Wisconsin Insurance Exam Latest Update Graded A+

Wisconsin Insurance Exam Latest Update Graded A+ Risk Not Knowing what will happen in the future and the possibility the outcome will be negative Defined As: Chance of Loss Possibility of Loss Uncertainty of Loss Types of Loss 1. Financial -Loss of house to loss of life 2. Non-Financial -Loss of Friendship Speculative Risk I win or I lose Pure Risk I lose or I do not lose Peril The actual cause of a loss Natural, Human, Economical, etc Hazard Situations or factors that may increase the possibility of a loss Common Types: Physical - Bad Breaks, ice on sidewalk Moral - Dishonest Tendencies Morale - Having a careless attitude because of coverage Legal - Federal and/or state regulations must be followed The process of risk management 1. Identify the Objectives 2. Identify the Risks 3. Evaluate the Risks How to deal with risk Avoid (Don;t fly, hang glide, mountain climb etc) Retain (Self insure) Transfer (Social vehicle for insurance) Share (incorporate or add a partner) Reduce (install fire alarms, stop smoking, etc) Rules of Risk Management 1. Don't Risk more than you can afford to lose 2. Consider the odds 3. Don't risk a lot for a little 4. Priority for purchasing insurance Pooling Spread of risk Law of Large numbers Allows for predictability of risk Assessable Policy Policyholder takes risk of loss Non-Assessable Policy Transfer risk taking to a 3rd party (Insurance Company) Insurable Risk 1. Losses reasonable to predict 2. Losses must be definite and measurable