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RMIN 4000 uga test 1 (Solved) Correctly 2024!!
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RMIN 4000 uga test 1 (Solved) Correctly 2024!!
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Name: Score:102 Multiple choice questions
Term 1 of 102
avoidance
the pooling of fortuitous losses by transfer of such risks to insurers, who agree to indemnify
insureds for such losses, to provide other pecuniary benefits on their occurrence, or to
render services connected with the risk
rates and premiums are determined by this using company past loss experience and
industry statistics
example: avoid the risk of being mugged in a high crime area by staying away from high
crime rate areas
insurer that accepts the insurance from the ceding company
Definition 2 of 102
probabilities cannot be estimated
speculative risk
uncertainty
hazard
physical hazard
Term 3 of 102
rate
uncertainty concerning the occurrence of a loss
price per unit of insurance
the process of selecting and classifying applicants for insurance
probabilities cannot be estimated
,Term 4 of 102
staff claims representative
-possible higher losses
-possible higher expenses
-possible higher taxes
example: department store can install a sprinkler system so that a fire will be promptly
extinguished
a salaried employee who will investigate a claim, determine the amount of loss, and
arrange for payment
-indemnification for loss
-reduction of worry and fear
-source of investment funds
-loss prevention
-enhancement of credit
Term 5 of 102
indemnification
a term that encompasses all major risks faced by a business firm. such risks include pure
risk, speculative risk, strategic risk, operational risk, and financial risk
techniques that provide for the payment of losses after they occur
-retention
-non-insurance
-commercial insurance
assets exposed to loss are separated or divided to minimize the financial loss from a single
event
example: manufacturer may store finished goods in two warehouses in different cities
the insured is restored to his or her approximate financial position prior to the occurrence
of the loss
example: if house burns down, homeowners policy will give you back what you started with
,Definition 6 of 102
the spreading of losses incurred by the few over the entire group, so that in the process, average
loss is substituted for actual loss
pooling
insurance
loss exposure
risk
Definition 7 of 102
is an organization or individual that adjusts claims for free
independent agents
independent adjustor
public adjustor
adjustment bureau
Definition 8 of 102
the uncertainty of loss because of adverse changes in commodity prices, interest rates, foreign
exchange rates, and the value of money
example: food delivers cereal at a fixed price to a supermarket chain for 6 months may lose
money if grain prices rise.
speculative risk
enterprise risk
financial risk
pure risk
, Definition 9 of 102
hedging is a technique for transferring the risk of unfavorable price fluctuations to a speculator by
purchasing and selling futures contracts on an organized exchange, such as the chicago board of
trade
hedging price risks
risk transfer
systemic risk
incorporation of a business firm
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