Chapter 6 Questions Flashcards
what are the four main elements of a premium
risk premium
expenses
profit
roce
what is meant by the term burning cost
experience based rating method
translates incurred losses into a rate against a measure of exposure appropriate to the risk
why do insurers analyse their competition
need to understands what effect competitors’ products, services and prices have on their retention and acquisition of business
what information can an underwriter establish about the general area that a risk is situated in by referring to a flood map
establish whether the general area that a risk is situated in falls into a category of significant moderate or low
what are the two main classes of expenses
fixed and variable
when an insurer needs to make savings to improve its expense ratio from which class of expense are the savings likely to be made
fixed expenses, with premises and staffing costs the
why cant insurers control variable expenses
they represent the cost of writing business
what class of insurance is most likely to be rated using the burning cost method
motor fleet risks
