Rmin 4000 Edmunds Exam 2 Latest Update

what types of investments are made with premiums? {Ans: typically invested in "safe" investments like bonds. life insurance can be invested in long term assets like real estate. P&C is short term exposure so premiums are invested in securities like high quality bonds or stocks}alien insurer {Ans: chartered in a foreign country, but licensed to operate in the state}loss ratio {Ans: ratio of incurred losses and loss adjustment expenses to premiums earned (incurred + LAE : premiums earned)}what is the problem with ratemaking? {Ans: Firms do not know the cost of their products in advance}balance sheet assets {Ans: Mostly financial investments vs. real property (buildings or factories) & production equipment}rebating {Ans: practice of giving an individual a premium reduction or some other financial advantage not stated in the policy as an inducement to purchase to policy}