SOFE SOFE Certification SOFE-CFE Questions & Answers

• Question 151:

  The formula to calculate Losses incurred for the accounting period is:

  A. Incurred losses = (Losses paid to date) / (Loss reserve prior period) + (loss reserve final period)

  B. Incurred losses = (Losses paid to date) _ (Loss reserve prior period) + (loss reserve current period)

  C. Incurred losses = (Annual Losses) _ (Losses paid to date) + (loss reserve current period)

  D. Incurred losses = (Losses paid to date) + (Loss reserve prior period) _ (loss reserve current period)

  Correct Answer: B

• Question 152:

  The claims that have occurred prior to the company's balance sheet date, were not reported, and therefore

  are not recorded by the company are known as:

  A. Unknown losses

  B. Unclaimed losses

  C. Unrecorded losses

  D. Long-tail losses

  Correct Answer: A

• Question 153:

  The development and payment patterns associated with reported claims can be used to estimate the other loss liability components commonly called:

  A. Incurred and reported

  B. Unclaimed and losses

  C. Incurred but not reported

  D. Uninsured and not reported

  Correct Answer: C

• Question 154:

  The reserve for a reported claim that is established by an adjuster or a formula based on the company's loss experience is called:

  A. loss reserve

  B. case reserve

  C. adjustment reserve

  D. predefined reserve

  Correct Answer: B

• Question 155:

  Which practices will vary based on company claim procedures, the line of business and size of claim.

  A. loss reserve

  B. claim reporting

  C. Loss reporting

  D. portfolio reserve

  Correct Answer: B

• Question 156:

  The projection method is not totally accurate in developing the unearned premium reserve, it provides the best estimate based on prior experience and adjusted for current activities.

  A. True

  B. False

  Correct Answer: A

• Question 157:

  Which of the following is NOT the loss category?

  A. paid losses

  B. losses reserved for future payment

  C. losses incurred

  D. subsidiary losses

  Correct Answer: D

• Question 158:

  Which of the following is the loss characteristic?

  A. known vs. unknown

  B. reported vs. unreported

  C. short-tail vs. long-tail

  D. All of the above

  Correct Answer: D

• Question 159:

  Under audit-type policies, the actual amount of the in-force premium is not known at the inception of the policy.

  A. True

  B. False

  Correct Answer: A

• Question 160:

  What requires that the retrospective rated premiums reserve be calculated for each individual risk by applying the appropriate retrospective rating formula to each plan?

  A. Accuracy method

  B. inventory method

  C. Audit premium

  D. Endorsement

  Correct Answer: B