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IF 1 Insurance , Legal And Regulatory > Ch : 01 Risk And Insurance > Flashcards

Ch : 01 Risk And Insurance Flashcards

1
Q

In personal sense we all take decisions based upon

A

An assessment of risk which is carried out informally

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2
Q

Informality ( assessment of risk ) may be acceptable in

A

Low risk situations

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3
Q

What is risk management

A

Risk measurement and the means of attempting to deal with the risks we face are collectively termed as risk management

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4
Q

Definition of risk

A

1.the possibility of an unfortunate occurrence
2.doubt concerning the outcome of a situation
3.unpredictability
4.possibility of loss
5.the chance of gain ( investment strategy and gamble )

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5
Q

What is a means of transferring the risk

A

Insurance

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6
Q

Risk transfer mechanism means

A

The accepting of an unknown future potential risk by an insurer for an agreed premium

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7
Q

Some people are willing to carry certain risks themselves are termed as

A

Risk seeking

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8
Q

Feeling happier minimising the risk they ate exposed by taking insurance they ate called

A

Risk averse

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9
Q

Term which describes an individual who is keen to remove risk where possible

A

Risk -averse

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10
Q

AIRMIC

A

Association of Insurance and Risk Managers in Industry and Commerce

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11
Q

Which organisation has been influential is setting standards in areas of risk management

A

AIRMIC ( Association of Insurance and Risk Managers in Industry and Commerce)

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12
Q

What is the focus of good risk management

A

Identification and treatment of defined risks

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13
Q

It gives shareholders a greater degree of confidence in a cos ability to manage its risks

A

Commercial risk management

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14
Q

Reduces potential for loss and managing hazards

A

Commercial risk management

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15
Q

Commercial risk management provides

A

A disciplined approach to quantifying the risks

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16
Q

3 steps in the risk management process

A

Risk identification
Risk analysis and
Risk control

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17
Q

For which type of risks an issuer may become involved in helping to identify existing and potential risks through carrying out a physical examination or survey

A

Conventional risks

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18
Q

Which step of risk management is the most effective but may b costly or impractical

A

Risk control

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19
Q

Aspects of controlling of risks

A

Physical control measures
Financial control measures
Developing a good risk culture

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20
Q

Internal controls

A

Detective controls
Corrective controls
Preventative controls

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21
Q

Insurers often assist which type of policyholders in the area of loss prevention and control

A

Commercial policyholders

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22
Q

Who also play a role in relation to risk control when they provide reports following the survey

A

Insurers

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23
Q

Who will examine past data to evaluate or analyse the risk

A

Risk Managers

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24
Q

Under risk control which is the most effective but may be costly or impractical

A

Elimination

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25
Q

Who has been central to development of research that supports the management of cyber risks and further developing security capabilities at a national level

A

The National cyber security centre

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26
Q

FPA

A

Fire protection Association

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27
Q

Most insurers rely on which centre for testing vehicle safety and security systems and for testing seats for whiplash protection

A

Thatcham Research Centre

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28
Q

MIAFTR

A

Motor insurance anti fraud and theft register

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29
Q

Which co was formed to combat increasing no of fraudulent claims

A

MIAFTR was formed through the participation of Association of British Insurers (ABI) members cos

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30
Q

Who help the insurers to develop crime and loss control solutions

A

Loss prevention research Council

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31
Q

Components of risk

A

Uncertainty
Level of risk
Peril and hazard

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32
Q

Level of risk is assessed by insurers in terms of

A

Frequency and severity

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33
Q

E.g of high frequency and low severity

A

Dented bumpers, cracked windscreen

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34
Q

E.g low frequency and high severity

A

Aircraft accidents and oil spillages

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35
Q

High frequency / low severity claims is is based on

A

Law of large numbers

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36
Q

Relationship between frequency and severity is

A

Inverse

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37
Q

What is peril

A

A peril can be defined as that which gives rose to a loss

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38
Q

What is hazard

A

Which influences the operation or effect of the peril

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39
Q

Examples of peril

A

Fire, lightning , collision , dishonesty

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40
Q

What is physical hazard relates to

A

Charatecteristics of the risk

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41
Q

Moral hazard arises from the

A

Attitude and behaviour of people

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42
Q

Age of the proposer and type of car for motor insurance is which hazard

A

Physical hazard

43
Q

Construction of the property falls under which hazard

A

Physical hazard

44
Q

Eg of poor Moral hazard

A

Poor claim history
Serious motoring convictions
Dishonesty
Carelessness
Social attitudes
Eg.relaxed attitude to the speed limit as a driver
Factors such as poor security in place or inadequate operation controls .A lax corporate attitude to security

45
Q

Insurable risks can be grouped as

A

Financial risks
Pure risks
Particular risks

46
Q

What is benefit policies

A

Policies are taken out in order to provide pre agreed amounts in the event of an accident or sickness

47
Q

What is pure risks

A

Are those where there is the possibility of a loss but not of gain and where the best cab achieve in a break even situation

48
Q

Particular risks

A

Are localised or even personal in their cause and effect

49
Q

Features of insurable risks

A

The event insured against mustvbe fortuitous
Insurable interest
Must not be against public policy

50
Q

Non fortuitous loss

A

Is a policuhokder who delebrates damages their car..not all the elements of loss or damage may b fortuitous

51
Q

Homogeneous exposures

A

Given a sufficient number of exposure to similar risks..also they use law of large numbers

52
Q

Ininsurable risks

A

Non financial
Speculative
Fundamental

53
Q

Eg of non financial risks

A

Choosing a new house
Deciding on a school for a child
Loss of enjoyment of a holiday

