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A business-level strategy through which a company seeks cost efficiencies in all operational areas. - Correct Answers ✅Cost Leadership T he process of selecting insureds, pricing coverage, determining insurance policy terms and conditions, and then monitoring the underwriting decisions made. - Correct Answers ✅Underwriting A ratio that measures losses and loss adjustment expenses against earned premiums and that reflects the percentage of premiums being consumed by losses. - Correct Answers ✅Loss ratio Methodical examination of a policyholder's operations, records, and books of account to determine the actual exposure units and premium for insurance coverages already provided. - Correct Answers ✅Premium Audit An association of insurance commissioners from the 50 U.S. states, the District of Columbia, and the five U.S. territories and possessions, whose purpose is to coordinate insurance regulation activities among the various state insurance departments. - Correct Answers ✅National Association of Insurance Commissioners (NAIC)
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A document drafted by the NAIC, in a style similar to a state statute, that reflects the NAIC's proposed solution to a given problem or issue and provides a common basis to the states for drafting laws that affect the insurance industry. Any state may choose to adopt the model bill or adopt it with modifications. - Correct Answers ✅Model law A draft regulation that may be implemented by a state insurance department if the model law is passed. - Correct Answers ✅Model regulation A situation in which an entity's current liabilities (as opposed to its total liabilities) exceed its current assets. - Correct Answers ✅Insolvency An organization that provides administrative services associated with risk financing and insurance. - Correct Answers ✅Third-party administrator (TPA) A person responsible for investigating, evaluating, and settling claims. - Correct Answers ✅Claims representative
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A system to remind claims personnel to perform a particular task on a claim. - Correct Answers ✅Diary, or suspense A record of all the activities and analyses that occur while handling a claim. - Correct Answers ✅Activity log The process by which an insurer can, after it has paid a loss under the policy, recover the amount paid from any party (other than the insured) who caused the loss or is otherwise legally liable for the loss. - Correct Answers ✅Subrogation An alternative dispute resolution (ADR) method by which disputing parties use a neutral outside party to examine the issues and develop a mutually agreeable settlement. - Correct Answers ✅Mediation An alternative dispute resolution (ADR) method by which disputing parties use a neutral outside party to examine the issues and develop a settlement, which can be final and binding. - Correct Answers ✅Arbitration
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A method of resolving disputes between insurers and insureds over the amount owed on a covered loss. - Correct Answers ✅Appraisal An alternative dispute resolution method by which a case undergoes an abbreviated version of a trial before a panel or an adviser who poses questions and offers opinions on the outcome of a trial, based on the evidence presented. - Correct Answers ✅Mini-trial An alternative dispute resolution method by which disputing parties participate in an abbreviated trial, presenting the evidence of a few witnesses to a panel of mock jurors who decide the case - Correct Answers ✅Summary jury trial An insurance policy or endorsement that is specifically drafted according to terms negotiated between a specific insured (or group of insureds) and an insurer. - Correct Answers ✅Manuscript policy or manuscript endorsement A group of policies with a common characteristic, such as territory or type of coverage, or all policies written by a particular insurer or agency. - Correct Answers ✅Book of business
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The amount of business an insurer is able to write, usually based on a comparison of the insurer's written premiums to its policyholders' surplus. - Correct Answers ✅Capacity A financial statement in which amounts are reported as a percentage of a base figure. - Correct Answers ✅Common-size statement A condition that increases the frequency or severity of a loss. - Correct Answers ✅Hazard A decision-making tool that uses credit report information to develop a predictive score on the creditworthiness of an applicant for additional credit. - Correct Answers ✅Credit scoring A listing of past claims, including the date of occurrence, the line of business, the type or description of the claim, the date of the claim, the amount paid, the amount reserved, and the claim's current status. - Correct Answers ✅Loss history A type of auto insurance in which the premium is based on the policyholder's driving behavior. - Correct Answers ✅Usage-based insurance
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A statistical technique that increases the flexibility of a linear model by linking it with a nonlinear function. - Correct Answers ✅Generalized linear model (GLM) Artificial intelligence in which computers continually teach themselves to make better decisions based on previous results and new data. - Correct Answers ✅Machine learning A small group of customers or potential customers brought together to provide opinions about a specific product, service, need, or other issue - Correct Answers ✅Focus group The ratio of insurance policies written to those that have been quoted to applicants for insurance. - Correct Answers ✅Hit ratio The percentage of insurance policies renewed. - Correct Answers ✅Retention ratio The process of identifying and dividing the groups within a market that share needs and characteristics and that will respond similarly to a marketing action. - Correct Answers ✅Market segmentation
