ACTUARY Professional and Practical Applications

Question 1

An insurance company charges an annual premium of $500 for a health policy.
The expected annual claim amount is $400, and the company’s administrative costs are $50 per policy.
What is the company’s profit margin per policy?

Accepted Answer

10%

Answer

5%

Answer

15%

Answer

20%

Question 2

An insurance company decides to reinsure part of its policies. Which of the following is the primary purpose of reinsurance?

Accepted Answer

Manage risk exposure

Answer

Reduce administrative costs

Answer

Improve customer satisfaction

Answer

Increase policyholder benefits

Question 3

Why are reserves important in an insurance company’s financial reporting?

Accepted Answer

They reflect future liabilities for claims.

Answer

They maximize profit for the company.

Answer

They determine premium prices.

Answer

They attract more customers.

Question 4

An insurance company must maintain solvency ratios to comply with regulatory requirements. What does a solvency ratio measure?

Accepted Answer

The ability to meet long-term obligations

Answer

The profitability of the company

Answer

The liquidity of the company

Answer

The efficiency of claims processing

Question 5

Which of the following is a commonly used tool in actuarial analysis?

Accepted Answer

Python

Answer

Microsoft Word

Answer

PowerPoint

Answer

Adobe Photoshop