C120 Underwriting Essentials Study 6-9 QUIZZES

C120 Underwriting Essentials Study 6-9 QUIZZES Which body approves policy forms for automobile insurance? - ✔✔Provincial and territorial governments The client has two minor convictions and has been licensed for less ...

C120 Underwriting Essentials Study 6-9 QUIZZES Which body approves policy forms for automobile insurance? - ✔✔Provincial and territorial governments The client has two minor convictions and has been licensed for less than four years. This business meets the current filed guidelines. As a precaution, the underwriter might send it to which of the following? - ✔✔The risk sharing plan Which one of the following is not important for an underwriter to determine? - ✔✔Colour of the automobile's interior What will an application for insurance allow an underwriter to assess? - ✔✔Physical hazards Why must an underwriter obtain a signed application from an applicant who becomes an insured? - ✔✔Because it is required by law Where are credit checks not done in Canada? - ✔✔Newfoundland and Labrador and Ontario John owns a pizzeria. He has hired a few drivers to deliver for his business. John requires that his drivers use their own vehicles. What insurance must John have? - ✔✔Non-owned automobile insurance What is the concern when an underwriter is inquiring about how an applicant stores its vehicles? - ✔✔Peril of theft What is Canadian Loss Experience Automobile Rating (CLEAR) based on? - ✔✔Cost of repairs and passenger injury Why is the manufacturer's suggested retail price (MSRP) considered unfair? - ✔✔Most collision claims result in repair rather than replacement of the vehicle What is the definition of pure premium? - ✔✔The portion of the total premium that is used to pay expected losses What does it mean for the insurer if the premiums are too low? - ✔✔The insurer will pay out more money than it takes in and will go out of business. What is the definition of underwriting loss? - ✔✔The amount of money an insurance company loses as a result of its insurance operations Which one of the following is true about unallocated loss adjustment expenses (ULAE)? - ✔✔These are costs that cannot be attached or attributed to a specific claim The mathematical theory of the law of large numbers means what? - ✔✔The larger the sample size, the more correct the results Which one of the following statistics is not required by the actuarial department? - ✔✔Market conditions and competition Bob is an actuary who has decided to look at various rating exposures for the local movie theatre. Which one of the following is not an exposure that he should consider? - ✔✔Type of film shown A commercial automotive building has many unique exposures. What would the type of rating for such a risk be called? - ✔✔Schedule rating When is class rating used? - ✔✔When statistics can be gathered on a large number of risks that share common characteristics What are the factors that allow for an underwriter to have some degree of flexibility when it comes to rating a risk? - ✔✔The type of insurance and the size of the risk Which of the following statements is false when discussing the benefits of an underwriter having good relationships with other insurance professionals? - ✔✔An underwriter is not expected to form, maintain, and expand their network of professional relationships. What must an underwriter do to establish underwriting credit? - ✔✔The underwriter must demonstrate to the facultative reinsurer a thorough knowledge of each risk and the underwriting exposures it represents. What is a loss reserve? - ✔✔An amount carried as a liability on an insurer's balance sheet representing, for each claim, an amount equal to the estimated final settlement cost less any amounts already paid What is a benefit of good relations between the underwriter and the claims department? - ✔✔Learning of changes in legal jurisdiction of newly released judgments that will affect the future assessment of risks Which organization tests products for safety? - ✔✔Underwriters Laboratories of Canada With respect to the IBCs Agreement of Guiding Principles, which of the following statements is false? - ✔✔They are mandatory for all insurers to abide by What organization works with legislative bodies to create a framework where property and casualty insurance is practised? - ✔✔Insurance Bureau of Canada (IBC) Which organization is the premier source of professional education and career development for the country's property and casualty insurance industry? - ✔✔Institute of Canada (IIC) What is facultative reinsurance? - ✔✔Reinsurance of risks on an individual case-by-case basis subject to acceptance or rejection by the insurer What is risk management? - ✔✔Analyzing a risk to quantify the potential for losses in a specific investment to decide on the appropriate action to take (or whether to not take action) When matters are not directly addressed in the insurer's manuals, underwriters must use good judgment. How is this developed? - ✔✔Trial and error Which one of the following statements is false regarding centralized insurers? - ✔✔Centralized insurers have a less rigid approach than that of decentralized insurers Which one of the following statements is true about decentralized insurers? - ✔✔Decentralized insurers give much more autonomy and discretion to their underwriters What needs to be considered when there has been a merger or an acquisition between two or more insurance entities? - ✔✔The different corporate cultures are aligned and supported Canadian-owned insurance companies account for approximately what percentage of the Canadian industry's annual premium volume? - ✔✔One third As is the case with lawsuits for insurers, it is prudent for underwriters to bear in mind that their file(s) on a given account could be required for evidence. What should an underwriter do? - ✔✔Be careful with all notes about an account and ensure that nothing is written that might embarrass or undermine the insurer Which statement is true about a captive insurance company? - ✔✔Is usually created to write the parent company's own insurance What has the rise in concern over pollution liability led to in governments? - ✔✔More extensive statutes governing pollution control and the emergence of environmental regulation as an independent field of law When the economy is sluggish, what do insurers notice about their business? - ✔✔There are more claims. When the economy is thriving, what do insurers notice about their business? - ✔✔There is an increase in mergers and acquisitions activity among their clients' businesses