All of the following statements about business objectives in designing a rating system are true EXCEPT
A) The rating system should encourage loss control activities.
B) The rating system should be independent of long-run changes in economic conditions.
C) The rating system should be simple to understand.
D) The rating system should be stable over short periods so that consumer satisfaction can be maintained.
Question 2
Which of the following statements is (are) true concerning investments of property and casualty insurers and life insurers?
I. Property and casualty insurance companies place greater emphasis on liquidity than do life insurers.
II. Life insurance company investments are, on average, of longer duration than property and casualty insurance company investments.
A) I only
B) II only
C) both I and II
D) neither I nor II
