Chapter 1

Question 1

Acts as a legal representative of the insurance company

Answer 1

Agent/producer

Question 2

Representative of the insured, doesn’t represent the insurance company.

Answer 2

Broker

Question 3

Policy holder

Answer 3

Insured

Question 4

Insurance company

Answer 4

Insurer

Question 5

Agent, legal representative of the insurance company

Answer 5

Producer

Question 6

The concept of making whole after a loss

Answer 6

Identification

Question 7

Transfer of risk

Answer 7

Insurance

Question 8

Covers pure risk but not speculative risk

Answer 8

Insurance

Question 9

Mathematical concept, easy to predict losses based on historical data

Answer 9

Law of numbers

Question 10

The chance or uncertainty of loss

Answer 10

Risk

Question 11

The combined chance of loss with possibility of gain.

Answer 11

Speculative risk

Question 12

Gambling is an example of what type of risk?

Answer 12

Speculative

Question 13

Are speculative risks insurable?

Answer 13

No

Question 14

What type of risk is the chance of loss with no possibility of gain.

Answer 14

Pure risk

Question 15

Insurance is designed to protect against what type of risk?

Answer 15

Pure risk

Question 16

What theory states that losses are more predictable as the number of insured increases?

Answer 16

Law of averages

Question 17

A _______________ represents the insured.

A ________________ represents the insurers.

Answer 17

Broker, producer

Question 18

The purpose of insurance is to ________________ by making the insureds whole, not to have the come out ahead.

Answer 18

Indemnify

Question 19

The insurance industry is regulated are:

A. State level
B. Federal level

Answer 19

State level