← FIN 4200 Exam 2 -- HW notes Export Options Alphabetize Word-Def Delimiter Tab Comma Custom Def-Word Delimiter New Line Semicolon Custom Data Copy and paste the text below. It is read-only. Select All adjusted rate levels are ________ and added some personal observations on the accuracy of ratemaking procedures. insurance underwriting and rating the use of credit scores in ________________ &______ . With developments in information technology, insurer access to information about applicants will continue to grow, and the debate over the use of credit information is likely to be repeated in other areas. Law of large numbers allows actuaries to makes estimates, but things do not happen in the future as they have planned in the past. This is because: Continued improvement in life Inflation causes rising medical costs What is the fallacy of actuarial precision? goal of underwriting is NOT the selection of risks that will have losses but it is to avoid a disproportionate number of bad risks, thereby equalizing the actual losses with the expected ones. Standard Substandard risk What is the nature and purpose of underwriting Law prohibits insurer midterm cancelation of policy. Can only cancel if policy has been in effect for less than 60 days. Cant cancel based on insureds age, sex, occupation, race, or place of residence What are the restrictions on post-selection underwriting notice of loss investigation proof of loss payment of denial of the claim What is the loss adjustment process There was no loss The policy did not cover the loss What is the basis of claim denial? The term "sakes prevention department" What is is sometimes used by the marketing department in reference to the underwriting department. The cost per unit of insurance. The rate may be the price per unit of coverage (e.g., per $100 in fire insurance or per $1,000 in life insurance) or it may be applied to some other measure that is assumed to be an appropriate measure of exposure (e.g., payroll in workers compensation or receipts in product liability). What is a rate? The cost of a policy, and is derived by multiplying the rate by the number of units of protection purchased or some other rating base What is the premium? Retrospective Rating These are a type of "cost-plus" contract in which the insured's actual losses during the policy period determine the cost of the protection. are old-age benefits, survivor benefits, disability benefits, and health care benefits under Medicare What are the four classes of benefits available under OASDHI with increases in the Consumer Price Index, as explained on page 210. These automatic adjustments replace congressionally legislated increases, which were originally the rule. Congress could, if it chose to do so, legislate an increase for a particular year. The automatic increases in benefit levels are financed through increases in the tax base, as explained on page 211. How are benefit levels automatically adjusted? •Medical expenses. •Total temporary disability. •Partial temporary disability. •Total permanent disability. •Partial permanent disability. •Survivors' death benefits. •Rehabilitation benefits. What are the seven classes of benefits payable to the injured worker or his or her dependents under the workers' compensation laws? no defense the uninsured motorist may offer _________, and that an astronomical judgment could be entered by default. Ch 30 Cards CH 30 Cards Actual cost value. This covers personal property owned or used by an insured anywhere in the world. What is the definition of personal property? care, custody, and control What does Section 2 discuss? An open peril coverage is an insuring agreement under which the insurer agrees to pay for loss by any peril except those that are specifically excluded. Name-peril Coverage the specific causes of loss are listed, and coverage applies to loss caused by one of the specifically designated perils. The principal difference is in the burden of proof regarding a loss. In the case of named peril coverage, it is the insured's obligation to establish that the loss was caused by an insured peril. Under open-peril coverage, the insurer must establish that the loss was caused by an excluded cause of loss. What is the principal difference of an open peril coverage and a named peril coverage?