Property-casualty insurance companies have essentially which of the following expense categories:

Question

Options

• Aacquisition, maintenance, overhead
• Brepurchases, maintenance, overhead
• Cacquisition, performance, overhead
• Dacquisition, testing, maintenance

• A
  69% (22)
• B
  9% (3)
• C
  19% (6)
• D
  3% (1)

Explanation

Property-casualty insurers organize their expenses into three core categories: acquisition (commissions, agent fees, marketing costs to bring in new business), maintenance (ongoing costs to service existing policies), and overhead (general administrative expenses like salaries, rent, and IT). Option A correctly names all three.

Why the distractors fail:

• B replaces "acquisition" with "repurchases" - insurers don't repurchase policies; that term belongs in equity/securities contexts.
• C replaces "maintenance" with "performance" - "performance" isn't a standard insurance expense category.
• D replaces "overhead" with "testing" - "testing" is not a recognized P&C expense classification.

Memory tip: Think AMO - Acquire the customer, Maintain the relationship, Operate the business (overhead). Like a sales cycle: get them, keep them, run the shop.

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