Name____________________________UT EID_______________________________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1. All of the following would appear in the asset section of an insurance company's balance sheet EXCEPT a. loss reserves. b. common stock. c. real estate. d. bonds. 1. 2. Reasons for the unearned premium reserve include which of the following? I. To pay losses that occur during the policy period. II. To pay premium refunds to policyholders in the event of cancellation. a. I only b. II only c. both I and II d. neither I nor II 2. 3. One item that appears on an insurance company's financial statements is a liability that represents an estimate of the claims reported and adjusted but not yet paid, claims reported and filed but not yet adjusted, and claims incurred but not yet reported to the company. This liability is called the insurer's a. unearned premium reserve. b. net income. c. loss reserve. d. admitted assets. 3. 4. Which of the following statements about property and casualty insurance company operating results is (are) true? I. An insurance company can have a combined ratio greater than 1 (or 100 percent) and still be required to pay income taxes. II. By all measures, the property and casualty insurance industry is highly profitable when compared to other industries. a. I only b. II only c. both I and II d. neither I not II 4. 5. All of the following statements about regulatory objectives of insurance rate making are true EXCEPT a. Rates unfairly discriminate if loss exposures that are similar with respect to losses and expenses are charged substantially different rates. b. Insurers know in advance if the coverages marketed will be profitable, so rate regulation is not needed. c. Rates are excessive if policyholders are paying substantially more than the actual value of their protection. d. One purpose of rate adequacy is to maintain the solvency of insurers. 5.
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