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C16 The Business Of Insurance- Chapter 1-6 Exam With 100% Correct Answers $14.49   Add to cart

Exam (elaborations)

C16 The Business Of Insurance- Chapter 1-6 Exam With 100% Correct Answers

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  • Course
  • C16 Business of Insurance
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  • C16 Business Of Insurance

C16 The Business Of Insurance- Chapter 1-6 Exam With 100% Correct Answers

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  • October 22, 2024
  • 46
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers
  • what is a risk pool
  • C16 Business of Insurance
  • C16 Business of Insurance
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professoraxel
C16 The Business Of Insurance- Chapter
1-6 Exam With 100% Correct Answers

Listitheitwoifundamentaliprinciplesiofiinsurance.i-iCorrectiAnswer-
1.iTheipremiumsiofitheimanyiareiuseditoipayitheilossesiofitheifew.
2.iTheipremiumsishallibeicommensurateiwithitheiriski(mustichargeianiap
propriateipremiumiforitheirisk.)
(thereimustibeianiappropriateibalanceiofipremiumsiandiclaimsipaid)


Whyiwouldianiinsurerispreadirisksioveridiverseigeographiciareas?i-
iCorrectiAnswer-

1.iRisksispreadioveriailargerigeographiciareaisoftenitheiburdeniofilocaliz
edidisastersioniinsurers.


2.iForiexample,iaisevereiwindstormiinioneipartiofitheicountryiwouldihav
eiaidevastatingieffectionianiinsureriwhoihadiconcentratediitsirisksiinithisi
oneiarea.


Whatiisiairiskipool?i-iCorrectiAnswer-
1.iAiriskipooliisiaisharingiandispreadingiofiriskibetweeniinsurersiandire-
insurers.


2.iFormediriskipoolsiareisyndicatesiofiinsuranceiorireinsuranceicompani
esithatihaveiorganizeditoiunderwriteiaiparticulaririskiorigroupiofisimilarir
isks.

,Explainitheilawiofilargeinumbers.i-iCorrectiAnswer-
TheiLawiofiLargeiNumbersiisiaimathematicaliformulaithatistatesithatithei
degreeiofiuncertaintyiisireducediasitheinumberiofieventsiincreases.iInsu
rersirelyionilossiforecastsiusingidataifromilargeigroupsiofisimilaririsks.iRis
ksimustibeiappropriatelyipriceditoimakeisureisufficienticapitalientersith
eipooliofifundsitoiaccommodateipayingiouticlaims.


Defineiadverseiselection.i-iCorrectiAnswer-
describesitheiprocessibyiwhichipotentialipolicyholdersiuseitheiriprivatei
knowledgeiofitheiriownihighileveliofiriskiwhenidecidingiwhetheriorinotit
oibuyiinsurance.iHighiriskiindividualsiwillibuyimoreiinsuranceiandipayiaic
omparativelyihighirateiofipremiumiifiallowediwhileilowiriskiclientsimigh
tinotibuyianyiinsuranceibecauseitheipriceiisitooihighiandimightigoitoitheic
ompetition.


Iniinsurance,iwhatiisiaitail?i-iCorrectiAnswer-
Aitailirefersitoitheiamountiofitimeibetweenianiincidentianditheidetermin
ationiofiaiclaim.iAishortitaililineiisiwhereitheiinjuryioridamageiisiknowniq
uiteiquickly.iForiexampleipropertyidamageiiniaimotorivehicleiaccident.iA
ilongitailiisiwhereiaiclaimimayibeiseparatedifromitheicircumstancesithati

causediitibyiasimanyiasi10-
20+iyears.imanyiProductilinesifalliintoithisicategory.


NameithreeiconcernsiofiAutoiReinsurersiasiitirelatesitoiLong-
tailiLiabilities.i-iCorrectiAnswer-
Theithreeiareasioficoncernsiareisevereiinjuries,ilongitailitrendsiiniprioriac
cidentsiandiinadequateiservingsiatitheiprimaryiinsuranceilevel.i

,Primaryiinsuranceicompaniesirelyionireinsurersitoibackistopiautoicovera
geiespeciallyiforiCATiclaimsi(1imill+).iRecentlyithereihaveibeenilightiCATi
claimsiwhichihaveicausediaiminorirateiincreaseiinireinsurance.iGeneralii
ncreasesiiniclaimsiexceedingi2-
5imillioniinitheipasti10iyears.iPredictingilong-
tailipricingiincreaseiisidifficultibecauseiclaimsiwillibeiopenimanyiyearsibe
foreisettlement.iAlsoiseenilateireportingiofiCATiclaimsiafteribeingirecog
nizediandireported.


Listi9iwaysithatiinsuranceibenefitsisociety.i-iCorrectiAnswer-
Thei9ibenefitsiarei(BDRiMMiPPiFL).
Banksiofferimortgagesioniinsuredibuildingsi
Developersimoreiwillingitoiadvanceifundsitoicontractorsioniprojectsigua
ranteedibyisuretyibonds
RetailersiareimoreiwillingitoiacceptiRisksiofioperatingiwheniinsuredi
Manufacturersimoreiwillingitoishipigoodsiwhenitheyipurchaseiliabilityii
nsurancei
Membersiofisocietyisanctioniuseiofiautoiwheniinsuredi
Providesipeaceiofimind
providesifinancialisecurityi
Facilitatesieconomicigrowthi
Lawyers,idoctors,iarchitects,iengineersimoreiwillingitoiprovideiservicesi
whenitheyiareiinsurediagainstiliabilityiandimalpractice

, Whyiisithereiaineediforiresidualimarketimechanisms?i-iCorrectiAnswer-
ResidualiMarketiisiailastiresortiforiconsumers.iitipertainsitoirisksithatiarei
highileveliiniwhichitheiconsumericannotifindiinsuranceiinitheimainstrea
mimarket.iEveryiinsurerilicenseditoiwriteiAutomobileiInsuranceiinitheiF
AiindustriesihasitoifollowitheirulesisetioutibyitheiBoardiofiDirectorsiwithi
regardsitoiscope,itermsiandistandardioficoverage.iFAidoesinotiissueipolic
ies,ibutiratheridesignatesiinsuranceicompaniesitoiofferispecificiservicesi
andiclaimsihandling.


Inipropertyiandicasualtyiinsurance,iwhatiareitheitwoitraditionalimethod
siofidistributioniandihowidoitheyidiffer?i-iCorrectiAnswer-
1.iIndependentibroker/agents:i


-
MostiinsuranceibusinessiwritteniiniCanadaihasibeeniplacedithroughibro
kersiwhichihasiitsirootsiinitheiBritishisystem


-
Theisizeiofitheicountryiandiitsisparseiandidispersedipopulationihasimade
ibroker-

basedibusinessiaimoreipracticalioption.iEconomicaliandiefficientiwayifor
iinsurersitoimarketitheiriproducts




2.iDirectiresponseimethod:


-
hybridiofidirectirightiofidistributingiinsuranceidirectlyitoiconsumersibyiu

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