Question

An insurer’s combined ratio ignores investment income. True False In most states, the Commissioner of Insurance...

An insurer’s combined ratio ignores investment income.

True

False

In most states, the Commissioner of Insurance directly regulates all of the following except

a.

the amount of capital or surplus an insurer must have to operate in the state

b.

the insurance policy forms in the state

c.

the trade practices of any insurer transacting business in the state

d.

the rates for each life insurance company

Homework Answers

Answer #1

1: True

The combined ratio refers to cash outflows from an insurance company due to dividends, expenses and losses. It does not include investment income.

2: Option b

The commissioner of insurance does not directly regulate the policy forms of insurance in the state. These are left to the Discreation of the insurance company. The amount of capital is regulated to ensure the solvency of the insurer. The trade practices are regulated to provide fair dealings to the clients. The rates of insurance companies are also regulated to ensure fairness in dealings.

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