Chapter 6 Questions - Chapter 6 Questions Application...

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Chapter 6 Questions & Application Questions 1. How does ratemaking, or the pricing of insurance, differ from the pricing of other products? Ratemaking which refers to the pricing of insurance and the calculation of insurance premiums differs from the pricing of others products in several ways. a. A rate is the price per unit of insurance. b. An exposure unit is the unit of measurement used in insurance pricing. c. Total premiums charged must be adequate for paying all claims and expenses during the policy period. d. Rates and premiums are determined by an actuary, using the company’s past loss experience and industry statistics. 2. A. Define the meaning of underwriting. Underwriting refers to the process of selecting, classifying, and pricing applicants for insurance. B. Briefly explain the basic principles of underwriting. 1. The primary objective of underwriting is to attain an underwriting profit. 2. The second principle is to select prospective insureds according to the company’s underwriting standards.
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  • Fall '15
  • Actuarial Science, primary insurer, treaty reinsurance states, C. Excess-of-loss reinsurance, D. Reinsurance pool

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