SOFE SOFE Certifications AFE Questions & Answers

• Question 71:

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

  A. Quick-tail lines

  B. Single-tail lines

  C. Acceptance-tail lines

  D. Short-tail lines

  Correct Answer: D

• Question 72:

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

  A. True

  B. False

  Correct Answer: A

• Question 73:

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

  A. Insurance claim

  B. transaction cycle

  C. Liability claim

  D. Compensation period

  Correct Answer: C

• Question 74:

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

  A. contain an extended-reporting clause

  B. provide for purchase, at the policyholder's option

  C. provide for automatic tail coverage

  D. All of the above

  Correct Answer: D

• Question 75:

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

  A. transfer only significant timing risk

  B. transfer only significant underwriting risk

  C. transfer neither significant timing nor underwriting risk

  D. All of the above

  Correct Answer: D

• Question 76:

  A premium deficiency relating to which insurance contracts indicate a probable loss on premiums yet to be earned.

  A. long duration

  B. premium policy

  C. short duration

  D. None of the above

  Correct Answer: C

• Question 77:

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

  A. Accounted revenue

  B. Premium deficiency

  C. Retained balance

  D. Deposit accounting

  Correct Answer: D

• Question 78:

  Home office record-maintenance methods may include:

  A. duplication of branch records

  B. maintenance of detailed entries for analytical purposes

  C. use of planning procedures from main office for both premiums and cash

  D. All of the above

  Correct Answer: A

• Question 79:

  In _______________, an adjustment is based on experience of an individual risk during the term of the policy and is generally subject to maximum and minimum premium limits specified in the policy.

  A. Business recordkeeping

  B. Retrospective premium adjustments

  C. Premium transaction flow

  D. Adjusting premiums

  Correct Answer: B

• Question 80:

  Who is responsible for accounting for customer remittance advices and the agent's current account?

  A. Accounts department

  B. Customer release policy

  C. Payment policy

  D. Premium collection department

  Correct Answer: D