Question

Why do underwriters study the pattern of reserves development?

a.

To determine the appropriate investment strategies

b.

To understand the profitability of various parts of the portfolio

c.

To calculate the unearned premium reserve

d.

To assess the true cost of claims for different classes of business

Posted under IC 14 Regulations of Insurance Business

Answer: (d).To assess the true cost of claims for different classes of business Explanation:Underwriters study the pattern of reserves development to understand the true cost of claims for different classes of business, which helps them determine the appropriate pure risk premiums going forward.

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Q. Why do underwriters study the pattern of reserves development?
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