All of the Following Statements About Regulatory Objectives of Insurance

question 36

Multiple Choice

All of the following statements about regulatory objectives of insurance rate making are true EXCEPT

• A)One purpose of rate adequacy is to maintain the solvency of insurers.
• B)Rates unfairly discriminate if loss exposures that are similar with respect to losses and expenses are charged substantially different rates.
• C)Insurers know in advance if the coverages marketed will be profitable,so rate regulation is not needed.
• D)Rates are excessive if policyholders are paying substantially more than the actual value of their protection.

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Definitions:

Disposable Income

The financial resources that remain for saving and spending in households, following the deduction of income taxes.

State and Federal Income Taxes

Taxes imposed on individuals and businesses by state and the federal government based on the income earned within the tax year.

Necessities

Essential goods or services required for basic living and sustaining human life, often including food, water, shelter, and clothing.

Technology

Inventions or innovations from applied science or engineering research.