AINS 21 Segment A | 124 Questions and Answers 100% Verified
Course
AINS
Institution
AINS
AINS 21 Segment A | 124 Questions
and Answers 100% Verified
4 roles of insurance - 1. risk management technique
transfer system
business
contract
loss exposure - any condition or situation that presents a possibility of loss, whether or not
actual loss occurs
risk management - making...
AINS 21 Segment A | 124 Questions and Answers 100% Verified 4 roles of insurance - ✔✔1. risk management technique transfer system business contract loss exposure - ✔✔any condition or situation that presents a possibility of loss, whether or not actual loss occurs risk management - ✔✔making and implementing decisions that will minimize the adverse effects of accidental losses on an organization -avoid, prevent, reduce -from RM standpoint, insurance is used to transfer cost of losses loss prevention - ✔✔reduces frequency of loss -ex. wearing safety goggles/helmets loss reduction - ✔✔reduces severity of loss -ex. fire extinguishers or sprinklers in building insurance as a risk transfer system - ✔✔1. transfer cost of losses - exchange possibility of large loss for smaller payments (premium) 2. sharing cost of losses - pooling premiums exposure unit - ✔✔measure of loss exposure by insurer law of large numbers - ✔✔as number of similar but independent exposure units increases, the accuracy of predictions about future outcomes also increases PC insurance - ✔✔one of two main sectors in insurance industry (45%) - cover financial consequences of damage to one's own property or legal liability to others LH insurance - ✔✔one of two main sectors in insurance industry (55%) - cover financial consequences of death, injury, sickness revenue for insurers - ✔✔1. premium 2. investment income expenses for insurers - ✔✔loss settlement, acquiring new business (advertising and commissions), general (salaries, utilities, computer equipment), premium taxes, licensing and fees, investment (salaries of investment department) 3 characteristics of insurance contract - ✔✔1. utmost good faith contract of adhesion contract of indemnity utmost good faith - ✔✔obligation to act in complete honesty and disclose all relevant facts contract of adhesion - ✔✔one party must accept agreement as written by other party or reject it -
ex. wording of policy contract of indemnity - ✔✔insurer agrees, in event of covered loss, to pay amount directly related to amount of loss self-contained policy - ✔✔single document that contains all agreements between insured and insurer and forms complete insurance policy modular policy - ✔✔several different documents, none of which form a complete policy personal insurance - ✔✔1. property - repair or replace damaged or destroyed property liability - injury to others or damage to other's property in which insured is legally responsible; also cost to defend life - income earning potential lost through death and death expenses health - sickness and accidents; disability (income from inability to work) homeowners policy - ✔✔property & liability - ownership and occupancy of home as well as away from their residence -damage to home and its contents by fire, wind, lightning, and theft/destruction of personal contents
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