Insurance Companies Can Predict Fairly Accurately

question 71

Multiple Choice

Insurance companies can predict fairly accurately:

• A) the percentage of policyholders who will have a claim and which policyholders will have a claim.
• B) which policyholders will suffer a loss but not the percentage of policyholders that will do so.
• C) the type of losses policyholders will incur but not the percentage of policyholders that will file claims.
• D) the percentage of policyholders that will file claims but not the policyholders that will file them.

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Definitions:

Forecast Risk

The risk associated with the likelihood that the forecasted figures will not align with the actual results, also known as projection risk.

Accounting Break-even

The point at which total revenues equal total expenses, and the company neither makes a profit nor incurs a loss.

Operating Cash Flow

The cash that a business produces from its regular business activities, essential for maintaining daily operations, paying bills, and funding investments.

Depreciation Expense

A non-cash charge that reduces the value of fixed assets due to wear, tear, or obsolescence over time.