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:

Net Income

The total earnings of a company after deducting all expenses from revenues, representing the profit.

Owner's Drawings

The amount of money taken out from the business by the owner(s) for personal use.

Income Statement

A financial statement that shows a company's revenues and expenses over a specified period, resulting in net profit or loss.

Debit Entries

Accounting entries that increase an asset or expense account, or decrease a liability or equity account.