INS200 C5 Underwriting

What is the main objective of underwriting?

• To calculate suitable premium

• To assess the risk

• To spread the costs equitably among members

• To decide whether or not to sell a contract to the prospective insured

What is the process of underwriting?

• Accepting or declining the risk

• Assessing the risk

• All of the above

• Calculating suitable premium

What is risk selection in underwriting?

• The process of choosing applicants that an insurer will accept

• The process of determining how much to charge for a policy

• The process of assigning the insured to a group of similar risks

• The process of deciding whether or not to sell a contract to the prospective insured

What is the risk premium in underwriting?

What is the purpose of the contingency loading in underwriting?

• To cover the policyholder’s fair contribution to the expenses incurred by the insurer

• To cover the expected dividend payment to the insurer’s shareholders

• To cushion the insurer from unexpectedly large claims

• To spread the costs equitably among members

What is the underwriter's job in underwriting?

• To spread the costs equitably among members

• To calculate suitable premium

• To evaluate the insurance application to determine the degree of risk

• To decide whether or not to sell a contract to the prospective insured

What is the risk premium rate in underwriting?

• The average total value insured multiplied by the average total claims

• The average total claims multiplied by the average total value insured

• The average total value insured divided by the average total claims

• The average total claims divided by the average total value insured

What is the purpose of the expenses loading in underwriting?

• To spread the costs equitably among members

• To cushion the insurer from unexpectedly large claims

• To cover the policyholder’s fair contribution to the expenses incurred by the insurer

• To cover the expected dividend payment to the insurer’s shareholders

What is the purpose of the profit loading in underwriting?

• To spread the costs equitably among members

• To cushion the insurer from unexpectedly large claims

• To cover the policyholder’s fair contribution to the expenses incurred by the insurer

• To cover the expected dividend payment to the insurer’s shareholders

What is the process of risk classification in underwriting?

• The process of choosing applicants that an insurer will accept

• The process of determining how much to charge for a policy

• The process of deciding whether or not to sell a contract to the prospective insured

• The process of assigning the insured to a group of similar risks