Exam 4- Chapter 15 Flashcards
Policy reserves are a
balance sheet liability
In property and casualty insurance the combined ratio is equal to ______________________ divided by total premiums written.
the sum of the loss ratio plus general expenses and broker’s commissions
The primary regulator of insurance firms is the
state insurance regulator
The term “variable” in a variable life policy refers to the
variable growth rate of the cash value of the policy.
Catastrophe bonds may be used as a form of _____
When issued, catastrophe bonds will have promised yields above the ________.
reinsurance; risk-free rate
In 2010 the average combined ratio after dividends for the P&C industry was ___________
102.4
Property and casualty insurers hold _____________ short-term assets than life insurers because property and casualty loss rates are _____________ predictable than life insurance loss rates.
more; less
Hurricane damage in a given area is an example of a ____________________ for which it is difficult to predict loss exposure.
high-severity, low-frequency event
The operating ratio is calculated as
the combined ratio after dividends minus the investment yield
The two major components of expense risk for P&C insurers are
loss adjustment expenses and variations in commission and other expenses
At P&C insurers, if the combined ratio is less than 100 percent, the premiums charged were sufficient to cover
both losses and expenses.
For P&C insurers, if the combined ratio is more than 100 percent, that firm
may have been profitable if investment returns were high enough
The P&C loss ratio on an insurance line contains: (2)
- payouts on claims
- costs associated with settling claims
what is insured? (4)
- Life
- Retirement
- Disability
- Accidents
- Fixed payment at death
- Fixed period of time
Term life
