P&P - Study 8 Review

Question 1

Which statement is NOT correct about the process of rating / ratemaking?

Accepted Answer

The process of rating is carried out by accountants.

Question 2

Underwriters look at both the risk and the applicant and decide to take which of the following actions?

Accepted Answer

Accept the risk, accept risk with conditions, reject the risk.

Question 3

Rating competition results in less stringent underwriting & rate reductions can lead to detrimental results for insurer.

Accepted Answer

True

Question 4

The application is a request by an insured for insurance and the applicant is the person or firm requesting insurance.

Accepted Answer

True

Question 5

Which statement is correct about why a written application is always preferable?

Accepted Answer

All of the above are correct.

Question 6

Function of insurance is to reduce uncertainty of something happening which will increase probability of it happening.

Accepted Answer

False

Question 7

What sections are common to all applications, regardless of the coverage being applied for?

Accepted Answer

All of the above are correct.

Question 8

Statistics may indicate trends and guarantee predictability within any particular time frame.

Accepted Answer

False

Question 9

The reliability of the predictions is dependent on which factors?

Accepted Answer

All of the above are correct.

Question 10

Which statement is NOT correct about what should be done by a broker/agent when obtaining an oral application?

Accepted Answer

Follow the notes with a call to the client and insurer for confirmation.

Question 11

Which statement is NOT correct about a Loss Payee?

Accepted Answer

A mortgagee is the only class of loss payee.

Question 12

Broker’s Report is opportunity for brokers to provide additional information based on personal knowledge of applicant.

Accepted Answer

True

Question 13

Risks may be rejected by underwriters for one of several reasons, which include?

Accepted Answer

All of the above.

Question 14

Which statement is NOT correct about the information found in an application under the heading of Signatures?

Accepted Answer

Automobile applications never have to be signed.

Question 15

Which statement is correct about an Application?

Accepted Answer

All of the above statements are correct.

Question 16

Law of Large Numbers states that the degree of uncertainty is reduced as the number of events increases.

Accepted Answer

True

Question 17

The ratemaking process consists of 5 steps, which are:

Accepted Answer

All of the above.

Question 18

Which statement is NOT correct with regards to what the other benefits are of a written application?

Accepted Answer

Reducing delays and reducing customer service.

Question 19

Theory of Probability is likelihood of an occurrence, expressed by number of actual occurrences to possible occurrences.

Accepted Answer

True

Question 20

A representation is a statement or conduct made to influence an insurer to decide on a risk. Which statement is False?

Accepted Answer

A misrepresentation is giving correct information.

Question 21

Which statement is NOT correct about the information found in an application under the heading of Policy Term?

Accepted Answer

All of the above are correct.

Question 22

In law, the duty to disclose in general is the process of revealing most of the facts.

Accepted Answer

False

Question 23

An application is the last defense in insurance fraud.

Accepted Answer

False

Question 24

Written applications are not mandatory for accident & sickness and life insurance.

Accepted Answer

False

Question 25

Second part of underwriting function is to determine the maximum amount the insurer can insure through retention only.

Accepted Answer

False

Question 26

Which statement is NOT correct about the information found in an application under the heading of Loss History?

Accepted Answer

The period of time for the loss history depends on the insured's request.

Question 27

Which statement is correct about the information found in an application under the heading of Named Insured?

Accepted Answer

The person named must have an insurable interest in the property.

Question 28

Which statement is NOT correct about what the Insurance Act requires the insurer to prove for a misrepresentation?

Accepted Answer

That the applicant did not commit the misrepresentation.

P&P - Study 8 Review

Questions 28

P&P - Study 8 Review

Questions 28