Question

Fly-By-Night Insurance Company had much larger losses than forecast. The company did not charge adequate premiums nor did the company purchase reinsurance. If Fly-By-Night becomes insolvent, which of the following will help pay the unpaid claims of the insurer?

A. guaranty fundB. premium rebatesC. risk-based capitalD. admitted assets

Answer 1

Answer: (A) Guaranty fund

Step-by-step explanation:

According to the given question, the Guaranty fund is one of the type of fund that basically helps in paying the various types of unpaid claims.

This type of funds are basically covering the beneficiaries of the insurance organization in which the insurer are basically helps in selling the various types of products and the services in the market.

The guaranty funds is typically used by the administrator for the purpose of protecting the policyholder in the insurance firm.

Therefore, Option (A) is correct answer.