Insurance Operations- Chapter 4 Problems

1. Describe the approaches underwriters take to ensure the adequacy of policyholders' surplus.

2. Describe the approaches underwriters take to ensure that the policies of accepted applicants adhere to underwriting guidelines.

3. Distinguish between the activities of line underwriters and those of staff underwriters.

4. Describe the components of an insurer's financial capacity.

5. Explain how rapid premium growth can cause insurers to experience excessive premium-to-surplus ratios.

6. Explain how underwriting guidelines provide a structure for underwriting decisions.

7. List the six general steps in the underwriting process.

8. Describe the factors, beyond the content of a submission itself, an underwriter must consider before selecting an underwriting alternative.

9. Describe what an underwriter would conclude about each of the following combined ratios:

a. A combined ratio of exactly 100%.
b. A combined ratio of greater than 100%.
c. A combined ratio of less than 100%.

10. Insurance Company has incurred underwriting expenses of %5 million, incurred losses and loss adjustment expenses of $14 million, net written premiums of $25 million, and earned premiums of $20 million.

a. Determine Insurance Company's trade-basis combined ratio.
b. Explain what this ratio indicates regarding Insurance Company's use of its premium dollars.

Text Book: "Entitles Insurance Operations 2nd edition".