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Question 1 of 10
1. Question
What do you understand by the term IBNER that means Incurred but not enough reserved?
Correct
When the insurer has a good technical knowledge of the compensation process, he reserves skillfully and neutrally, taking into account not to underestimate or exaggerate the claims estimate. When the insurer makes prediction errors on many different claims, the error amount is known as IBNER, incurred but not enough reserved claim account.
Incorrect
When the insurer has a good technical knowledge of the compensation process, he reserves skillfully and neutrally, taking into account not to underestimate or exaggerate the claims estimate. When the insurer makes prediction errors on many different claims, the error amount is known as IBNER, incurred but not enough reserved claim account.
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Question 2 of 10
2. Question
The estimates are more uncertain because of IBNER, what is the process to settle it down?
Correct
To allow for IBNER, one has to make his own judgment as to whether there is IBNER or not. Ideally, IBNER can be done by using historical information about the losses that were reserved and settled or reserving information on individual losses or with total claims triangulations.
Incorrect
To allow for IBNER, one has to make his own judgment as to whether there is IBNER or not. Ideally, IBNER can be done by using historical information about the losses that were reserved and settled or reserving information on individual losses or with total claims triangulations.
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Question 3 of 10
3. Question
After taking into account claims inflation, exposure correction, and IBNR, IBNER, and risk profile changes, which of the following the expected gross losses also include?
Correct
Adjustments are common practices by the underwriters, made to correct for experiences that are unusual by nature such as different weather conditions, currency effects, or anything that has happened everywhere in the market. Although they increase the reliability of the estimates, it also adds layers of uncertainty.
Incorrect
Adjustments are common practices by the underwriters, made to correct for experiences that are unusual by nature such as different weather conditions, currency effects, or anything that has happened everywhere in the market. Although they increase the reliability of the estimates, it also adds layers of uncertainty.
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Question 4 of 10
4. Question
What is the modern way of looking at risk?
Correct
The modern way of looking at risk to consider separately the frequency and severity of the claims has several different advantages as it also gives a much more solid basis on which to estimate the future volatility of loss experience.
Incorrect
The modern way of looking at risk to consider separately the frequency and severity of the claims has several different advantages as it also gives a much more solid basis on which to estimate the future volatility of loss experience.
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Question 5 of 10
5. Question
Each claim is split into a paid component, an outstanding component, and recoveries from a third party. Keeping that in mind, what is the overall incurred amount?
Correct
A claim reserve is a reserve of money set aside by an insurance company in order to pay policyholders. These are the funds set aside for the future payment of incurred claims that have not yet been settled. The outstanding claims reserve is an actual estimate as the amount liable on any given claim is not known until it is settled. Actuarial estimates of the amounts that will be paid on outstanding claims must be evaluated so that the insurer can calculate its profits.
Incorrect
A claim reserve is a reserve of money set aside by an insurance company in order to pay policyholders. These are the funds set aside for the future payment of incurred claims that have not yet been settled. The outstanding claims reserve is an actual estimate as the amount liable on any given claim is not known until it is settled. Actuarial estimates of the amounts that will be paid on outstanding claims must be evaluated so that the insurer can calculate its profits.
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Question 6 of 10
6. Question
What are the unsatisfactory aspects of the insurance classification?
Correct
The insurance classification of insurance products diversifies due to the perspective changes. There are unsatisfactory aspects to it that are products that should be together are split and products that should be split are brought together artificially, as an example of aviation liability could be classified as employers’ liability or with hull insurance in aviation.
Incorrect
The insurance classification of insurance products diversifies due to the perspective changes. There are unsatisfactory aspects to it that are products that should be together are split and products that should be split are brought together artificially, as an example of aviation liability could be classified as employers’ liability or with hull insurance in aviation.
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Question 7 of 10
7. Question
According to the classification method of the products by the category of cover, it could be classified into how many broad categories?
Correct
The UK actuarial profession uses the classification method in the products by the category of cover. According to this method, classification is done in four broad categories: liability, property, financial loss, and fixed benefits, depending on the type of losses that are indemnified and the type of compensation itself.
Incorrect
The UK actuarial profession uses the classification method in the products by the category of cover. According to this method, classification is done in four broad categories: liability, property, financial loss, and fixed benefits, depending on the type of losses that are indemnified and the type of compensation itself.
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Question 8 of 10
8. Question
Which of the following is true about the Principle of Indemnity?
Correct
The principle of indemnity is when applied to property insurance means: compensation must be provided to enable to replace of the lost good or put the person back in the financial position before losing the goods. This implies sometimes that the person will not be paid the market price for a house that burned down, but will get enough money to rebuild it. It implies that anyone should not be able to make money out of insurance by getting more compensation than the product’s insured worth.
Incorrect
The principle of indemnity is when applied to property insurance means: compensation must be provided to enable to replace of the lost good or put the person back in the financial position before losing the goods. This implies sometimes that the person will not be paid the market price for a house that burned down, but will get enough money to rebuild it. It implies that anyone should not be able to make money out of insurance by getting more compensation than the product’s insured worth.
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Question 9 of 10
9. Question
What is the principle of insurable interest?
Correct
If there is a suspect about a place, say in the neighborhood, that would be damaged in the next flood, it is not allowed to wager on the possibility of losses without the person’s personal interest.
Incorrect
If there is a suspect about a place, say in the neighborhood, that would be damaged in the next flood, it is not allowed to wager on the possibility of losses without the person’s personal interest.
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Question 10 of 10
10. Question
Property insurance, in the past, used to cover against the fire risk, which was extended to other types such as an explosion, flood, and earthquake. State the modern policy made for property insurance.
Correct
Modern policies have raised its bar by concluding all risks’, which means that they focus on the outcome that is the property damage rather than the cause of the damage that means anything that causes damage will be reimbursed. These include exclusions against risks that the insurer does not wish to deal with, on an obvious note, because they have a systemic nature: they would cause damage to too many of its insured for the insurer to be able to cover all of them at the same time. These exclusions include civil war and nuclear activity.
Incorrect
Modern policies have raised its bar by concluding all risks’, which means that they focus on the outcome that is the property damage rather than the cause of the damage that means anything that causes damage will be reimbursed. These include exclusions against risks that the insurer does not wish to deal with, on an obvious note, because they have a systemic nature: they would cause damage to too many of its insured for the insurer to be able to cover all of them at the same time. These exclusions include civil war and nuclear activity.