Why Are Some Mutual Insurers Referred to as "Assessment Mutuals

question 36

Multiple Choice

Why are some mutual insurers referred to as "assessment mutuals"?

• A)They charge low premiums because the loss exposures of their insureds are thoroughly assessed before a policy is written.
• B)They are noted for being very thorough in their assessment of investment opportunities.
• C)They are assessed for state premium taxes only if they make a profit.
• D)They can assess policyholders if premiums are insufficient to pay losses and expenses.

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Definitions:

Discount Rate

The interest rate used to determine the present value of future cash flows in discounted cash flow analysis.

Scrap Value

The estimated worth of a tangible asset at the end of its useful life, often related to material goods that can be recycled or sold for parts.

Investment

The allocation of resources, typically monetary, into assets or projects expected to generate returns or income over time.

Present Discounted Value

The value of a future amount of money in today's terms, adjusted for the time value of money.