
D. All partners and their share of the
partnership
If a company's inventory turnover ratio is C. The company is selling its inventory more quickly than its competitors.
higher than the industry benchmark, it
indicates that
Choose one answer.
A. Its inventory is becoming obsolete
compared to that of its competitors.
B. The company is holding its inventory
longer than its competitors.
C. The company is selling its inventory more
quickly than its competitors.
D. The company's inventory is generating
higher costs than that of its competitors.
1/37
,8/5/24, 8:31 AM
Which one of the following is determined by B. Composition of the insurer's book of business
a company's underwriting policy?
Choose one answer.
A. The underwriting authority the insurer
grants its producers
B. Composition of the insurer's book of
business
C. The market pursued by the insurer
D. The rating organization to which the
insurer will belong
Which one of the following statements is B. Trending of losses in fire insurance is generally restricted to claim severity.
true regarding ratemaking in different types
of insurance?
Choose one answer.
A. Most losses from catastrophic events,
such as hurricanes, are included in
ratemaking data in the affected states.
B. Trending of losses in fire insurance is
generally restricted to claim severity.
C. The experience period used for property
causes of loss other than fire is usually five
years or less.
D. Applying loss development factors to
data is critical when claims settle quickly and
loss reserves are relatively small.
Which one of the following types of B. Large deductible plan
individual rating plans can be used by
medium to large insureds in combination
with risk control and allows the insured to
manage its cash flow by avoiding upfront
payments?
Choose one answer.
A. Schedule rating plan
B. Large deductible plan
C. Individual risk premium modification plan
D. Expense modification plan
2/37
,8/5/24, 8:31 AM
An insurer must decide what provision for B. Underwriting profit.
profit and contingencies should be included
in the rate and should consider the overall
desired rate of return, including likely returns
from investment income versus
Choose one answer.
A. Policyholder surplus.
B. Underwriting profit.
C. Loss reserve amounts.
D. Loss adjustment expenses.
The amount included in the insurance rate to C. The loading for profits and contingencies.
protect insurers against the possibility that
actual claims or expenses will exceed
projections is referred to as
Choose one answer.
A. The prospective loss costs.
B. The expense factor.
C. The loading for profits and contingencies.
D. The claims and eventualities factor.
Underwriting pricing activities usually D. Forecasting
include all of the following, EXCEPT:
Choose one answer.
A. Account classification
B. Rating
C. Application of premium modification
plans
D. Forecasting
3/37
, 8/5/24, 8:31 AM
Insurance Company's actuary has calculated B. $99
the pure premium for its automobile
insurance line as $67. Fixed expenses for the Using the pure premium ratemaking method, the rate per exposure unit equals the pure
line are $25 per exposure unit, and the premium plus the expenses per exposure unit, divided by 1 minus the profit and
loading for profit and contingencies is 7%. contingencies factor. ($67 + $25)/(1 - 0.07) = $99
Using the pure premium ratemaking method
and rounding to the nearest whole dollar,
which one of the following is the rate per
exposure unit?
Choose one answer.
A. $86
B. $99
C. $106
D. $115
Insurance classification systems group risks B. Have the same likelihood of loss.
that share similar characteristics and that
usually
Choose one answer.
A. Have the same size exposure base.
B. Have the same likelihood of loss.
C. Generate similar rates and premiums.
D. Are not subject to catastrophic loss.
Financial statements B. Can be used by agents and brokers to assess coverage needs.
Choose one answer.
A. Are not useful to insurance professionals
because of the limited nature of information
provided.
B. Can be used by agents and brokers to
assess coverage needs.
C. Are of no use to underwriters or claim
representatives.
D. Can be useful when read individually but
fail to provide a comprehensive picture
when viewed together.
4/37
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Denyss. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $7.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
70055 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now