Question

How does inflation affect technical statistics in insurance?

a.

It reduces the value of investments on the one hand and distorts technical statistics on the other

b.

It increases the value of investments on the one hand and distorts technical statistics on the other

c.

It has no effect on the value of investments or technical statistics

d.

It only distorts technical statistics on a long-term basis

Answer: (a).It reduces the value of investments on the one hand and distorts technical statistics on the other Explanation:Inflation reduces the value of the investments on the one hand and distorts technical statistics on the other by artificially inflating premiums, losses and costs, thus rendering the statistics either useless or dangerously optimistic on a short-term basis.

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