- TIA EXAM 5 - WERNER CH 02.txt

Card Set Information

- TIA EXAM 5 - WERNER CH 02.txt
2012-02-14 23:10:19

exam 5a
Show Answers:

  1. What is a rating manual used for?
    Used to classify and calculate rate for a risk
  2. Written manuals are used to do what?
    • Help agents understand the rating process
    • File with insurance regulators
  3. What information is needed to calculate premium for a given risk?
    • Rules
    • Rate pages
    • Rating algorithm
    • Underwriting guidelines
  4. What do rating manual rules contain?
    • Contains qualitative information which helps user with rating algorithms
    • Summary of available policy forms
    • Premium determination considerations
    • Classi fication of risk
  5. What do Rate Pages contain?
    • Contains the numbers needed to calculate premium
    • E.g., base rates, rating factors, fees
  6. What is a base risk?
    Specific risk characteristic selected by insurer

    • May be most common or selected based on marketing
    • (e.g. for ML discount, if it is the base, those that don't qualify get a rate increase. Better image to have it as a discount if they qualify)

    Base rate is applicable
  7. What are Rating Algorithms and what type of items do they include?
    • Provides the detail instructions to calculate the policy premium
    • 1. Uses information in rules and rate pages
    • 2. Includes such items as: Order to consider rating variables, How rating variables are applied (e.g., multiplicative, additive), Maximum and minimum premiums (or sometimes maximum discount or surcharge, Rounding instructions
  8. What are the Underwriting Guidelines?
    • Company-specifi c criteria for acceptance or placement of a risk
    • Decisions to accept, decline, or refer risks
    • Company placement
    • Tier placement
    • Schedule rating credits/debits