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Cpcu 551 Questions And Answers With Verified Solutions 100% Correct!!!
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Cpcu 551 Questions And Answers With Verified Solutions 100% Correct!!!
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Cpcu 551 Questions And Answers WithVerified Solutions 100% Correct!!!
An example of an administrative expense that can minimize the cost of risk is -
ANSWER✔✔ Risk management consulting
The availability of funds to pay for losses is most important to organizations when
- ANSWER✔✔ Operations have been disrupted
A self-supporting solid wall that prevents a fire from passing through or around it
is a - ANSWER✔✔ Fire wall
A building with concrete exterior walls and wooden support beams as defined by
Insurance Services Office, Inc. (ISO) - ANSWER✔✔ Joisted masonry
The analysis step of the risk management process involves considering the four
dimensions of a loss exposure. If any of these dimensions of loss exposure
analysis involve empirical distributions developed from past losses, what needs to
be determined? - ANSWER✔✔ The credibility of the data being used
In theory, liability losses are limited only by the - ANSWER✔✔ Defendant's total
wealth
Customer Mary gave dry cleaner Ike her fur coat so he could remove a large stain.
Ike could not eliminate the stain so he asked restoration specialist Peter to
attempt to remove it. The bailor in this scenario is - ANSWER✔✔ Mary
,Jack and Susan own and manage a hotel. They are concerned about their
responsibility for the property of their guests and whether they have an insurable
interest in that property and thus could buy insurance to cover their
responsibility. Most courts would hold that they do have an insurable interest in
their guests' property based on the legal basis of - ANSWER✔✔ Exposure to legal
liability
What is the primary advantage of using retention as a risk financing measure to
help an organization meet its risk financing goals? - ANSWER✔✔ Managing the
cost of risk
One way of jointly considering frequency and severity is to combine both
frequency and severity into - ANSWER✔✔ A total claims distribution
What type of captive typically operates as a formalized retention plan rather than
a transfer measure? - ANSWER✔✔ Single-parent captive
What is correct with respect to retention's ability to meet risk financing goals? -
ANSWER✔✔ Retention enables an organization to manage its cost of risk
Martin enters a warehouse by smashing a basement window and climbing
through the opening. He steals supplies and a box of petty cash and exits the
building through the same window. This is an example of what type of theft? -
ANSWER✔✔ Burglary
If the organization wishes to pre-fund for retained future losses, it must
determine the present value of the expected future losses. Calculating the
present value of a future amount is known as - ANSWER✔✔ Discounting
,What is used for a rating plan whereby the insured receives a premium reduction
for agreeing to reimburse the insurer for losses up to a substantial per accident or
per occurrence limit? - ANSWER✔✔ Large deductible plan
Many states require a self-insurer to - ANSWER✔✔ Purchase excess insurance
In insurance terminology, trucks, trailers, buses, fire engines, and ambulances
designed for road use are examples of what category of motor vehicle? -
ANSWER✔✔ Autos
Perils are an important aspect of property insurance. What is correct with respect
to perils? - ANSWER✔✔ A peril is the actual means by which property is damaged
or destroyed such as fire, lightning, windstorm, hail or theft.
A commercial building may contain furniture, machinery and equipment, raw
materials, and finished products. What is the term generally used in property
insurance policies to refer to all these types of property? - ANSWER✔✔ Business
personal property
What is a characteristic of an organization that would be more appropriate for
risk transfer than risk retention? - ANSWER✔✔ Weak financial condition
To achieve the financial goal of maximizing market value, most publicly traded
organizations should pursue risk financing goals. Common risk financing goals
include - ANSWER✔✔ Managing uncertainty of loss outcomes
, The best method of treating the loss exposure of flood when constructing a
building is - ANSWER✔✔ Locating in an area with no prior flood experience
A pool can meet the risk financing goal of minimizing the cost of risk through -
ANSWER✔✔ Economies of scale administration
What is true regarding the selection of appropriate risk financing measures? -
ANSWER✔✔ It is typically more economical for an organization to retain rather
than transfer loss exposures directly related to its core operations
Two of the most common applications of relative frequency measures in risk
management are injuries per person per hour in works compensation and -
ANSWER✔✔ Auto accidents per mile driven
What is correct with respect to retrospective rating plans? - ANSWER✔✔ An
organization must have a substantial insurance premium to benefit from
retrospective rating
What is correct with respect to the timing dimension in the analysis of loss
exposures? - ANSWER✔✔ Money held in reserve to pay for a loss can earn
interest until the actual payment is made
Each insured member of a pool contributes premium based on its loss exposures.
In exchange, - ANSWER✔✔ The pool pays for each insured's covered losses
Ships and their cargoes represent a special category of property insurance. What
is correct with respect to this category? - ANSWER✔✔ Even more than other
property, ocean cargoes fluctuate in value according to their location
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