Term
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Definition
1Possibility of Loss, outcome in doubt,
2 Uncertainty towards the occurrence of a loss |
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Definition
| Objectively and Subjectively |
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Term
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Definition
Relative variation of actual loss from expanded loss
-declines as number of exposers increase. i.e. law of large numbers
luck |
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Term
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Definition
personal estimate of loss
own person's opinion
ie someone guesses |
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Term
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Definition
| Cause of loss eg Fire death windstorm |
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Definition
| Create increased chance of risk |
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Definition
| physical conditions eg icy streets, oily rags, por health or wet stairs |
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Definition
| Characteristical hazards, eg arson fraud |
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Term
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Definition
| Careless hazatrds eg leaving car unlocked |
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Term
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Definition
| hazards caused by lawyer fees and court costs |
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Term
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Definition
| underwriting, contract provitions, deductables |
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Term
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Definition
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Term
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Definition
Change of loss or no loss
eg owning a home drving a car , premature death, disability
IS INSURABLE |
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Term
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Definition
chance of loss,
types investing in the market delvoloping a new
technology, gambling
NOT INSURABLE |
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Term
| Particular vs Fundemental |
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Definition
affects an individual,
other affects a large group and may require gov't help |
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Term
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Definition
| All risk incompases pure speculative stratgic operational and financial risk |
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Term
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Definition
| physical damage, destruction or theft |
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Term
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Definition
| extra expenses associatd with direct loss |
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Term
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Definition
| Large Emergency Fud, Loss of certain goods and services, worry and fear, |
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Term
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Definition
avoidence,
Loss control
Noninsurance transfer
Insurance
Retention |
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Term
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Definition
| prevention, reduces freq and serverity of loss, eg seatbelt |
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Term
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Definition
| hold harmless agreemenmts, waivers |
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Term
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Definition
| transfers exposer to an insurer |
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Term
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Definition
| etain the loss, active and passive |
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Term
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Definition
The exchange of premium for a large uncertain (claim)
The contributions of the few pay the loss of the many.
Risk transfer ( to a group) and loss sharing |
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Term
| Components of Insurance Premium |
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Definition
Pure Premium (60-80%)
+ profit/contingency epenses
+ admisitrative expeneses
+Sales/Commisstion costs
+premium taxes
= Gross Premium |
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Term
| Requirments of an insurable risk |
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Definition
large number of smaller exposers
Define and meausrable loss
must be an Accidental loss (no fraud)
Economicly feasible premium |
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Term
| Ways to spread castatraphic losses |
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Definition
| reinusrance and Geographical diversification |
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Term
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Definition
Private insurance (life, health also wealth growth)
Property/causilty (fire, personal,families amd commercial lines)
Government (social security) |
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Term
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Definition
Payment for loss
loss of worry and fear loss control
source of investment of funds
enhances credit |
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Term
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Definition
loading (expenses)
Fraudulent/inflated claims |
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Term
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Definition
| the combination of control and risk financing to offset the finnancial impact of risk |
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Term
| Objectives of risk management |
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Definition
pre-loss-post
reduce worry
cost/benifet analysis
loss-post
survival
continued operations
continued growth
social responsibility |
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Term
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Definition
indentify loss exposures (property income etc)
Analysis loss exposures ( frequency / serverity)
Evaluate and select method
Avoidence, loss control,prevention, reduces frequency
risk financing, retention, |
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Term
| look at chart for techniques page 8 |
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Definition
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Term
| Advantages / disadvantages of Retention |
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Definition
saves money/lower expenses, increased cash flow, encourages los prevtion
Disadvantages
potentilahigh loss
high exposure, high taxes |
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Term
| Advantages/disadvantages of insurance |
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Definition
paid loss, reduces uncertainity, loss control serverices, tax deduction,
Dis advantages \
time negotiating, payment in advance |
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Term
| Benifets of Risk management |
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Definition
setting objectives
cost of risk reduced, |
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Term
| types of personal insurance |
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Definition
| stock comp. and mutual cos. |
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Term
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Definition
own by stock holders
stock holders share in the profits of the comapnay |
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Term
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Definition
| on by policy policy who shae the losses and profits of the company |
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Term
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Definition
changing for a muatual to a stock comp increased # of mergers
formation of mutual holing comp |
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Term
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Definition
provides insurance to weird junk
syndicated buys a share of the risk |
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Term
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Definition
represents the insurance company and has the authority to act of behalf of the company
life/health
property/causality |
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Term
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Definition
represents the insured
suplus lines |
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Term
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Definition
an insured builds it angency by reruiting training new agents
(life marketing) |
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Term
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Definition
insured sells its products through established agents
life |
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Term
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Definition
mail order, internet maketing strategy
life |
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Term
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Definition
agent represents more than one company
9owns espiration) p/c
has the right to renewal |
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Term
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Definition
the agents reresnent one company
comapny owns expiratitions |
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Term
| Direct and mass merchadising |
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Definition
Direct response, mail order internet,
Mass merchandisiing
a plan to insure a plan to insure individuals in a group, a sngle program of insurance at a reduced premium |
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Term
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Definition
| Actuarial, price insurance, uses stats and computers to provide finacial stability, also evaluate pentions |
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Term
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Definition
select and classify apps of insurance
object: prevent adverse slection of risk, |
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Term
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Definition
agents, brokers, group representatives,
market research
advertising |
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Term
| Sources of Underwritting info |
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Definition
applications
insprction
physicals |
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Term
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Definition
verify the loss
fair prompt settlement
independant works for comp fora fee
public represent the insured are paid based on claim settlement |
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Term
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Definition
| shifts risk to another company, |
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Term
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Definition
Lifeinsurance investments
property liability |
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Term
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Definition
| responible for the finacial accounting opertations |
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Term
| Reasons to regulate isurance |
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Definition
| maintain insurance, (solvency-paybills) compensation for inadequate consumer knowledge |
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Term
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Definition
| 1868/69 Supreme cout ruled state can regulate insurance |
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Term
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Definition
| reverses Paul vs virginaia, feds can control insurance |
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Term
| Public law 15 or McCorum Ferguson act |
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Definition
| 1945 - reaffrimed states rights to regulate and tax insurance |
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Term
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Definition
| insurance laws that regulatd the operations of insurers |
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Term
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Definition
| interpret policies claauses |
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Term
| State insurance departmetns (regualte) |
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Definition
| admisitrate state insurance laws |
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Term
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Definition
Assets - liabilites
same as net worth |
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Term
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Definition
Formation and licensing of companies
Solvency regukation
Rate ruglation and approval |
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Term
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Definition
adv fed
laws for country not by state (more efficient)
State advantages
greater innovation
decetnralized pilitcal power |
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Term
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Definition
| insured can't be paid twice (should not profit from loss) |
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Term
| Exceptions to pricipal of indemity |
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Definition
valued policy face value (antiques)
Actual cash value = (recplacement cost - drepreciation ) |
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Term
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Definition
| the decreaded valued due to age wear and tear, and economic obselcence |
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Term
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Definition
| insurance company entitled to recover from neglegent company or person |
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Term
| Principle of utmost good faith |
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Definition
high degree of honesty of insurance contracts
inured will not concel or lie on information |
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