Study 4

Question 1

What is a claim reported but not yet paid out?

Answer 1

Outstanding loss revenues

Question 2

Incurred =

Answer 2

Happened

Question 3

What are two ways stock companies make money?

Answer 3

1. Underwriting gain/profit

2. Interest on investment

Question 4

What are founded on the principal of mutual aid?

Answer 4

Assessment or premium note mutuals

Question 5

Insurance companies of the mutual type that specialize in industrial risks and in loss prevention, specifically fire

Answer 5

Factory mutuals

Question 6

Which provinces are engaged in writing compulsory automobile insurance?

Answer 6

Saskatchewan, Manitoba, British Columbia and Quebec

Question 7

Where did insurance begin?

Answer 7

Lloyds of London

Question 8

Funds that are set aside by an insurance company for the purpose of meeting obligations as they fall due

Answer 8

Reserve

Question 9

An amount carried as a liability in an insurance balance sheet

Answer 9

Loss reserve

Question 10

One who specializes in the mathematics of insurance morality rates and the like

Answer 10

Actuary

Question 11

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

Answer 11

Rate making

Question 12

Three main departments of any company are…..

Answer 12

1. Administration
2. Marketing
3. Accounting and finance

Question 13

Three main departments of an insurance company

Answer 13

1. Underwriting
2. Claims
3. Actuarial

Question 14

To insure. More commonly to scrutinize a risk then decide on its eligibility for insurance

Answer 14

Underwrite

Question 15

One who adjusts losses on behalf of the insurance companies but is not employed by any one insurance company

Answer 15

Independent adjuster

Question 16

Insurance purchased by an insurance company from another insurance company

Answer 16

Reinsurance

Question 17

An insurer’s transferal or signing over part of an insurance risk to re-insure

Answer 17

Cede

Question 18

That which is ceded, for example: A re-insurance term

Answer 18

Cession

Question 19

The portion of the risk that is kept by the insurer while the remainder is ceded to a reinsurer

Answer 19

Retain brackets retention

Question 20

An insurance company that reinsures primary insurance companies

Answer 20

Reinsurer

Question 21

To cede part of the risk to another insurer or reinsurer

Answer 21

Retrocede (retrocession)

Question 22

The re-insurance company that accepts a retrocession from another company

Answer 22

Retrocessionaire

Question 23

Two main types of actuaries are….

Answer 23

1. Pricing actuaries- responsible for calculating pricing

2. Reserving actuaries- determine the amount of money to be held in bulk claims reserves. (IBNR)

Question 24

What are the two methods of reinsurance?

Answer 24

1. Propertional reinsurance (pro rata reinsurance)

2. Non-proportional reinsurance

Question 25

A type of reinsurance where the company share loss payments in the same proportion that it shares premium and policy amounts

Answer 25

Proportional reinsurance

Question 26

Two types of reinsurance are…..

Answer 26

1. Treaty (automatic)

2. Faculative (case-by-case basis)