Enterprise Risk - encompasses all major risks faced by a business firm, which include: pure risk,
speculative risk, strategic risk, operational risk, and financial risk
Expense Loading - the amount needed to pay all expenses, including commissions, general
administrative expenses, state premium ...
RMI 211 MSU Exam 1
Enterprise Risk - encompasses all major risks faced by a business firm, which include: pure risk,
speculative risk, strategic risk, operational risk, and financial risk
Expense Loading - the amount needed to pay all expenses, including commissions, general
administrative expenses, state premium taxes, acquisition expenses, and an allowance for contingencies
and profit
Admitted Assets - assets that an insurer can show on its statutory balance sheet in determining its
financial condition
Adverse Selection - the tendency of persons with a higher-than-average chance of loss to seek
insurance at standard rates
Capacity - Relative level of surplus
Captive Insurer - insurer owned by a parent firm for the purpose of insuring the parent firm's loss
exposures
Chance of Loss - the probability that an event will occur
Direct Loss - financial loss that results from physical damage, destruction, or theft of property
Diversifiable Risk - affects only individuals or small groups (car theft). It is also called
nonsystematic or particular risk.
Fortuitous Loss - Unforeseen and unexpected loss that occurs as a result of chance.
Hard Markets - high premiums
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