Why is a high persistency ratio generally considered favorable for an insurance company? Option: "Persistency Ratio" indicates a higher percentage of claims being settled, reflecting positively on the company's reputation., A high "Persistency Ratio" implies that the insurance company has a large Asset Under Management (AUM), indicating financial stability., A high "Persistency Ratio" suggests that policyholders are satisfied with the services and are likely to renew their policies, leading to stable long-term revenue., A high "Persistency Ratio" signifies that the company has a low Combined Ratio, indicating efficient cost management.

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Why is a high persistency ratio generally considered favorable for an insurance company?

"Persistency Ratio" indicates a higher percentage of claims being settled, reflecting positively on the company's reputation.

A high "Persistency Ratio" implies that the insurance company has a large Asset Under Management (AUM), indicating financial stability.

A high "Persistency Ratio" suggests that policyholders are satisfied with the services and are likely to renew their policies, leading to stable long-term revenue.

A high "Persistency Ratio" signifies that the company has a low Combined Ratio, indicating efficient cost management.

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What does a Combined Ratio of more than 100% indicate for a general insurance company?

The company has a high persistency ratio, indicating strong customer retention.

The company has a high solvency ratio, indicating strong financial health.

The company has a low underwriting expense ratio, suggesting efficient cost management.

The company is experiencing underwriting losses, meaning claim payouts exceed the premiums collected.

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What is the significance of the "Solvency Ratio" in evaluating the financial health of an insurance company?

The "Solvency Ratio" indicates the efficiency of the company's claims settlement process.

The "Solvency Ratio" assesses the company's ability to meet its long-term financial obligations, including claim settlements.

The "Solvency Ratio" measures the company's ability to generate profits from its core insurance operations.

The "Solvency Ratio" reflects the company's market share and competitive position within the insurance industry.

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What is a key recommendation given in the article regarding claim settlement ratios?

"Always choose the insurer with the highest CSR, regardless of other factors"

"Ignore the CSR as it is not a reliable indicator"

"Focus on the CSR for the most recent year only"

"Prioritize companies with a consistent CSR over those with exceptionally high but fluctuating ratios"

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What does an ICR of over 100% indicate about an insurance company's financial health?

The company is in a strong financial position.

The company has a diverse range of insurance products.

The company has a high number of new policyholders.

The company has paid out more in claims than it received in premiums.

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What might a very low ICR (less than 50%) suggest about an insurance company's policies?

The company has a strong track record of settling claims quickly.

The policies offer comprehensive coverage with minimal exclusions.

The policies are likely to have many exclusions and be expensive.

The company is experiencing rapid growth and attracting new customers.