Casualty Actuarial Society (CAS) Practice Exam

The choice of marketing and distribution, underwriting, and claims represents the foundational functions that are essential for an insurance company's operation.

Marketing and distribution are critical as they involve reaching potential customers and selling insurance policies. This function encompasses advertising, public relations, and the various channels through which policies are sold, which may include agents, brokers, or direct sales to consumers. The effectiveness of this function directly affects the insurer’s ability to generate revenue.

Underwriting is another core function closely tied to the insurance process, where insurers assess the risk associated with prospective policyholders. Underwriters evaluate applications for insurance based on risk factors and set appropriate premiums. This function is vital, as it helps ensure that the insurer maintains profitability by only accepting risks that are deemed manageable.

Claims processing is equally crucial, as it involves handling requests from policyholders after an insured event occurs. Efficient claims management ensures that legitimate claims are settled promptly, maintaining customer satisfaction and trust in the insurer's reliability.

Together, these three functions work synergistically, forming the backbone of an insurer's operations to manage risks, facilitate business growth, and maintain customer relationships, which makes this answer the correct choice.