Nathan Was Hired as an Actuary with ABC Insurance

question 39

Multiple Choice

Nathan was hired as an actuary with ABC Insurance.Nathan was asked to calculate the annual premium for a new product and to explain his calculations to ABC's director of ratemaking.Nathan calculated the pure premium and presented this value as the final premium.After Nathan's presentation,the director of ratemaking said,"You left out something very important.If we sell coverage at the pure premium rate,we'll be out of business soon." What did Nathan overlook in his calculations?

• A)loadings
• B)the underwriting cycle
• C)seasonality of claims
• D)investment income

---

Definitions:

Gamma Motor Neurons

Neurons that control the contraction of intrafusal muscle fibers in muscle spindles, helping to regulate muscle tone and sensitivity of stretch reflexes.

Muscle Spindle

A sensory receptor located within muscles that detects changes in muscle length, contributing to the sense of body position.

Action Potentials

Rapid and temporary changes in the electrical membrane potential of a cell, allowing for the transmission of nerve impulses along neurons.

Golgi Tendon Organs

Sensory receptors located at the junction of tendons and muscles, sensitive to changes in muscle tension.