Which of the Following Statements Is Correct About the Fair

question 43

Multiple Choice

Which of the following statements is correct about the fair rate of return for insurance companies?

• A) The fair rate of return is measured using the expense ratio.
• B) The fair rate of return is governed by law.
• C) The fair rate of return reduces the insurance premiums charged by insurance companies.
• D) The fair rate of return compensates the insurance companies for the risk that they take.