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CT Property and Casualty State Exam Questions and Answers Part one 100% pass | graded A+
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CT Property and Casualty State Exam Questions and Answers Part one 100% pass | graded A+
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CT Property and Casualty StateExam Questions and Answers Part
one 100% pass | graded A+
Risk Sharing - ✔✔Two or more individuals or business agree to pay a portion of any loss incurred by any
member of the group (ex: stockholders in a corporation)
Risk Transfer - ✔✔Insurance- risk transfer to insured to insurer
Risk Avoidance - ✔✔Eliminating a particular risk by not engaging in certain activity.
Risk Retention: - ✔✔Individual or business will pay for the loss if it occurs, or a portion of the loss
via deductible.
Risk Reduction - ✔✔Lessening the chance that loss will occur, or lessening the extent of a loss if
it occurs. (Ex: installing sprinkler system in business will reduce damaged caused by fire)
The law of large numbers - ✔✔the larger the group, the more accurately losses can be predicted.
This prediction allows to change each insured a premium that, pooled together, will cover all claims
and operating costs.
Elements of Insurable Risk - ✔✔(CANHAM)
Calculable, Affordable, Non-Catastrophic, Homogeneous, Accidental, Measurable
Calculable - ✔✔Premiums must be calculated based upon prior loss statistics in order to predict
future losses.
Affordable - ✔✔Premium should be affordable for average customer
, Non-catastrophic - ✔✔The risk must be non-catastrophic for the insurance company (Ex: disasters like
flood, riots, wars, and earthquakes have coverage limitations)
Homogeneous - ✔✔Risk must be similar in value so the same factors affect the chance of loss
accidental - ✔✔Loss must be due to chance
(intentional loss is not covered by insurance)
Measurable - ✔✔Definite (time/place) and that proof must be established with numbers,
dollar amounts, not just casual references.
Adverse Selection - ✔✔is the tendency of persons with a higher-than-average chance of loss to
seek insurance at standard rates
Underwriting - ✔✔the process of selecting, classifying, and pricing applicants for insurance (changing
rates for high risk and refusing applications)
Reinsurance - ✔✔The transfer of insurance risk from one insurer to another through a contractual
agreement under which one insurer (the reinsurer) agrees, in return for a reinsurance premium, to
indemnify another insurer (the primary insurer) for some or all of the financial consequences of
certain loss exposures covered by the primary's insurance policies.
Ceding Insurer - ✔✔The company transferring risk in a reinsurance arrangement (reducing risk)
The Reinsurer - ✔✔The company assuming the risk
Facultative Reinsurance - ✔✔Reinsurance of individual loss exposures in which the primary insurer
chooses which loss exposures to submit to the reinsurer, and the reinsurer can accept or reject any loss
exposures submitted.
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