Which of the Following Statements Are True in the Context

question 52

Multiple Choice

Which of the following statements are true in the context of general insurance?

• A)Loss rates on all general property policies are adversely affected by unexpected increases in inflation.
• B)Long-tail losses arise where the peril occurs during a coverage period but a claim is not made until many years later.
• C)Long-tail losses arise where the peril occurs during a coverage period but a claim is not made until many years later and loss rates are more predictable on low-severity high-frequency lines than on high-severity low-frequency lines.
• D)Loss rates on all general property policies are adversely affected by unexpected increases in inflation; long-tail losses arise where the peril occurs during a coverage period but a claim is not made until many years later and loss rates are more predictable on low-severity high-frequency lines than on high-severity low-frequency lines.

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Definitions:

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, representing how much of the asset's value has been used up over time.

Operating Cash Flow

The amount of cash generated by a company's normal business operations.

Contribution Margin

The amount by which sales revenue exceeds variable costs, used to cover fixed costs and to generate profit.

Sales Quantity

The total number of units of a product or service sold within a specific period.