prin of insurance chapter 6

What is the primary purpose of ratemaking in an insurance company?

• To determine the sales strategy

• To calculate insurance premiums

• To manage claims settlements

• To handle reinsurance agreements

Who is responsible for determining rates and premiums in an insurance company?

• Underwriter

• Claims adjuster

• Actuary

• Marketing manager

What does the term "production" refer to in the context of insurance company operations?

• The creation of insurance policies

• The sales and marketing activities

• The settlement of claims

• The investment of premiums

In insurance, what is an "exposure unit" used for?

• Measuring the risk of a claim

• Calculating the premium

• Determining the sales target

• Allocating marketing resources

What is the primary purpose of underwriting in insurance?

• To increase the number of policyholders

• To select, classify, and price applicants for insurance

• To provide legal advice to policyholders

• To manage investment portfolios

What is adverse selection in the context of insurance?

• The process of selecting the best insurance policy

• The tendency of people with a higher-than-average chance of loss to seek insurance at standard rates

• The method of reducing insurance premiums

• The strategy of increasing insurance coverage

How can adverse selection be controlled?

• By increasing insurance premiums

• By careful underwriting and policy provisions

• By reducing the number of policyholders

• By offering more insurance products

What does a statement of underwriting policy establish?

• The financial goals of the insurance company

• Policies consistent with the company’s objectives

• The marketing strategy for insurance products

• The investment strategy for the company

What is a common certification for underwriters?

• CPA certification

• CPCU certification

• CFA certification

• CFP certification

Which of the following is a primary basic principle of underwriting?

• Increase the number of policyholders

• Attain an underwriting profit

• Reduce the number of claims

• Maximize investment returns