Which of the Following Statements Is True Regarding Insurance Market

question 27

Multiple Choice

Which of the following statements is true regarding insurance market conditions and underwriting results?

• A)A combined ratio greater than one (or 100 percent)indicates profitable underwriting.
• B)In a "soft" insurance market,more retention is used than in a "hard" insurance market.
• C)Insurance rates are high and underwriting standards are tight when the insurance market is "hard."
• D)Property and liability insurance premiums and underwriting standards do not fluctuate over time.

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Definitions:

Utility Function

A mathematical representation that quantifies the satisfaction or happiness an individual derives from consuming goods and services.

Budget Constraint

A budget constraint represents the limits imposed on household choices by income, wealth, and commodity prices.

Income

Earnings acquired regularly through employment or investment returns.

Nuts

Edible seeds or fruits with a hard shell and a kernel that is eaten or used in cooking.