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RMIN 4000 EXAM 2 - CH 6/7/QUESTIONS WITH A+ GRADED ANSWERS
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RMIN 4000 EXAM 2 - CH 6/7/QUESTIONS WITH A+ GRADED ANSWERS
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RMIN 4000 EXAM 2 - CH6/7/QUESTIONS WITH A+ GRADED
ANSWERS
what are the major operations of insurance companies - -rate making,
underwriting, production, claims settlement, reinsurance, investments
- pricing of insurance and the calculation of insurance premiums - -rate
making
- person who uses statistical methods to analyze loss and other data to
determine rates/premiums - -actuary
- components of gross rate - -prospective loss costs
expense provision
profit and contingencies
- prospective loss costs aka - -pure premium
- expense provision aka - -load
- profit and contingencies aka - -risk charge
- amount needed to pay future claims and loss adjustment expenses - -
prospective loss costs (pure premium)
- amount needed to pay future expenses (acquisition, overhead, premium
taxes) - -expense provision (load)
- amount needed to protect against the possibility that actual
claims/expenses exceed projections - -profit and contingencies (risk charge)
- expenses associated with adjusting claims - -loss adjustment expenses
(LAE)
- unit of measurement used in pricing (ex. car years, per $100 in coverage,
etc.) - -exposure unit
- gross rate x # of exposure units - -gross premium
- what are the 4 types of ratemaking methods - -class (manual) rating
loss ratio method
merit rating
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