Study 9 – Automobile Insurance Ratemaking

Question 1

“Knock-for-Knock” laid the groundwork for modern

a. direct compensation
b. accident benefits
c. own damage
d. physical damage

Answer 1

a. Direct Compensation

Question 2

Which factors are combined together as they impact future loss costs

a. rating and IBNR
b. rating and loss cost development
c. rating and trending
d. loss cost development and trending

Answer 2

d. loss cost development and trending

Question 3

Loss costs include:

a. paid losses
b. outstanding losses
c. incurred but not reported losses
d. all of the above

Answer 3

d. all of the above

Question 4

Loss costs ratioed to the Earned premiums in the Actual Loss Ratio Exhibit is

a. pure premium ratio
b. loss ratio
c. earned loss ratio
d. pure earned loss ratio

Answer 4

c. earned loss ratio

Question 5

Within the territories, rate fluctuate over the years resulting from

a. the increase in population
b. the decrease in population
c. loss experience
d. economic development in the territory

Answer 5

c. loss experience

Question 6

Which of the following is NOT a hazard considered under a risk for ratemaking

a. territory
b. class of automobile and its uses
c. liability hazard
d. the automobile itself

Answer 6

c. liability hazard

Question 7

Which of the following is NOT a major class under Automobile risks

a. private passenger
b. commercial vehicles
c. recreational vehicles
d. owned automobiles

Answer 7

d. owned automobiles