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Under the alternative funding method used by the Flair Company, Flair assumes financial responsibility for paying claims up to a specified level and deposits the funds necessary to pay these claims into a bank account that belongs to Flair. However, an insurer, which acts as an agent of Flair, makes the actual payment of claims from this account. When claims exceed the specified level, the insurer pays the balance from its own funds. No state premium tax is levied on the amounts that Flair deposits into this bank account.
From the following answer choices, choose the name of the alternative funding method described.
Suggested Answer: C
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32 comments · newest first
BU
Buddy
12 months ago
I’m not so sure about that, could be a reserve-reduction arrangement too.
CA
Carman
1 year ago
Definitely a retrospective-rating arrangement, I think.
CO
Cordie
1 year ago
Wait, no state premium tax? That seems too good to be true.
LU
Lucina
1 year ago
Totally agree, it fits the description perfectly!
VI
Viola
1 year ago
This sounds like a minimum-premium plan.
ST
Stevie
1 year ago
I don't recall the specifics, but I know that the premium-delay arrangement is definitely not it.
CA
Catarina
1 year ago
I'm a bit confused about the terms, but I feel like the reserve-reduction arrangement could fit, too.
PA
Paul
1 year ago
I remember practicing a question similar to this, and I think the minimum-premium plan might be the right choice here.
TA
Tamar
1 year ago
I think this sounds a lot like a retrospective-rating arrangement, but I'm not completely sure.
ST
Stevie
1 year ago
I've got this! A and E are the compilation errors - you can't assign a double to a float without an explicit cast, and the F suffix on a float literal is not allowed in Java.
SY
Sylvia
1 year ago
I remember something about needing to enable multicast-direct to optimize streaming, but I'm not sure if that covers everything.
LA
Lamar
1 year ago
I'm thinking it might be social disapproval that's not an unconditioned punisher, because it feels more learned than instinctual.
AS
Ashley
1 year ago
Ah, the old 'you pay, I'll play' funding method. Gotta love these corporate shenanigans - it's like a game of financial hide-and-seek, but with far more paperwork.
BE
Beula
1 year ago
D) Minimum-premium plan
QU
Quentin
1 year ago
C) Reserve-reduction arrangement
DW
Dwight
1 year ago
B) Premium-delay arrangement
CA
Catarina
1 year ago
A) Retrospective-rating arrangement
LA
Lauran
2 years ago
This has got to be a retrospective-rating arrangement. Flair is assuming the financial responsibility, and the insurer is just acting as an agent - that's the textbook definition.
AL
Alexis
1 year ago
B) Premium-delay arrangement
NO
Noah
1 year ago
That's correct! Flair assumes financial responsibility up to a specified level and the insurer pays the balance when claims exceed that level.
RO
Royal
1 year ago
A) Retrospective-rating arrangement
AL
Alline
2 years ago
I'm not entirely sure, but the description of Flair making deposits and the insurer handling claims makes me lean towards a premium-delay arrangement. Sounds like they're deferring the premium payments.
PU
Pura
1 year ago
Yes, that makes sense. Flair assumes financial responsibility but delays the actual payment of claims.
JE
Jerry
1 year ago
I agree, it does sound like they are deferring the premium payments.
LY
Lyndia
1 year ago
I think it might be a premium-delay arrangement.
LA
Latrice
2 years ago
The fact that no state premium tax is levied on Flair's deposits makes me think this is a reserve-reduction arrangement. They're avoiding taxes on that money.
EL
Elroy
2 years ago
I'm not sure, but I think it could also be D) Minimum-premium plan, as Flair assumes financial responsibility up to a specified level.
NI
Nichelle
2 years ago
I agree with Lisbeth, because in this method, the insurer pays the balance when claims exceed the specified level.
FA
Fausto
2 years ago
This sounds like a minimum-premium plan to me. Flair is responsible for claims up to a certain level, and the insurer picks up the rest - that's the definition of a minimum-premium plan.
XO
Xochitl
2 years ago
User 2
ST
Stevie
2 years ago
User 1
LI
Lisbeth
2 years ago
I think the answer is A) Retrospective-rating arrangement.