Exam (elaborations)
NY state life, accident and health 2024/2025 A+ score assured (100% verified)
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NY state life, accident and health 2024/2025 A+ score assured (100% verified)
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NY state life, accident and healthProducer - ANSinsurance agent, broker, consultant, reinsurance intermediary, excess lines
broker, or any person who solicits or negotiates insurance
person - ANSmeans an individual or business entity
Home State - ANSdistrict of columbia or any state territory of the United States in which an
insurance producer maintains residence or principal place of business and is licensed to act
as an insurance producer.
Negotiate - ANSmeans the act of conferring directly with or offering advice
Sell - ANSto "exchange contract of insurance by any means
solicit - ANSattempting to sell insurance, asking or urging a person to apply for a particular
kind of insurance
Agents - ANSauthorized or acknowledged Agent of an Insurer
Broker - ANSmeans any person, firm, association or corporation that recieves
compensation, commission or other thing of value
Consultant - ANSrepresent the client, offer advice in the lines of insurance in which they are
licensed a fee
Prohibited Sanction - ANSNo such consultant may recommend or encourage the purchase
of insurance, annuities or securities from any authorized insurer in which any member of his
immediate family holds an executive position or holds a substantial interest
Independent Adjuster - ANSmeans any person or firm or coporation for money, acts on
behlaf of an insurer in the work of investigation and adjusting claims arising under insurance
contracts issued by such insurer
Solvency - ANSAnnual statements & Audited Financial Statements, alien company verified
and signed by a principal located in the United States, Exempt are companies with less than
250k in premiums and fewer than 500 policyholders in the state
False Advertising - ANSNo insurance officer can transact in this state any business of a
character except that which it is authorized to transact under its certificate of authority issued
by the superintendent
Defamation of Insurer - ANSNo person shall willfully make counsel or circulate to another
any statement or by word mouth which is untrue in fact, directly or by inference derogatory to
the financial condition of an insurer.
,Risk - ANSChance of Loss, Possibility of loss: Must Exist. Probablity of Loss: Must be low or
Non-existent at time of application. Uncertainty of Loss: Required
Speculative Risk - ANSWhere the possibility of gain is present, the risk is an Uninsurable
Risk
Pure - ANSWhere there is a possibility of loss only. Only pure risk is an Insurable Risk.
Exposure - ANSAn Exposure is the possibility and measured probability of risk.
Exposure steps - ANSMust Assess the probability of loss. In insurance this process is known
as Underwriting. The higher the Probability of loss, the higher the premium. If the Probability
of loss is too high the risk will become an uninsurable risk.
Hazard - ANSThe condition that may create or increase the chance of loss.
Physical Hazards - ANSRefers to physical properties that increase the chance of loss. In
LAH insurance some examples include Cancer, AIDS, high risk occupations.
Moral Hazards - ANSRefers to evil tendencies and dishonest character of the applicant for
insurance. Moral hazards may be prone to intentionally defraud companies in the
application, and/or through intentional, false or exaggerated claims.
Morale Hazards - ANSRefers to a careless attitude and lack of concern toward the
occurrence of losses. Some may feel because they have coverage they no loner need be
concerned about potential losses. Driving while impaired is an example.
Peril - ANSThe direct cause of loss- In life insurance Death is peril. In Accident and Health
illness and injury is peril. In Property and Causality insurance fire, hail, and theft are perils.
Loss - ANSThe Direct Result of a peril that damages or diminishes value in whole or in part.
Covered loss: trigger claims to indemnify (restore) that which was lost.
Handling Risk: Avoidance - ANSRisk may be avoided when the person refuses to accept
any aspect of the risk. Accomplished by the refusing to engage in the action that has risk.
Negative Approach. Risk adverse society could not advance.
Retention - ANSRetention is the most common risk management technique. May be
voluntary or involuntary.
Voluntary Retention - ANSIs a calculated purposeful decision. bears the full financial impact
of the risk retained and its potential loss
Retain or Insure? - ANSretain small, manageable losses. insure large and personally
catastrophic losses. not purchasing insurance is an example of risk retention. The more risk
you retain the lower your premium
, Sharing - ANSsharing risk management technique that distributes risks among two or more
persons.
Co-insurance provision - ANSboth the insured and insurer share in the financial impact of
loss
in business a Corporation is an example of risk sharing - ANSRisks is distributed among all
shareholders
Reduction: Prevention - ANSseeking to prevent the occurrence(safety programs)
Reduction: Control - ANSControl the severity(sprinkler systems) of the loss
Transfer - ANSrisk may be transferred from one person to another person more willing and
able to bear the financial adversities associated with a specific risk
Transfer Examples - ANSPurchasing insurance is a common form of risk transfer. A legal
contract is another form of risk-transfer(insurance policy).mBy contractually shifting the
financial burden of loss from one party to another.
Insurable Risk: Large Number of Homogeneous Exposure Units - ANSMeasure the
likelihood that something will happen and making statistical calculations on its probable
occurrence at any given point in time. When a large group is broken down into "risk pools"
that share common characteristics the closer the predictive results will track actual results.
Fortuitous & Accidental - ANSThe loss must be beyond the control of the insured
(unintentional & unplanned). Cannot be something that is certain to happen.
Definite & measurable - ANSloss must be definite and difficult to counterfeit(Proof of Loss)
and capable of financial measurement(Payment of Claim)
Non Catastrophic - ANSfrom perspective of the insurer it cannot affect a large percentage of
exposure units at the same time.
significant in scope - ANSIt is an unsound risk management practice to transfer small losses
to an insurer or another third party
Adverse Selection - ANSTendency of higher risks with greater potential for immediate,
imminent, or impending losses. To seek or continue insurance to a greater extent that do
lower risks with lower potential for loss.
Law of Large Numbers - ANSlarger the number of exposure units (People or Property). More
closely the actual results obtained. Will match the expected results predicted
Reinsurance - ANSinsurance one insurer may place with another insurer to reduce the
amount of risk assumed
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