Alberta General Insurance Level 1 Practice Exam

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What type of information do regulators monitor?

  1. Only the statistics on the frequency and severity of claims

  2. Average length of time a claim is open

  3. Only changes in average private premiums

  4. Incidence and cost of fraudulent activity only

The correct answer is: Average length of time a claim is open

Regulators monitor the average length of time a claim is open because it gives insight into the efficiency of the claims process. Other options may also be important to monitor, such as A (statistics on frequency and severity of claims) for determining risk and D (incidence and cost of fraudulent activity) for detecting potential fraud. However, these options do not provide information about the overall effectiveness of the claims process. C (changes in average private premiums) may also be monitored, but this does not directly relate to the claims process and is more relevant to insurance companies' financial stability. Therefore, B is the most appropriate response.

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