1 OHIO LIFE, ACCIDENT, AND HEALTH INSURANCE/ REVIEW QUESTIONS AND ANSWERS, VERIFIED/

1 OHIO LIFE, ACCIDENT, AND HEALTH INSURANCE/ REVIEW QUESTIONS AND ANSWERS, VERIFIED/ The role of insurance - -transfer the risk of financial loss from an individual or business to an insurance company stock insurance company - -owned by the stockholders, who get paid a share of the company's profit through dividends mutual insurers - -have no stockholders, instead the policyholders own the company Mutualization - -Transformation of a stock insurer into a mutual insurer. Demutualization - -a mutual insurer is converted into a stock insurer reinsurers - -insures other insurance company's risk 1945 McCarran and Ferguson Act - -States that while federal government has the authority to regulate the insurance industry, it would not exercise that right if the insurance industry was run effectively and adequately by the states 1970 Fair Credit Reporting Act - -provides individuals privacy protection and fair and accurate credit reporting national association of insurance commissioners - -An association of insurance commissioners from the fifty U.S. states, the District of Columbia, and the five U.S. territories and possessions, whose purpose is to coordinate insurance regulation activities among the various state insurance departments. Law of Large Numbers - -the larger the number of people, the more predictable the actual losses will be Speculative Risk - -A chance of loss, no loss, or gain. Pure Risk - -a risk that presents the chance of loss but no opportunity for gain-only risk that is insurable 5 ways to handle risk - -Avoidance Retention Sharing Reduction Transfer Aleatory Contract - -The exchan