Review for the First Exam

1. Review for the First Exam Describe Exam Review Major Topics Provide Study Tips and Exam Strategies Sample Exam

2. First ExamWhen and Where? Thursday, February 14, 2008 10:00-11:20 am In this classroom

3. First Exam 20 Questions in Total Exam is Worth 30 Points. Some True/False or Multiple Choice Others Short Answer or Calculations Exam is Open Book, Open Note Bring Calculator (that you are familiar with using) and Auto and Homeowners policies

4. Management of mutual insurers are immune to a hostile takeover by a new owner. A) True B) False C) Not enough information to determine D) None of the above

5. The pure premium is the total of expected claims and expenses on an insurance policy. A) True B) False C) Not enough information to determine D) None of the above

6. An Insurance Producer (agent or broker) has all of the following duties to an insured except which one: A) Analyze the client’s risks and needs. B) Sell a policy that reasonably suits the insurer’s needs. C) Help with claims. D) Make sure the insured is always getting the lowest premium rate available. E) All of the above are duties

7. Calculate the gross premium using the pure premium method based on the following information: Loss frequency 10% Loss severity $900 Fixed expenses $100 Variable expenses 50% A) $90 B) $200 C) $380 D) $2000 E) None of the above

8. How do you calculate the combined ratio? A) Loss ratio plus loss adjustment expense ratio B) Loss ratio plus expense ratio C) Loss ratio plus expense ratio minus investment income ratio D) Loss ratio plus expense ratio plus investment income ratio E) None of the above

9. Topics the Exam Covers Overview of Insurance Operations (Measurement of Insurer Performance) Marketing and Distribution Systems Underwriting Claims Adjusting Ratemaking Loss Reserving Reinsurance

10. Study Tips Review Homework Assignments If you have not been doing well on the assignments, then you probably need to read the texts (on reserve in Undergrad Library) Review Class Projects (available online) Do not memorize material, but know where it is located, if you need to look it up Have organized notes

11. Exam Strategies Answer all the questions you can answer without using your book and detailed notes first. Then, if you have time, use your book and detailed notes to help you answer the remaining questions. Do not get bogged down on a particular question. Skip it and come back, if you have time left.

12. Class Project 9 Work on this class project with 1-2 other students. You will record your answers using your i-clicker. If you do not have an i-clicker, let me know before we go over the answers.

13. Question 1 A) True B) False C) Not enough information to determine D) None of the above

14. Question 2 A) True B) False C) Not enough information to determine D) None of the above

15. Question 3 A) True B) False C) Not enough information to determine D) None of the above

16. Question 4 A) B) C) D)

17. Question 5 A) B) C) D)

18. Question 6 A) 160 B) 200 C) 267 D) 2187 E) None of the above

19. Question 7Per-risk Excess Reinsurer will pay A) 0 B) $5 million C) $24 million D) $35 million E) None of the above

20. Question 8 A) Cancel the policy B) Renew the policy C) Obtain additional information before deciding D) Refuse to pay the claim E) None of the above

21. Question 9Accident Year 2005 12-24 month Link Factor A) 1.00 B) 1.15 C) 1.50 D) 1.89 E) None of the above

22. Question 10Accident Year 2007 Loss Reserve A) 1092 B) 3560 C) 4825 D) 7560 E) None of the above

23. Question 11 A) 840 B) 4200 C) 5040 D) 9240 E) None of the above

24. Question 12 A) 240 B) 1040 C) 2373 D) 5040 E) None of the above