What Is the Proper Treatment Basis for the Allocation of a Premium

question 14

Multiple Choice

What is the proper treatment basis for the allocation of a premium?

• A) The payment history of the policyholder
• B) The number of parties to which the payment is to be allocated
• C) The type of insurance (medical, general, etc.)
• D) The probability of a claim

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Definitions:

Contingent Liabilities

Responsibilities that may arise based on the outcome of a future event.

Financial Statements

Documents that provide an overview of the financial condition of an entity including its assets, liabilities, revenues, and expenses over a particular period.

Settlement

The conclusion of a transaction or the resolution of a claim or dispute, usually involving the transfer of funds or assets.