Cas Exam 8 Aaa

Front 1

3 primary purposes of risk classification

Back 1

1. Protect the insurance system's financial soundness.
2. Enhance Fairness.
3. Permit economic incentives to operate and thus encourage widespread availability of coverage.

Front 2

5 basic principles that achieve the 3 primary purposes of risk classification

Back 2

1. The system should reflect expected cost differences.
2. The system should distinguish among risks on the basis of relevant cost-related factors.
3. The system should be applied objectively.
4. The system shoudl be practical and cost-effective.
5. The system should be acceptable to the public.

Front 3

9 considerations in designing a risk classification system

Back 3

1. Underwriting
2. Marketing
3. Program design
4. Statistical Considerations
5. Operational Considerations
6. Hazard Reduction Incentives
7. Public Acceptability
8. Causality
9. Controllability

Front 4

3 elements of programs design of a risk classification system

Back 4

1. Degree of choice available to the buyer
2. Experience based pricing
3. Premium payer

Front 5

Statistical considerations of a risk classification system

Back 5

1. Homogeneity
2. credibility
3. Predictive stability

Front 6

Operational considerations of a risk classification system

Back 6

1. Expense
2. Constancy
3. Availability of coverage
4. Avoidance of extreme discontinuities
5. Absense of ambiguity
6. Manipulation
7. Measurability

Front 7

Major public acceptability considerations for risk classification systems

Back 7

1. They should not differentiate unfairly among risks.
2. They should be based upon clearly relevant data.
3. They should respect personal privacy.
4. They should be structured so that the risks tend to identify naturally with their classification.