Why Are Some Mutual Insurers Referred to as "Assessment Mutuals

question 36

Multiple Choice

Why are some mutual insurers referred to as "assessment mutuals"?

• A)They charge low premiums because the loss exposures of their insureds are thoroughly assessed before a policy is written.
• B)They are noted for being very thorough in their assessment of investment opportunities.
• C)They are assessed for state premium taxes only if they make a profit.
• D)They can assess policyholders if premiums are insufficient to pay losses and expenses.

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Definitions:

Neighbors

Individuals or entities located near one another, often used in the context of residential, geographic, or international proximity.

Market Failure

An instance where the free market's distribution of goods and services is inefficient, usually causing a reduction in net social welfare.

Allocate Resources

The process of distributing available resources, such as time, money, and assets, among various projects or business units to maximize efficiency and achieve strategic goals.

Efficiently

The ability to achieve a desired outcome with minimal wasted effort or expense.