54
Q

Non financial risks

A

Is one where the outcome is not measurable in monetary terms

55
Q

Which risk is often referred as business risk

A

Speculative risks

56
Q

Speculative risk outcomes

A

Loss, break -even or gain

57
Q

Fundamental risks

A

Are those which arise from a cause outside the control of any one individual or group individuals and their effects are usually widespread

58
Q

E.g of fundamental risks

A

Loss relates social. Economic, political and natural cause
Economic recession
War
Earthquake
Famine

59
Q

Benefits of insurance

A

In addition to peace of mind and the enabling of risk transfer
Improved cash flow
Expansion of business
Loss control
Premium invested
Social benefits

60
Q

Money is held until claims have to be paid

A

This creates a premium reserve

61
Q

Pooling of risks

A

The losses of the few are met by the contributions of the many

62
Q

When it enables the insurer to predict the final cost of claims in any one year

A

Applying law of large numbers

63
Q

Equitable premium

A

Fair contribution to the pool

64
Q

Task of an underwriter when considering individual risk

A

Correct assessment will ensure fair premium is charged and a fair profit can be made

65
Q

A small fixed sum retained by the insured is called as

A

Excess

66
Q

A large fixed sum tends to be called as

A

Deductible

67
Q

2 or more policies in force which cover the same risk

A

Dual insurance

68
Q

Self insurance

A

Means that an individual or Co has decided not ro use insurance as the risk transfer mechanism but to carry themselves

69
Q

A co decides to self insure the first £100,000 of each property loss that it suffers .This amt is called

A

Retention

70
Q

Types of motor insurance

A

Motor insurance
Motorcycle insurance
Commercial motor insurance
Motor trade insurance

71
Q

Under which insurance valuables and personal effects are covered as is public liability cover

A

Home insurance

72
Q

Pet insurance is primary designed to cover

A

Vet costs of a pet is ill, gets injured or has an accident

73
Q

Types of heath insurance

A

Personal accident
Sickness
Pvt medical insurance
Short term income protection
Critical illness

74
Q

What is designed to cover monthly loan and credit card payments

A

PPI ( payment protection insurance)

75
Q

Under which insurance payment is made directly to the insured creditors rather than the insured

A

PPI ( payment protection insurance)

76
Q

Under FCA rules, which policies cannot bow be sold as single premium contracts

A

PPI ( payment protection insurance )

77
Q

Pecuniary insurance covers

A

Intangible such as income, revenue or value
Eg : FG , legal expenses, credit, business interruption,political risks and GAP ( guaranteed asset protection )

78
Q

Marine insurance covers 3 main areas of risk

A

Physical damage to the ship or goods (cargo)
Liabilities incurred to other parties
Loss of income

79
Q

Marine freight insurance covers

A

The sum paid for transportong goods or vessel hire

80
Q

Marine Hull insurances covers

A

Damage to the ship. Its machinery and equipment and some limited liability insurance in case of contact with other vessels

81
Q

Specialist covers are

A

Aviation products
Personal accident policies for aircrew

82
Q

Aviation insurances covers

A

Damage to aircraft ( hull) and legal liability to TP and passengers (liability)

83
Q

What is a specialist branch of aviation insurance

A

Satellite insurance

84
Q

Which insurance policy is one that brings together a number of different types of cover or a range of risks/ perils under one policy

A

Combined or packaged policies

85
Q

The policy is really a shell into which different covers may b placed

A

Commercial combined

86
Q

For a risk to be insurable it must be

A

Financial , pure and particular

87
Q

Homogenous exposures are

A

Similar risks which help to determine a pattern

88
Q

Rohan is starting a mobile bicycle repair business .he is concerned about the threat of the local competition .he should be aware that this is not insurable as its a

A

Speculative risk

89
Q

An intruder alarm in a workshop is an example of

A

Physical control measure

90
Q

The pool of insurance premium must be large enough to meet the losses in any1 year plus the

A

Cost of operating the pool and element of profit

91
Q

Income protection provides

A

Fixed benefits in the event of an accident , illness or loss of job

92
Q

If a motor insurance policy requires the car to ne kept in a garage at night ..this is an example of

A

Control risk

93
Q

Where an insurance policy is arranged on a collective basis , the insured needs to be aware of

A

Each insurer is separately liable to the insured fpr their proportion of any claim that become payable

94
Q

The ability of underwriters to be able to quote an appropriate premium is based on the concept of

A

Homogeneous exposures

95
Q

When insurance is written on a co insurance basis with more than one insurer ,each insurer

A

Will pay a proportion of any claim, usually to the lead office

96
Q

A business has property insurance of 1 million .If they choose to cover the 1st 250k from.their own resources is known as the insurers retention

A
97
Q

Insurers typically accumulate money due to the delay between premiums being collected and when claims are made .what is this knwn as

A

Premium reserve

98
Q

List of commercial property insurance

A

Perils and all risks policies
Engineering/ breakdown
Glass
Livestock
Money

99
Q

Examples of particular risks

A

A factory fire
A car collision
Theft of personal possession from a home

100
Q

Examples of fundamental risks

A

Economic recession
War
Earthquake
Famine

101
Q

Examples of peril

A

Explosion
Lightning
Collision
Dishonesty

102
Q

Examples of financial risks

A

Accidentally damage to a motor car
Theft of property
Loss of business profits following a fire
Legal liability to pay compensation for personal injury to others

103
Q

What is money insurance

A

Is on all risks basis,covering all risks of loss or destruction of or damage to money in transit on the insured premises during business hours

IF 1 Insurance , Legal And Regulatory (13 decks)

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