Which of the following is a reason premiums in Part 6 of Schedule P may change over time?

Prepare for the CAS Exam 6 with detailed study materials. Use flashcards and multiple-choice questions, each with hints and explanations, to get exam-ready!

Multiple Choice

Which of the following is a reason premiums in Part 6 of Schedule P may change over time?

Premium audits are the mechanism that can cause Part 6 premiums to change after the policy period. After the period ends, an audit checks actual exposure measures (such as payroll or other risk drivers) used to compute the premium. If the actual exposure differs from what was estimated, the premium is adjusted, resulting in a retroactive change—higher or lower than the initially billed amount. This retrospective adjustment explains why premiums in Part 6 may change over time. The other options describe outcomes or static conditions (like a guaranteed decrease, stability, or no changes) that don’t reflect the standard post-period adjustment process captured in Schedule P Part 6.

Premium audits are the mechanism that can cause Part 6 premiums to change after the policy period. After the period ends, an audit checks actual exposure measures (such as payroll or other risk drivers) used to compute the premium. If the actual exposure differs from what was estimated, the premium is adjusted, resulting in a retroactive change—higher or lower than the initially billed amount. This retrospective adjustment explains why premiums in Part 6 may change over time. The other options describe outcomes or static conditions (like a guaranteed decrease, stability, or no changes) that don’t reflect the standard post-period adjustment process captured in Schedule P Part 6.

More practice questions