Washington State Insurance Practice Exam

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Which factor is not considered while determining insurance rates?

  1. Loss adjusting expenses

  2. Policyholder's personal preferences

  3. Operating expenses

  4. Loss reserves

The correct answer is: Loss adjusting expenses

When determining insurance rates, factors such as loss adjusting expenses, operating expenses, and loss reserves are all taken into account. However, policyholder's personal preferences do not influence the calculation of insurance rates. Insurance rates are mainly determined based on actuarial data, underwriting factors, and statistical analysis rather than individual policyholder preferences.

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