Financial Statement Analysis for Insurance Companies

What is the main issue that can arise due to information asymmetry in insurance transactions?

Which of the following is an example of moral hazard in insurance?

What solution can help mitigate adverse selection in insurance transactions?

Which ratio helps measure the profitability of an insurance company through the relationship between insurance profit and net earned premium?

In insurance, what does RBC2 stand for?

Which term in insurance refers to a person who assesses the risk and determines the premiums and terms of coverage?

What is the main difference between CAR and RBC2 Ratio?

What does GEP stand for in the context of insurance financial statement analysis?

In the provided example, what is the result of deducting Reinsurance Expense from GEP?

What does the Loss Ratio measure in insurance financial statement analysis?

What does the Combined Operating Ratio indicate about an insurance company?

When calculating Insurance Margin, what two expenses are typically included?

What is the new minimum capital requirement for insurance companies as of 2022?

What type of companies fall under the regulation of the Insurance Commission (IC) as mentioned in the text?

What is the required minimum paid-up capital for new insurance businesses?

What does the Risk-based capital (RBC) Requirement measure for insurance companies?

What does the RBC2 Ratio signify for insurance companies in relation to their capital requirements?

The minimum capital requirement for insurance companies in 2022 is P1,000,000,000 for new business and P500,000,000 for microinsurance.

The Risk-based capital (RBC) Requirement is not applicable to insurance companies according to the text.

The RBC2 Ratio must be less than 100% for an insurance company to meet the requirement.

The T2 Capital should be more than 50% of the T1 Capital to meet the RBC Ratio Requirement.

The Insurance Commission falls under the Department of Health according to the text.

The RBC2 Ratio is simpler to calculate compared to the Capital Adequacy Ratio (CAR) in insurance financial statement analysis.

When calculating the Expense Ratio, underwriting expenses are divided by the net earned premium.

The Loss Ratio is calculated by dividing claims expenses by the net earned premium in insurance financial statement analysis.

A Combined Operating Ratio below 100% indicates a profitable insurance company.

In insurance financial statement analysis, the Insurance Margin is calculated by adding Expense Ratio and Loss Ratio.

In the context of insurance financial statement analysis, the Net Earned Premium (NEP) is calculated by deducting reinsurance expenses from the gross written premium.

Adverse selection happens when both parties in a transaction have symmetric information.

Moral hazard refers to a situation where one party takes excessive risks because it knows the other party will bear the consequences.

A deductible clause is a solution to adverse selection in insurance transactions.

The Expense Ratio is calculated by dividing Claims Expense by Net Earned Premium.

The Loss Ratio measures the profitability of an insurance company through the relationship between insurance profit and net earned premium.

RBC2 stands for Risk-Based Capital 2 and signifies the minimum capital requirement set for insurance companies.

The premium for an insurance policy is determined based on the insured's credit score.

Policy limit is the minimum amount that an insurer will pay under a policy for a covered loss.

Higher policy limits often result in lower insurance premiums.

Insurance policies commonly include deductible, premium, and lifetime maximum as critical components.

The premium for an insurance policy is usually expressed as an annual cost.

The deductible in an insurance policy is the maximum amount the insurer will pay under that policy.

Travel insurance typically covers only international travel, not domestic travel.

Life insurance, health insurance, homeowners insurance, and auto insurance are the most common types of insurance policies.

It is recommended to get insurance at a younger age as the premiums are usually higher.

Insurance policies always provide cash benefits to the insured individual when they mature.

Missing premium payments for insurance can lead to policy lapses that may impact the benefits in case of an unfortunate event.

Auto insurance is not considered one of the core components of most insurance policies.

The face value in a general life insurance policy is the amount paid to the policyholder upon the death of the insured.

Policies with high deductibles are generally more expensive due to the increased out-of-pocket expenses for the policyholder.

Health insurance policies with higher deductibles usually offer more affordable access to medical care throughout the year.

Virtually all mortgage companies require borrowers to have insurance coverage for the market value of a property.

Auto insurance is essential to protect investments in real estate transactions.

Home insurance covers damages or theft of personal possessions outside the home as well.

An endowment plan with educational benefits payable is an example of a life insurance policy.

The Whole Life Insurance Plan mentioned provides cash benefits starting at the end of the 5th policy year.

The Hospital income plan offers a return of premium if the insured does not outlive the coverage period.

Insurance companies offer plans that allow the option to choose between Euro or US Dollar currency.

The Life Insurance policy guarantees payment to named beneficiaries only if the insured dies during their lifetime.

Annual premiums for auto insurance are paid by auto insurance companies to individuals involved in accidents.

Insurance policies are primarily used to hedge against risks that may result from damage to the insured or their property, not from liability for damage or injury caused to a third party.

The core components that make up most insurance policies include the premium, policy limit, and deductible.

The RBC2 Ratio signifies the minimum capital requirement set for insurance companies, not how efficiently the company is using its capital.

The Combined Operating Ratio below 100% indicates a profitable insurance company, rather than a company facing financial challenges.

The Loss Ratio measures the relationship between insurance profit and net earned premium, not the profitability of an insurance company.

Adverse selection occurs in insurance transactions when one party takes excessive risks knowing that the other party will bear the consequences.

What does the policy limit refer to in insurance?

How is an insurance policy's premium typically expressed?

What factor can influence the determination of an insurance policy's premium?

In insurance, what does the deductible represent?

Which of the following components of an insurance policy can vary based on different factors?

How does a higher policy limit typically affect insurance premiums?

What is the significance of paying the insurance premium religiously, as advised in the text?

Why is it recommended to purchase insurance at a younger age?

Which component mentioned in the text is crucial for enjoying the face amount of an insurance policy when you are still alive?

In insurance policies, what does the term 'front-end load' generally refer to?

What is the core purpose of travel insurance based on the provided text?

Why is getting an insurance plan with cash benefits advisable according to the text?

What is the primary purpose of insurance as discussed in the text?

Which of the following best describes how insurance companies make payments more affordable for the insured?

In insurance, what does the term 'indemnifies' mean?

Why do insurance policies hedge against the risk of financial losses?

What does the deductible in an insurance policy refer to?

What is the primary purpose of auto insurance based on the text?

Which insurance plan provides cash benefits equal to a percentage of the Face Amount starting at the end of the 6th policy year and every 2 years afterwards until the age of 100?

What additional feature do insurance companies offer nowadays besides life insurance plans?

What is the purpose of an Endowment plan with educational benefits payable as per the text?

What is the main difference between Whole Life Insurance Plan and Insurance plan for women mentioned in the text?

Which insurance plan guarantees payment to named beneficiaries upon the insured's death in exchange for premiums paid during their lifetime?

What is the purpose of a deductible in an insurance policy?

Why might health insurance policies with lower deductibles have higher annual premiums?

What is a common requirement by mortgage companies related to home insurance?

In what situation do policies with very high deductibles tend to be less expensive?

What is a key reason why auto insurance is important when buying or leasing a car?

How does having a lower deductible in a health insurance policy affect access to medical care?