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

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Definitions:

Negative Schema

Cognitive frameworks or beliefs that are pessimistic or detrimental, influencing how individuals perceive themselves and the world.

Depressing Feelings

Emotions that contribute to a state of feeling sad, hopeless, and discouraged.

Outlook on Life

An individual's general attitude or viewpoint towards life and the future.

Depressed Individuals

People who are experiencing depression, characterized by persistent feelings of sadness, hopelessness, and a lack of interest or pleasure in activities.