The Expected Loss Ratio for a Class of Business Is

question 26

Multiple Choice

The expected loss ratio for a class of business is 60 percent.What change would be indicated in the level of rates under the loss ratio method if the actual loss ratio turned out to be 68 percent?

• A)6.67 percent increase
• B)13.33 percent increase
• C)25.00 percent increase
• D)33.33 percent increase

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Definitions:

Condition Precedent

In contract law, an act or promise that must take place or be fulfilled before the other party is obligated to perform his or her part of the agreement.

Enforceable

Describes a legal agreement or contract that is valid and therefore can be upheld and enforced in a court of law.

Best Evidence Rule

A legal principle requiring the presentation of the original document as evidence in court, rather than copies, unless the original is unavailable.

Obligee

A person or entity that is owed a duty or performance under a legal agreement or contract.