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C16: The Business Of Insurance - Chapter 1 Exam Questions With 100% Correct Answers
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C16: The Business Of Insurance - Chapter 1 Exam Questions With 100% Correct Answers
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C16: The Business Of Insurance -Chapter 1 Exam Questions With 100%
Correct Answers
Listithei2ifundamentaliprinciplesiofiinsurance?i-iCorrectiAnswer-
1)ipremiumsiofitheimanyiuseditoipayilossesiofifewi
2)ipremiumishallibeicommensurateiwithitheirisk
Whyiwouldianiinsurerispreadirisksioveridiversigeographicaliareas?i-
iCorrectiAnswer-Softenitheiburdeniofilocalizedidisastersioniinsurers
Whatiisiairiskipool?i-iCorrectiAnswer-
Theisharingiandispreadingiriskiofiriskibetweeniinsurersiandireinsurers,iw
hichiareisyndicatesiofiinsuranceiorireinsuranceicompaniesithatihaveiorg
anizeditoiunderwriteiaiparticulaririskiorigroupiofisimilaririsks.
ExplainitheiLawiofiLargeiNumbers?i-iCorrectiAnswer-
Aimathematicalipremiseiwhichistatesithatitheidegreeioficertaintyiinipro
babilitiesiincreasesiasitheinumberiofieventsiincreases.
DefineiADVERSEiSELECTIONi-iCorrectiAnswer-
Theiprocessibyiwhichipotentialipolicyholdersiuseiprivateiknowledgeiofit
heiriownileveliofiriskiwenidecidingiwhetheriorinotitoibuyiinsurance.
, Foriclaimsithatitakeiailongitimeitoisettle,iwhatidoiweicallitheiperiodiofiti
meibetweeniwhenitheiclaimioccursiandiitsifinaliresolution.i-
iCorrectiAnswer-
"Tail"irefersitiitheiamountiofitimeibetweeniandiincidentianditheidetermi
nationiofiaiclaim.
Namei2iconcernsiofiOntarioiautomobileiexcessireinsurersithatirelateitoit
heieffectsiofilong-taililiabilities.i-iCorrectiAnswer--severeiinjuries
-longitailitrendsiforiprioriaccidents
-inadequateireservingiatitheiprimaryiinsuranceilevel
Listi3iwaysithatiinsuranceibenefitsisociety.i-iCorrectiAnswer--
providingisecurity
-savings
-encouragmentiofiinvestment
Whyiisithereiaineediforiresidualimarketimechanisms?i-iCorrectiAnswer-
Provideiailastiresortiinsuranceifacilityiforiconsumersitoiensureithatiinsur
anceicoverageiisiavalibleievenitoithoseiwhoiareiconsiderediaihighirisk.
Inipropertyiandicasualtyiinsurance,iwhatiareithei2itraditionalimethodsio
fidistribution,iandihowidoitheyidiffer?i-iCorrectiAnswer-
Independantibrokers;isoliciticonsumersianditheyifititheiconsumeritoithei
company.
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