A Credit-Based Score That Insurers Claim Is Highly Predictive of Future

question 2

Multiple Choice

A credit-based score that insurers claim is highly predictive of future claims costs is an individual's

• A)combined ratio.
• B)loss ratio.
• C)insurance score.
• D)underwriting score.

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Definitions:

Administrative Expenses

Costs related to the general administration of a business, such as salaries of senior executives, legal and accounting services.

Product Costs

The total costs associated with making a product, including direct materials, direct labor, and manufacturing overhead.

Variable Cost

Costs that change in proportion to the level of production or business activity, such as materials and labor costs.

Contribution Margin

The difference between sales revenue and variable costs, indicating how much revenue is contributing to fixed costs and profits.