When a fraternal insurer began operations, it asked each member, regardless of age, to pay $20 per month to the fraternal's group life insurance plan. In exchange, each member received the same amount of life insurance
Soon younger members of the group began to drop out when they realized their premiums were subsidizing a group with a higher chance of loss. Which important underwriting principle was violated in this case?
A) An underwriting profit should be attained.
B) Moral hazard should be avoided.
C) Insureds should be selected according to underwriting standards.
D) There should be equity among policyholders.
Answer: D
You might also like to view...
Aziz immediately halted production at his facility after seeing a report indicating the last batch had a high level of product defects, and restarted work only when the problem was discovered and fixed. Aziz is engaged in which management function?
A. Repairing B. Organizing C. Monitoring D. Controlling E. Executing
Chuong Corporation is conducting a time-driven activity-based costing study in its Order Fulfillment Department. The company has provided the following data to aid in that study:Chuong CorporationOrder Fulfillment DepartmentData InputsResource Data: Number of employees 11Average salary per employee$36,000Practical capacity per employee (in minutes) 90,000?Activity Data:Processing OrdersPreparing DeliveriesHandling ReturnsMinutes per unit of the activity102244?On the Customer Cost Analysis report in time-driven activity-based costing, the time-driven activity rate for Handling Returns would be closest to:
A. $44.00 per return handled B. $0.91 per return handled C. $17.60 per return handled D. $0.40 per return handled
An American Airlines flight from Dallas to Houston was nearly full, and the tickets were more expensive than the almost-empty American Airlines flight from Chicago to Phoenix. This is an example of what kind of service pricing?
A. Bundled B. Demand-based C. Supply-based D. Cost-based E. Customer-based
Which of the following statements reflects the marketing concept?
A) Focus on making continuous product improvements. B) Undertake a large-scale selling and promotion effort. C) Emphasize an inside-out perspective. D) Consider customer focus and value as the paths to sales and profits. E) Focus on a product-centered make-and-sell philosophy.