If a person is knowledgeable of the law of large numbers , she would conclude th
ID: 342584 • Letter: I
Question
If a person is knowledgeable of the law of large numbers, she would conclude that it would indicate what should happen as an insurer experiences an increase in the number of units insured?
Underwriting expenses would decrease
The amount the insurer expects to pay in claims should decrease
Actual results will more closely approach expected result
The insurer's profitability should become more variable
Your long-time downtown insurance agent would inform you that unique exclusions are used in insurance policies for each of the following reasons except to:
reduce moral hazard.
waive policy conditions
eliminate coverage for uninsurable perils
eliminate coverage not needed by typical insureds.
s the owner of Murray Insurance Agency, you would advise you client that a situation that involves strict liability includes which of the following?
operating a car
blasting operations
manufacturing a product
mining operations
In the realm of the insurance industry, casualty insurance coverage would apply to which of the following categories of insurability?
workers compensation insurance
fire insurance
marine insurance
life insurance
Ted’s Consignment was destroyed by a fire. The firm’s fixtures cost $1,200 when purchased, but similar new fixtures now costs $1,800. Assuming the fixtures were 50 percent depreciated, what is the actual cash value of Ted's loss?
$600
$900
$1200
$1800
1.Underwriting expenses would decrease
2.The amount the insurer expects to pay in claims should decrease
3.Actual results will more closely approach expected result
4.The insurer's profitability should become more variable
Explanation / Answer
The answer is given below:
2.
The amount the insurer expects to pay in claims should decrease
The increase in the number of unit should decrease the insurer expects to pay in claims for large numbers.
The answer is given below:
1.
reduce moral hazard.
When there is no morale there will not be any insurance and claim policies, as morale is important for every individual towards their activities.
The answer is given below:
2.
blasting operations
Strict liability includes the blasting operations, as that should not affect the work performance.
The answer is given below:
2.
fire insurance
The accident which causes injury is cover under the casualty insurance coverage.
The answer is given below:
3.
$1200
Actual Cost= New cost- purchased cost/50% depreciation
Actual Cost= 1800-1200=600/50*100
Actual Cash Value= 1200
2.
The amount the insurer expects to pay in claims should decrease
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