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finance 4201 book quizzes with answers
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finance 4201 book quizzes with answers
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finance 4201 book quizzes with answersWhich one of the following statements is correct regarding premium growth and an
insurer's success? - ANSWERS✔✔ To determine profitability, an insurer should consider
how its premium growth is being achieved.
Martina, Cromley Insurance Company's (Cromley) underwriting manager, wants to know if
her underwriting department has had a gain or loss. Cromley has homeowner losses of
$1,000,000 and written premium of $3,000,000. Cromley has earned premiums of
$2,000,000. The taxes, salaries, and building expense for Martina's underwriting department
are $600,000. What is Cromley's combined ratio? - ANSWERS✔✔ 70%
the primary purpose of the claims function is to - ANSWERS✔✔ Fulfill the insurer's
promise.
Which one of the following types of insurance has been particularly influenced by data
analytics and telematics devices? - ANSWERS✔✔ Automobile
ABC Insurance Company's written premiums are $2,000,000 and its earned premiums are
$1,800,000. Losses total $1,000,000, and loss adjustment expenses are $350,000. Which one
of the following represents ABC's loss ratio? - ANSWERS✔✔ 75%
Once the marketing department has developed a relationship with potential customers,
which one of the following departments determines if and under what conditions the
insurer is willing to provide insurance products and services to these potential customers? -
ANSWERS✔✔ Underwriting
Which one of the following statements is true with regard to the various forms of ownership
of property-casualty insurers? - ANSWERS✔✔ Lloyd's and insurance exchanges are each
examples of an insurance marketplace.
,The universal connectivity that allows people to interact with devices and for those devices
to meaningfully interact with each other without human interaction is known as -
ANSWERS✔✔ The Internet of Things.
Which one of the following core functions of an insurer can be transformed through the
Internet of Things' ability to facilitate instantaneous communication? - ANSWERS✔✔
Claims
All of the following are qualities of the data storage and sharing medium known as the
blockchain, EXCEPT: - ANSWERS✔✔ Low volume
Juan has a poor driving record and has been unable to obtain auto liability coverage from
private insurers. Auto liability coverage is mandatory in his state. Since affordability is a
concern, Juan wants auto liability coverage only. Which one of the following is an option for
Juan to obtain coverage? - ANSWERS✔✔ Obtain coverage through his state's residual
market
Which one of the following consists of a series of private contracts in which subscribers or
members of the group agree to insure each other? - ANSWERS✔✔ Reciprocal insurance
exchanges
All corporations are obligated to promote the well-being of society. At the minimum, this
obligation demands that the insurer should - ANSWERS✔✔ . Avoid causing any public
harm
Three core functions exist within the structure of a typical insurer. These core functions are -
ANSWERS✔✔ Marketing and distribution, underwriting, and claims.
Which one of the following is an external constraint insurers contend with that may prevent
them from meeting their goals? - ANSWERS✔✔ public opinion
, Which one of the following is an internal constraint that might prevent an insurer from
meeting all of its goals? - ANSWERS✔✔ Efficiency
Insurer Y is involved in recycling and reusing materials used in policy production and
claims handling and reporting. The insurer has also been keenly interested in salvage
programs having learned that these programs are better for the environment and more cost-
effective for insureds. By participating in these programs and activities, Insurer Y is meeting
which one of the following insurer goals? - ANSWERS✔✔ Social responsibility goals
The two major types of insurers by legal form of ownership are - ANSWERS✔✔ Proprietary
and cooperative.
The primary sources of revenue for insurers are insurance premiums and - ANSWERS✔✔
Investment income.
Which one of the following statements is correct regarding rate regulation? - ANSWERS✔✔
An insurer should expect at least some minimum rate of return on the equity invested in its
insurance operations.
Uniformity of approach to financial regulation has been facilitated by the NAIC
accreditation program. As part of the peer review process, the program subjects state
insurance regulators to a comprehensive review to determine whether the state has met
minimum baseline standards of - ANSWERS✔✔ Solvency regulation.
It is an unfair claim practice for a claim representative to fail to approve or deny coverage of
a claim within a reasonable period after - ANSWERS✔✔ A proof-of-loss statement has been
completed.
Two drivers age 30 operating similar vehicles in the same rating territory buy the same type
and amount of auto insurance from the same insurer. These drivers should be charged
similar rates to comply with the regulatory goal that rates be - ANSWERS✔✔ Not unfairly
discriminatory.
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