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RISK MANAGEMENT & INSURANCE FINAL EXAM QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
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RISK MANAGEMENT & INSURANCE FINAL EXAM QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
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RISK MANAGEMENT & INSURANCEFINAL EXAM QUESTIONS AND
ANSWERS WITH SOLUTIONS 2024
Objective risk - ANSWER Objective Risks are measurable and can be improved by Loss Prevention & Loss
Control
Subjective risk - ANSWER Subjective Risk - A state of mind/worry. Improvement by discussion and
understanding
What are the principles of when you must show insurable interest for property and life insurance? -
ANSWER Property - At the time of Loss
Life - At the time of Purchase
Define pure and speculative risk - ANSWER Pure - Only Negative Results
Speculative - Positive or Negative Results
What are the reasons for internal policy Sub Limits? - ANSWER To provide limited coverage, and require
scheduling of higher limits or insuring elsewhere
What impact does an increased amount of exposure units have on the Expected Loss Value? - ANSWER
The larger the number of units, the closer the expected value will be to actual results, and a Lower
Variance and Standard deviation
Define a Peril, A Hazard, and an Exposure - ANSWER A Peril is what causes damage - Wind, Fire, collision,
hail
A Hazard is a physical condition that increases the chance of an accident/event - Icy roads, poor
maintenance, dying tree near your house
Exposure - The item subject to possible damage - House, car, people
What are the key elements to make risk insurable? - ANSWER Must be identifiable
Must be measurable
, Have a calculable chance of loss
Must be a large number of similar exposures
Losses must be Fortuitous - Unexpected and accidental
Not Catastrophic in nature
Have economically feasible premiums
Understand the difference between Maximum Possible and Maximum Probable Loss - ANSWER Max
Possible - Worst case possible - total of all assets destroyed - Not reduced by Loss Cont.
Max Probable - Most likely max loss considering loss control measures
Why are there Deductibles in policies - ANSWER Provide incentive for insured to manage
exposures/claims
Reduce insurance premiums
To eliminate small and expensive losses to adjust/settle
Understand Objective, Subjective, Systemic Risks - ANSWER Objective Measurable & manageable
Subjective - State of mind - Talk it out
Systemic - Failure of an entire system _ Economic system - Housing Market Crash
Explain the Scope of Enterprise Risk Management - ANSWER Enterprise Risk management assess all
Risks, Objective, Subjective, Systemic, Financial, Strategic etc.
Define Misrepresentations and Concealments & their implications in insurance claims - ANSWER
Misrepresentation is a statement written or oral that is not the truth and you know better - May void
policy & coverage
Concealment - Holding back information you know is important/material
What is Real Property? - ANSWER Buildings
Machinery
Carports
Detached Garages
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