SOFE AFE Designation AFE Questions & Answers

• Question 51:

  Which of the following is NOT the way to make changes in variables that can be considered in the loss reserving process?

  A. selection of loss projection

  B. adjustment of historical loss data

  C. separate calculation of effect of variables

  D. segregation of new data

  Correct Answer: D

• Question 52:

  Inflation in Defense and Cost Containment (DCC) is evaluated separately and is estimated to occur at the same rate as the rate of inflation in the losses.

  A. True

  B. False

  Correct Answer: B

• Question 53:

  Adjusting and Others (AO) reserves are often provided for by using the calendar year paid-to-paid method rather than the accident year paid-to-paid method used for Inflation in Defense and Cost Containment (DCC) reserves.

  A. True

  B. False

  Correct Answer: A

• Question 54:

  Average severities projection method uses various claim count and average cost per claim date on either a paid or insured basis.

  A. True

  B. False

  Correct Answer: A

• Question 55:

  Extrapolation of historical dollars, projection of separate frequency data, use of expected loss ratios are all projection methods for:

  A. Loss extrapolation projections

  B. Loss reserve projections

  C. Claim unit projections

  D. Losses incurred projections

  Correct Answer: B

• Question 56:

  Which projection method uses paid losses plus reserves on outstanding claims?

  A. Average losses

  B. Loss ratio

  C. Incurred loss

  D. None of the above

  Correct Answer: C

• Question 57:

  The date on which the contract becomes effective is known as _.

  A. policy date

  B. report date

  C. reinsurance date

  D. record date

  Correct Answer: A

• Question 58:

  The estimated amount receivable from third parties from whom the insured may have the right to recover damages is known as:

  A. reduction for subrogation

  B. reduction for salvation

  C. reduction for damages

  D. reduction for paid losses

  Correct Answer: A

• Question 59:

  Which of the following is NOT the date that is the key to classify the chronology of the data?

  A. policy date

  B. accident date

  C. reinsurance date

  D. report date

  Correct Answer: C

• Question 60:

  Reduction for salvage is: A. the estimated amount payable by the vendor from the disposition of damaged or recovered property

  B. the actual amount receivable by the claimer from the temperament of damaged property

  C. the actual amount payable by the investor from the disposition of damaged or recovered property

  D. the estimated amount receivable by the insurer from the disposition of damaged or recovered property

  Correct Answer: D