Question

What is the impact of inflation on premium calculations?

Q: Answer-What is the impact of inflation on premium calculations?

The correct answer is C. Inflation affects both the cost of claims and the exposure, which must be considered. Inflation increases the cost of repairs, medical treatments, and other expenses related to claims. It also can increase the value of insured property, impacting the exposure.

A Inflation has no impact on premium calculations.

B Inflation only affects the cost of claims, not the exposure

C Inflation affects both the cost of claims and the exposure, which must be considered

D Inflation primarily affects the insurer's expenses, not the cost of claims

E None of the above

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What is the impact of inflation on premium calculations?

Solution