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and the reinsurer can accept or reject any loss exposures submitted. - Correct Answers ✅Facultative reinsurance The process insurers use to calculate insurance rates, which are a premium component. - Correct Answers ✅Ratemaking The price per exposure unit for insurance coverage. - Correct Answers ✅Rate The price of the insurance coverage provided for a specified period. - Correct Answers ✅Premium The average amount of money an insurer must charge per exposure unit in order to be able to cover the total anticipated losses for that line of business. - Correct Answers ✅Pure premium The amount that is included in an insurance rate to cover the insurer's expenses and that might include loss adjustment expenses but that excludes investment expenses. - Correct Answers ✅Expense provision
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An estimate of the amount of money the insurer expects to pay in the future for losses that have occurred. - Correct Answers ✅Loss reserve The sum of paid losses, paid loss adjustment expenses, loss reserves, and loss adjustment expense reserves. - Correct Answers ✅Incurred losses A person who uses mathematical methods to analyze insurance data for various purposes, such as to develop insurance rates or set claim reserves. - Correct Answers ✅Actuary A model used to predict an unknown outcome by means of a defined target variable. - Correct Answers ✅Predictive model The process of extracting hidden patterns from data that is used in a wide range of applications for research and fraud detection. - Correct Answers ✅Data mining A fundamental measure of the loss exposure assumed by an insurer. - Correct Answers ✅Exposure unit
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A factor that provides for differences in expected loss, individual company expenses, underwriting profit, and contingencies; when multiplied with a loss cost, it produces a rate. - Correct Answers ✅Loss cost multiplier The period for which all pertinent statistics are collected and analyzed in the ratemaking process. - Correct Answers ✅Experience period A statistical technique for analyzing environmental changes and projecting such changes into the future. - Correct Answers ✅Trending The level of confidence an actuary has in projected losses; increases as the number of exposure units increases. - Correct Answers ✅Credibility The factor applied in ratemaking to adjust for the predictive value of loss data and used to minimize the variations in the rates that result from purely chance variations in losses. - Correct Answers ✅Credibility factor
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The limit for which a liability policy can be written without either a charge for an increased limit or a credit for a reduced limit. - Correct Answers ✅Basic limit A factor applied to the rates for basic limits to arrive at an appropriate rate for higher limits. - Correct Answers ✅Increased limit factor Looks for any unusual percentages in the common-size statements that identify items as having an excessively large (or small) value when compared with those of competitors or another benchmark, such as an average for an industry. - Correct Answers ✅Vertical Analysis Correct results in a book of business that isn't achieving established profitability goals. - Correct Answers ✅Reunderwriting A physical condition that increases the frequency or severity of loss. Can be identified by the five senses. - Correct Answers ✅Physical Hazard
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Research & develop forms Review Rates Educate and Train Arrange Reinsurance Assist with Complex Accounts Conduct UW Audits Cash, securities, receivables, inventory, and prepaid expenses. - Correct Answers ✅Current Assets Long-term investments, plant assets, intangible assets. Assets that will be used beyond one year. - Correct Answers ✅Noncurrent Assets Accounts payable, short-term debt, current position of long-term debt. - Correct Answers ✅Current Liabilities Will be satisfied or paid one year after the balance sheet date, such as long-term notes payable. - Correct Answers ✅Noncurrent Liabilities
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net sales - cost of goods sold - Correct Answers ✅Gross Profit gross profit - operating expenses - Correct Answers ✅Operating Income Major investments in either tangible long-term assets such as land, buildings, and equipment or intangible assets such as patents, trademarks, and copyrights. - Correct Answers ✅Capital Expenditures Revenues - Expenses - Correct Answers ✅Net Income Net income from the income statement plus other income that is not required to be reported. Can include unrealized gains and losses, foreign currency exchanges, pension adjustments. - Correct Answers ✅Comprehensive Income This function works with risk managers and commercial insureds to help prevent losses and reduce the effects of losses that can't be prevented. Insurers typically provide three types of risk control services: conducting physical surveys, performing risk analysis and improvement, and developing safety management programs.
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The division of a total consumer market by purchase behavior - Correct Answers ✅Behavioristic Segmentation The division of markets based on demographic variables, such as age, gender, education, occupation, ethnicity, income, family size, and family life cycle. - Correct Answers ✅Demographic Segmentation The division of markets by individuals' values, personalities, attitudes, and lifestyles - Correct Answers ✅Psychographic Segmentation Use the assistance of a local agent or broker to determine insurance needs. - Correct Answers ✅Small Businesses Typically use brokers to access insurance markets. Access to risk financing alternatives. Manufacturer of airplane components. - Correct Answers ✅Middle Markets Fortune 500 accounts. Utilize brokers to negotiate complex insurance needs. Captives. - Correct Answers ✅National Accounts
