Which of the Following Are Reasons for Underwriting Risk to Result

question 57

Multiple Choice

Which of the following are reasons for underwriting risk to result?

• A)Generated premiums are insufficient to cover claims incurred insuring a particular peril.
• B)Generated premiums are insufficient to cover the administrative expenses of providing that insurance after taking into account the investment income generated between the time premiums are received and the time claims are paid.
• C)Generated premiums are insufficient to cover ordinary business expenses.
• D)Generated premiums are insufficient to cover claims incurred insuring a particular peril and generated premiums are insufficient to cover the administrative expenses of providing that insurance after taking into account the investment income generated between the time premiums are received and the time claims are paid.

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Definitions:

Articles of Incorporation

Legal documents filed with a governmental body to legally document the creation of a corporation.

Corporation

A legal entity recognized by law as separate from its owners, capable of owning property, entering contracts, and being sued.

Par-value Share

A type of share that has a face value or nominal value assigned to it, which is the minimum price at which the shares can be issued.

Secured

A status indicating that a loan or credit has collateral attached to it, ensuring the lender's investment is protected.