RMIN 4000 Final Exam 2024 Questions & Answers 100% accurate!!
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Course
RMIN 4000
Institution
RMIN 4000
RMIN 4000 Final Exam 2024 Questions & Answers 100% accPeril - ANSWER-Cause of loss
Risk - ANSWER-Uncertainty about chance, timing, or amount of loss
Chance of Loss - ANSWER-Probability that an event will occur
Objective Risk - ANSWER-The relative variation of actual loss from expected loss...
RMIN 4000 Final Exam 2024 Questions &
Answers 100% accurate!!
Peril - ANSWER-Cause of loss
Risk - ANSWER-Uncertainty about chance, timing, or amount of loss
Chance of Loss - ANSWER-Probability that an event will occur
Objective Risk - ANSWER-The relative variation of actual loss from expected loss; (Actual-Expected)/Expected; higher variation means higher risk
Law of Large Numbers - ANSWER-Objective risk varies inversely with the square root of the number of cases
Subjective Risk - ANSWER-Uncertainty based on a person's mental condition or state of mind
Hazard - ANSWER-A condition that increased the frequency or severity of the loss
Moral Hazard - ANSWER-Arson
Morale Hazard - ANSWER-Driving drunk
Pure risk - ANSWER-Chance of loss or no loss (no gain)
Speculative risk - ANSWER-Chance of loss, no loss, or gain
Particular risk - ANSWER-Risk that affects only affects individuals as individuals
Legal hazard - ANSWER-Large damage awards in litigation
Fundamental/systematic risk - ANSWER-Affects a large number of individuals or the entire economy
Enterprise risk - ANSWER-All major risks faced by a business
Direct loss (property) - ANSWER-Financial loss that results from physical damage, destruction, or theft
Indirect loss (property) - ANSWER-Financial loss arising from loss of USE of property Liability risk - ANSWER-Responsibility for actions that cause injury or property damage to another (no limit)
Fortuitous loss - ANSWER-Unforeseen and unexpected by the insured and occurs as a result of chance
Risk Transfer - ANSWER-Pure risk is transferred from the insured to the insurer, who typically is in a better financial position to pay the loss than the insured
Indemnification - ANSWER-The injured is restored to his approximate financial position prior to the occurrence of the loss
Adverse Selection - ANSWER-The tendency of persons with a higher-than-average chance of loss to seek insurance at standard (average) rates, which if not controlled by underwriting, results in higher-than-expected loss levels
Viatical settlement - ANSWER-Benefactor pays AIDS patient to take out life policy
Risk Management - ANSWER-Formal decision-making process to address risk, including the potential financial consequences associated with loss exposures
Loss exposure - ANSWER-Any item exposed to loss; any situation in which a loss may occur
Risk Control - ANSWER-Reduce frequency or severity of losses
Risk Management Process (IESI) - ANSWER-1. Identify potential losses 2. Evaluate potential losses
3. Select appropriate RM technique 4. Implement and monitor
Risk Financing - ANSWER-Techniques that provide for the funding of losses
Retention - ANSWER-Firms retain part or all of the losses that can result from a given loss; Ex: Expense, set aside liquid, credit line
Retention level - ANSWER-The dollar amount of losses the firm will retain
Captive - ANSWER-Insurer owned by a parent firm for the purpose of insuring the parent firm's loss exposure; have easier access to a reinsurer; source of profit
Self-Insurance (self-funding) - ANSWER-Form of retention; PArt or all of a given loss exposure retained by firm; used for workers comp and health plans
Risk Retention Group - ANSWER-A group captive that can write any type of liability coverage except employer liability, workers comp, and personal lines
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