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ABA CTFA Practice Test - Questions Answers, Page 80

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The method used to account for insurance and reinsurance contracts that do not transfer insurance risk is referred to as:

A.
Accounted revenue
A.
Accounted revenue
Answers
B.
Premium deficiency
B.
Premium deficiency
Answers
C.
Retained balance
C.
Retained balance
Answers
D.
Deposit accounting
D.
Deposit accounting
Answers
Suggested answer: D

The subsequent measurement of the deposits is based upon whether the insurance and reinsurance contract:

A.
transfer only significant timing risk
A.
transfer only significant timing risk
Answers
B.
transfer only significant underwriting risk
B.
transfer only significant underwriting risk
Answers
C.
transfer neither significant timing nor underwriting risk
C.
transfer neither significant timing nor underwriting risk
Answers
D.
All of the above
D.
All of the above
Answers
Suggested answer: D

In many states, a claims-made insurance policy is required to:

A.
contain an extended-reporting clause
A.
contain an extended-reporting clause
Answers
B.
provide for purchase, at the policyholder's option
B.
provide for purchase, at the policyholder's option
Answers
C.
provide for automatic tail coverage
C.
provide for automatic tail coverage
Answers
D.
All of the above
D.
All of the above
Answers
Suggested answer: D

Primary coverage involves policies written between an insurer and a customer directly.

A.
True
A.
True
Answers
B.
False
B.
False
Answers
Suggested answer: A

In processing __________, many entities keep a single file for each insured event, with separate identification of each claimant.

A.
Insurance claim
A.
Insurance claim
Answers
B.
transaction cycle
B.
transaction cycle
Answers
C.
Liability claim
C.
Liability claim
Answers
D.
Compensation period
D.
Compensation period
Answers
Suggested answer: C

Lines of insurance in which claims are settled relatively quickly are called:

A.
Quick-tail lines
A.
Quick-tail lines
Answers
B.
Single-tail lines
B.
Single-tail lines
Answers
C.
Acceptance-tail lines
C.
Acceptance-tail lines
Answers
D.
Short-tail lines
D.
Short-tail lines
Answers
Suggested answer: D

Which of the following in Not the flow of transaction through the claims cycle?

A.
Quick-tail lines claim acceptance
A.
Quick-tail lines claim acceptance
Answers
B.
Insurance underwritten
B.
Insurance underwritten
Answers
C.
Claim settlement
C.
Claim settlement
Answers
D.
Loss reserve evaluation
D.
Loss reserve evaluation
Answers
Suggested answer: B

What must be properly coded to meet the statutory reporting requirements of the annual statement and to provide statistics to support filling?

A.
Claims data
A.
Claims data
Answers
B.
Insurance act
B.
Insurance act
Answers
C.
Risk estimation
C.
Risk estimation
Answers
D.
Claim settlement
D.
Claim settlement
Answers
Suggested answer: A

When premium income less return premiums arising from policies issued or other contracts entered into to reinsure other insurance entities that provide the related primary coverage are called:

A.
Indirect premiums
A.
Indirect premiums
Answers
B.
Direct premiums
B.
Direct premiums
Answers
C.
Assumed reinsurance premiums
C.
Assumed reinsurance premiums
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D.
Real reinsurance premiums
D.
Real reinsurance premiums
Answers
Suggested answer: C

Claims adjusting involve:

A.
a field work
A.
a field work
Answers
B.
an appraisal of risk subject to appropriate supervision
B.
an appraisal of risk subject to appropriate supervision
Answers
C.
approval by entity's claims department
C.
approval by entity's claims department
Answers
D.
All of the above
D.
All of the above
Answers
Suggested answer: C
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