SOFE SOFE Certifications AFE Questions & Answers

• Question 91:

  Schedule rating:

  A. starts with a real standard, frequently the judgmental rate, and adjusts such standard rates according to an evaluation of greater or lesser exposure to risk.

  B. starts with an assumed standard, frequently the manual rate, and adjusts such standard rates according to an evaluation of greater or lesser exposure to risk.

  C. starts with an assumed standard, frequently the class rate, and adjusts such standard rates according to an evaluation of greater or lesser exposure to risk.

  D. starts with a real standard, frequently the individual rate, and adjusts such standard rates according to an evaluation of greater or lesser exposure to risk.

  Correct Answer: B

• Question 92:

  ______ is used when the rates for large or usual risks are established almost entirely by the skill and experience of the rate maker.

  A. Expertise rating

  B. Premium rating

  C. Class rating

  D. Individual rating

  Correct Answer: D

• Question 93:

  At the end of each reporting period, unearned premiums are calculated and the change in unearned premiums is recorded as a change or debit to premium income.

  A. True

  B. False

  Correct Answer: B

• Question 94:

  What is based on statistical data and are large groups of similar risks can be classified by a few and easily identifiable characteristics and result in standard rates?

  A. Numerical rating

  B. Premium rating

  C. Manual rating

  D. Item rating

  Correct Answer: C

• Question 95:

  Which of the following is the objective to the evaluation and risk-accepting function?

  A. Evaluating and acceptability of risk

  B. Determining the premium

  C. Evaluation of entity's capacity to retain risk

  D. All of the above

  Correct Answer: D

• Question 96:

  Which of the following is NOT the step of the transaction cycle?

  A. Evaluating and accepting expenses

  B. Issuing policies

  C. Billing and collecting premiums

  D. Home office and branch office recordkeeping

  Correct Answer: A

• Question 97:

  Outgoing premiums less return premiums arising from reinsurance purchased from other insurance entities are called:

  A. Rating premiums

  B. Direct premiums

  C. Assumed reinsurance premiums

  D. Ceded reinsurance premiums

  Correct Answer: D

• Question 98:

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

  A. Indirect premiums

  B. Direct premiums

  C. Assumed reinsurance premiums

  D. Real reinsurance premiums

  Correct Answer: C

• Question 99:

  In which premium income less return premiums arising from policies issued by the entity collecting the premiums and acting as the primary insurance carrier?

  A. Indirect premium

  B. Direct premium

  C. Reinsurance premium

  D. Entity premium

  Correct Answer: B

• Question 100:

  When policy periods expire, the premiums written are earned and are recognized as:

  A. Liabilities

  B. Expenses

  C. Revenues

  D. None of the above

  Correct Answer: C