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Question 1 of 10
1. Question
Pricing to an insurer is never a disconnected bunch of techniques, but a “process”, what type of process is pricing referred to as?
Correct
Pricing is a formalized process, with the connection of one technique to another, with the start of collecting information about a particular policyholder or a risk, and ends with the commercially informed rate.
Incorrect
Pricing is a formalized process, with the connection of one technique to another, with the start of collecting information about a particular policyholder or a risk, and ends with the commercially informed rate.
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Question 2 of 10
2. Question
Which is the best technique to work around to improve the estimate of the given years, if we have incomplete IBNR analysis of a specified year?
Correct
The missing claims are known as the IBNR, incurred but not reported claims. These are the losses that have already occurred which is why it needs some method to be incorporated into the analysis. The best technique is to omit the results of the immature data of that specified year, assuming that the others are complete, whilst figuring out an average.
Incorrect
The missing claims are known as the IBNR, incurred but not reported claims. These are the losses that have already occurred which is why it needs some method to be incorporated into the analysis. The best technique is to omit the results of the immature data of that specified year, assuming that the others are complete, whilst figuring out an average.
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Question 3 of 10
3. Question
A claim that occurred in 2005, if occurred again under exactly the same circumstances, after ten years, would have a different large payout, what is this scenario called?
Correct
To account for the time value of money, Claims inflation is taken into consideration. Claims inflation is different than RPI and CPI because it depends on different factors not captured by RPI & CPI. The claim inflation rates are virtually needed in reserving, pricing, planning, and capital modeling.
Incorrect
To account for the time value of money, Claims inflation is taken into consideration. Claims inflation is different than RPI and CPI because it depends on different factors not captured by RPI & CPI. The claim inflation rates are virtually needed in reserving, pricing, planning, and capital modeling.
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Question 4 of 10
4. Question
Why is it often pointless to try to be too smart in revaluing the claims?
Correct
When calculating the claims inflation, few of the processes are followed such as setting the revaluation date, assuming the midpoint of each policy year, revalue the total claim, but the claim inflation values differ as they are mired with uncertainty and thus it is pointless to act too smart in it.
Incorrect
When calculating the claims inflation, few of the processes are followed such as setting the revaluation date, assuming the midpoint of each policy year, revalue the total claim, but the claim inflation values differ as they are mired with uncertainty and thus it is pointless to act too smart in it.
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Question 5 of 10
5. Question
In revaluing the total claim, the formula is mentioned as below:
Xrev@t* (t) =X(t) x (1 + r) t*- t
Explain what does t represent, being the basis of the value of the total claim?Correct
In the formula given to measure the revalue of the total claim, t is the policy year whose historical claims are wished to be revalued, t* is the year of the policy being priced, and r is the claims inflation.
Incorrect
In the formula given to measure the revalue of the total claim, t is the policy year whose historical claims are wished to be revalued, t* is the year of the policy being priced, and r is the claims inflation.
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Question 6 of 10
6. Question
What do you understand by the term “revalued losses”?
Correct
A revaluation increases or decreases an asset’s value, when the loss is incurred, the loss is revalued overtime keeping in mind the price money of time, that is why to determine revalued losses, the loss column is multiplied by the revaluation factor.
Incorrect
A revaluation increases or decreases an asset’s value, when the loss is incurred, the loss is revalued overtime keeping in mind the price money of time, that is why to determine revalued losses, the loss column is multiplied by the revaluation factor.
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Question 7 of 10
7. Question
What is the purpose of an exposure measure?
Correct
If a company insures a fleet of cars, the overall risk will be proportional to the number of vehicles in the fleet, or the vehicle- years. This measure seems good but it is not perfectly proportional to the risk. Some cars are more expensive and have to bear more repair costs than others, and certain drivers are more dangerous than others. That is why different types of exposure measures are taken to quantify the risk profile and they are roughly proportional to overall- risk.
Incorrect
If a company insures a fleet of cars, the overall risk will be proportional to the number of vehicles in the fleet, or the vehicle- years. This measure seems good but it is not perfectly proportional to the risk. Some cars are more expensive and have to bear more repair costs than others, and certain drivers are more dangerous than others. That is why different types of exposure measures are taken to quantify the risk profile and they are roughly proportional to overall- risk.
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Question 8 of 10
8. Question
Out of the following, which type of exposure measure for employer’s liability is used for burning cost analysis?
Correct
An exposure measure often used for burning cost analysis is the wage roll that is the total amount of salary paid to the company’s employees. Another way is the number of employees or employee- years which gives appropriate weights to the employees leaving or joining in the year and also to the part-timers.
Incorrect
An exposure measure often used for burning cost analysis is the wage roll that is the total amount of salary paid to the company’s employees. Another way is the number of employees or employee- years which gives appropriate weights to the employees leaving or joining in the year and also to the part-timers.
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Question 9 of 10
9. Question
If exposure measure is adopted in the form of a wage roll, how do you think should it be corrected to bring in to the current day value?
Correct
Wage roll is a monetary amount, that is why it should be corrected to be brought to current day values, but the inflation factor applied to the losses is not applied to the exposures, as the wage roll has company-specific information of wage policy. It should be revalued based on the wage inflation of the country.
Incorrect
Wage roll is a monetary amount, that is why it should be corrected to be brought to current day values, but the inflation factor applied to the losses is not applied to the exposures, as the wage roll has company-specific information of wage policy. It should be revalued based on the wage inflation of the country.
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Question 10 of 10
10. Question
How can you determine the “total losses amount” per year?
Correct
The paid losses are those amounts that have been paid for the particular years or whose payment has been approved. The outstanding losses are those amounts that have been reserved for claims, based on the estimate of how big the claim will be, depending on the level of compensations. Both of the estimates together are determined to be total losses amount per year collectively.
Incorrect
The paid losses are those amounts that have been paid for the particular years or whose payment has been approved. The outstanding losses are those amounts that have been reserved for claims, based on the estimate of how big the claim will be, depending on the level of compensations. Both of the estimates together are determined to be total losses amount per year collectively.