Study 10

Question 1

underwriter

Answer 1

(1) The insurance company or group that underwrites or insures a particular risk. (2) The individual within an insurance company whose responsibility it is to accept or reject business in the particular line in which they specialize and, in this way, choose the risks their principals are prepared to underwrite.

Question 2

line guide

Answer 2

A listing of the maximum amounts of exposure an insurance company is prepared to accept on various classes of risk.

Question 3

frequency of loss

Answer 3

frequency of loss
This is a measure of how often losses are likely to occur in the future. Assuming the average size of loss is constant, the higher the loss frequency, the worse the loss experience.

Question 4

rate

Answer 4

Amount charged to an insured that reflects the expectation of loss for a covered risk, insurance company expenses, and profit. In other words, it is the basis of premium calculation for the insurance provided for the exposure.

Question 5

actuary

Answer 5

One who specializes in the mathematics of insurance, mortality rates, and the like.

Question 6

ratemaking

Answer 6

The process of compiling and analyzing data to establish rates that accurately reflect the level of risk. Usually performed by actuaries.

Question 7

rating

Answer 7

The process by which underwriters apply the rates developed by actuaries to the information that underwriters have gathered to determine premium for individual risks.

Question 8

premium

Answer 8

The price of insurance protection for a specified risk for a specified period of time.

Question 9

adjuster

Answer 9

One who investigates insurance claims, makes recommendations regarding the payment of benefits from insurance policies, and negotiates payments and settlements.