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ARM 402 Review: Questions With Solutions (Accurate)
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ARM 402 Review: Questions With Solutions (Accurate)
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ARM 402 Review: Questions With Solutions (Accurate)What term represents the situation where the movement of the value of one
variable upward corresponds with a movement downward in the value of
another variable? Right Ans - Negative Correlation
When the potential causes are identified on the right side of the diagram and
consequences on the left, the users can then identify actions that can 1) work
to control the occurrences of the causes, and 2) deal with the consequences.
What are these actions called? Right Ans - Modifications
Having developed the correlation coefficients for several combinations of
risks, the risk manager can evaluate what could be the best pairings of risk to
achieve corporate objectives by means of what device? Right Ans -
Correlation Matrix
Which risk treatment techniques are used to treat risks for which the
organization wants to exploit an opportunity? Right Ans - Exploitation,
Retention, Modification
Again with Prouty, which treatment is recommended for a risk that intersects
at slight impact and moderate likelihood? Right Ans - Transfer
Insurance as a risk treatment plan is a good approach for risks that have what
characteristics? Right Ans - High Severity and low frequency
Organizations that wish higher limits of liability than are provided by their
primary insurance policy purchase excess liability coverage. One form of this
coverage provides excess limits of coverage only for events that are covered
by the primary policy. This type of excess policy is known as: Right Ans -
Following Form
Which of the following statements about the operation of a large deductible
plan is inaccurate? Right Ans - The organization settles all claims up to the
deductible, the insurer handles those above the deductible
In a retrospective insurance rating plan, what is the premium the insurer
charges for limiting individual losses? Right Ans - The excess loss premium
, All of the following are advantages of captive insurer plans, EXCEPT: Right
Ans - Losses retained by the captive are paid for by the insured as a premium
What is the charge that the insurer makes to cover its acquisition expenses,
administration costs, profit, and the risk transfer charge under a retrospective
rating plan? Right Ans - The basic premium
A group self-insurance plan helps its individual members manage their cost of
risk in which way? Right Ans - Reducing the cost of excess insurance
What is the likely effect on an insured organization's retrospective rating plan
if the insurer, over time, does not diligently adjust covered losses that fall
within the organization's retention? Right Ans - The total loss payments
will be higher, increasing the retrospective rating plan premium for the policy
period and subsequent periods after evaluations are applied.
The Vendor agrees to indemnify and hold harmless the Plains Central School
District, from and against any and all liability, claims, lawsuits (including
attorneys' fees), and actions, as a result of work performed or services
rendered under the contract, to the extent permissible by law. This agreement
is what kind of transfer? Right Ans - Noninsurance risk financing transfer
Which one of the following components of the retrospective rating formula
allows for an amount to be added for state premium taxes, license fees, bureau
charges, and residual market loadings? Right Ans - Tax multiplier
An insured incurred a lower-than-average amount of losses during a policy
period. How would the amounts charged as a final adjusted premium under a
retrospective rating plan compare to that of a guaranteed-cost insurance plan
designed to cover the same losses? Right Ans - The amounts charged under
the retrospective plan will be lower
Part of the success of the kTrap 1.0 is the circuit within it that broadcasts an
exact frequency that diligent Kumquat researchers determined would attract
mice. Without that frequency, the kTrap would be just another camera-
integrated mousetrap. This closely-guarded frequency is known as a: Right
Ans - Trade secret
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