The first phase, is the _____________of the system, produces the widely recognized Insurance Regulatory Information System (IRIS) ratios.

Question

Options

• AGross miscellaneous ratio
• Bnet leverage ratio
• Cstatistical phase
• Dnormal phase

• A
  12% (5)
• B
  7% (3)
• C
  79% (33)
• D
  2% (1)

Explanation

Option C (statistical phase) is correct because the Insurance Regulatory Information System (IRIS) operates in two phases, and the first phase - the statistical phase - is what generates the well-known set of IRIS financial ratios used to assess insurer solvency. These ratios are calculated from insurers' annual statements and flagged when they fall outside normal ranges.

Why the distractors are wrong:

• A (Gross miscellaneous ratio) is not a phase of IRIS at all - it's a fabricated-sounding ratio name, not a process stage.
• B (Net leverage ratio) is an actual IRIS ratio output, not the name of a phase - confusing a product of the phase with the phase itself.
• D (Normal phase) does not exist in the IRIS framework; the two actual phases are the statistical phase and the analytical phase (where regulators review flagged ratios).

Memory tip: Think "Stats come first, then Analysts review" - the Statistical phase Starts the process and Spits out the ratios; the analytical phase follows with human judgment. "Stats → Ratios" links C directly to the question.

No community discussion yet for this question.