Shared Flashcard Set

Details

I&RM (CH.1)
chapter one
40
Insurance
Undergraduate 1
01/06/2016

Additional Insurance Flashcards

 


 

Cards

Term
Subjective Probability
Definition
the individual's personal estimate of the Chance of Loss
Term
Physical Hazard
Definition
a physical condition that increases the frequency or severity of loss
Term
Speculative Risk
Definition
a situation in which either Profit or Loss is possible
Term
Human Life Value
Definition
the present value of the family's share of the deceased breadwinner's future earnings
Term
Retention
Definition
when an individual or business keeps part of all of the losses
Term
Law of Large Numbers
Definition
as the number of exposure units increases, the more closely the actual loss experience will approach the expected loss experience
Term
Risk Financing
Definition
techniques that provide for the funding of losses
Term
Direct Loss
Definition
a financial loss resulting from the physical damage, destruction, or theft of property
Term
Diversifiable Risk
Definition
risk that affects only individuals or small groups... Not the entire economy
Term
Insurance
Definition
transferring risk to an insurance carrier
Term
Loss Exposure
Definition
any situation or circumstance in which a loss is possible.. Regardless is the loss actually occurs
Term
Peril
Definition
the actual cause of the loss
Term
Legal Hazard
Definition
characteristics of the legal system or regulatory environment that increase the frequency or severity of losses
Term
Enterprise Risk Management
Definition
a single program addressing all significant risk faced by a firm
Term
Self-Insurance
Definition
a form of planned retention where part of all of a given loss exposure is retained by the individual/firm
Term
Subjective Risk
Definition
uncertainty based on a person's mental condition or state of mind
Term
Avoidance
Definition
a technique of managing risk where an exposure is Refused, Abandoned, or Ignored.
Term
Indirect Loss
Definition
a financial loss that is a Consequence of the occurrence of a direct loss
Term
Enterprise Risk
Definition
encompasses All Major Risks faced by a business firm. This includes:
-Pure Risks
-Speculative Risks
-Strategic Risks
-Operational Risks
-Financial Risks
Term
Personal Risk
Definition
risk that Directly affects an individual or family
Term
Risk
Definition
Uncertainty concerning the occurrence of loss
Term
Hazard
Definition
a Condition that Creates or Increases the frequency or severity of a loss
Term
Pure Risk
Definition
A situation where there are only the possibilities of loss or no loss at all
-a loss it happens, or it doesn't happen
Term
Noninsurance Transfer
Definition
moving risk to an entity other than an insurance company
Term
Premature death
Definition
the loss of a family head with Unfulfilled Financial Obligations
Term
Chance of loss
Definition
the Probability that an event will occur
Term
Loss Prevention
Definition
aims to reduce the probability of loss so that frequency is reduced
Term
Liability Risk
Definition
the risk of being held liable for someone's bodily injury or damage to their property
Term
Nondiversifiable Risk
Definition
systematic risk that affects the entire economy or large numbers of people or groups within the economy
Term
Incorporation
Definition
a method of protecting personal assets by transferring risk to a legal entity
Term
Objective Risk
Definition
the relative variation of actual loss form expected loss
Term
Moral Hazard
Definition
dishonesty or character defects in an individual that increase the frequency or severity of loss
Term
Attitudinal Hazard
Definition
a carelessness or indifference to a loss, which increases the frequency or severity of a loss
Term
Hold-Harmless Clause
Definition
that part of a contract where liability for a loss is transferred
Term
Property Risk
Definition
the risk of having property damaged or lost due to a peril
Term
Objective Probability
Definition
the long-run relative frequency of an event based on the Assumptions of an Infinite Number of Observations with no change in the underlying conditions
Term
Loss Reduction
Definition
aims to Reduce the Severity of a loss, once it does occur
Term
Risk Control
Definition
Techniques that Reduce the frequency or severity of loss
Term
Financial Risk
Definition
refers to the Uncertainty of loss because of Adverse changes in Commodity Prices, Interest Rates, Foreign Exchange Rates, and the Value of Money
Term
Hedging
Definition
transfers the Risk of unfavorable Price fluctuations by using the Market to Purchase/Sell Futures Contracts
Supporting users have an ad free experience!