The first peril in a chain of events that causes a loss is:
Proximate Cause
An unplanned reduction of economic values that can be either indirect or direct is a:
Loss
This is a condition that increases frequency or severity of loss:
Hazard
What is the most important step in the RM Process?
Identify
What are the steps of the RM Process?
Identify, Measure, Choose Best Method, Implement, Review/Monitor
This position is a rate-maker, calculates dividends, loss reserves, and develops new policies:
Actuary
This allows potential investor to determine a firm's expected risk adjusted rate of return: is measured by Beta
CAPM
If a man is a salaried claims adjuster who works exclusively for Allstate, they would be a ____________ adjuster.
Staff
This type of adjuster protects their clients interest but they get a percentage of money:
Public
In underwriting what are some of the reports used to determine eligibility?
Credit Score, Motor Vehicle Record, Agent's Report
T/F An Insurance agent's primary compensation is in the form of commissions.
True
This job requries one to inform the customer about risk and coverages, provide the insured with incentive to act, and service to insured before and after loss
Agent
Does the insurance agent represent the insured or insurer?
Insurer (Company)
This job requires one to determine if a loss did happen and to ensure fair and prompt payment of all just claims:
Adjuster
The primary purpose of Insurance Regulation is:
To maintain insurer solvency
Insurance Brokers are agents of the insurance consumer (insured) or the insurer?
Insured (consumer)
T/F: Fair rates should be charged to each risk class to avoid subsidization.
True
T/F: Underwriter should select similar risks simlar to what actuary based rates on.
True
T/F: One purpose of underwriting is to reduce adverse selection against the insured.
False: reduce adverse selection against the insurer
These insurers write all lines of business and are in it to make a profit:
Proprietary Insurers
What are two ways to classify insurers according to chartering/licensing?
Foreign & Domestic (Domicile)
As individuals we are more concerned with these types of risk:
Pure
Why are insurance consumers not well informed?
Believe the rewards of being able to make informed decisions are not worth the effort to obtain the information
T/F: Life/Health companies have more cash and invested assets than Property/Casualty insurers.
True
Is spending too much on insurance in total a problem with poor risk management execution?
No
Who are the primary regulators of Insurance?
States
Do states set rates on certain types of insurance policies sold to regulate?
Yes
Do regulators examine operations and financial statements to protect their solvency?
yes
The Underwriting Cycle's equation is defined as:
Firm's loss ratio + Expense ratio over time
If payments for fire losses to homes an example of a cost to society of insurance?
No
T/F: The underwriting cycle measures losses and expenses over time
True
Is living in a hurricane prone area a peril?
No
Is an earthquake a peril?
yes
Is losing money in the stock market a pure risk?
No
Is losing your wallet a pure risk?
yes
Are stock insurance companies profit in nature?
yes
What are the questions a claims adjuster would ask?
Did loss happen, Is loss covered, What is the amount of loss?
A public claims adjuster is hired and paid by who?
Insured
Does Lloyds of Lond cover losses that members can't?
No
Do individuals/members have limited personal liability exposure with Lloyds of London?
Yes
Lloyd's of London doesn't sell insurance itself: True or False
true
Lloyds of London is (proprietary or mutual) insurers?
