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CPCU 500 > CPCU 500 > Flashcards

CPCU 500 Flashcards

1
Q

The likelihood that an outcome or event will occur.

A

Probability

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2
Q

A chance of loss or no loss, but no chance of gain.

A

Pure risk

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3
Q

A chance of loss, no loss, or gain

A

Speculative risk

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4
Q

The risk that customers or other creditors will fail to make promised payments as they come due

A

Credit risk

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5
Q

The perceived amount of risk based on an individual’s or organization’s opinion

A

Subjective risk

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6
Q

The measurable variation in uncertain outcomes based on facts and data

A

Objective risk

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7
Q

A risk that affects only some individuals, businesses, or small groups

A

Diversifiable risk

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8
Q

A risk that affects a large segment of society at the same time

A

Nondiversifiable risk

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9
Q

The potential for a major disruption in the function of an entire market or financial system

A

Systematic risk

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10
Q

Uncertainty about an investment’s future value because of potential changes in the market for that type of investment

A

Market risk

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11
Q

The risk that an asset cannot be sold on short notice without incurring loss

A

Liquidity loss

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12
Q

An approach to managing all of an organization’s key business risks and opportunities with the intent of maximizing shareholder value. Also known as enterprise-risk management

A

Enterprise risk management

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13
Q

Any condition or situation that presents a possibility of loss, whether or not an actual loss occurs

A

Loss exposure

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14
Q

A condition that increases the frequency or severity of loss

A

Hazard

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15
Q

A condition that increases the likelihood that a person will intentionally cause or exaggerate a loss

A

Moral hazard

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16
Q

A condition of carelessness or indifference that increases the frequency or severity of loss

A

Morale hazard (attitudinal hazard)

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17
Q

A tangible characteristic of property, persons, or operations, that tends to increase the frequency or severity of loss

A

Physical hazard

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18
Q

A condition of the legal environment that increases loss frequency or severity

A

Legal hazard

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19
Q

A condition that presents the possibility that a person or an organization will sustain a loss resulting from damage (including destruction, taking, or loss of use) to property in which that person or organization has a financial interest.

A

Property loss exposure

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20
Q

Property that has a physical form

A

Tangible property

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21
Q

Tangible property consisting of land, all structures permanently attached to the land, and whatever is growing on the land

A

Real property (realty)

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22
Q

All tangible or intangible property that is not real property

A

Personal property

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23
Q

Property that has no physical form

A

Intangible property

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24
Q

Any condition tor situation that presents the possibility of a claim alleging legal responsibility of a person or business for injury or damage suffered by another party

A

Liability loss exposure

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25
Q

A condition that presents the possibility of loss caused by a person’s death, disability, retirement, or resignation that deprives an organization of the person’s special skill or knowledge that the organization cannot readily replace

A

Personnel loss exposure

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26
Q

Any condition or situation that presents the possibility of a financial loss to an individual or a family such by causes as death, sickness, injury, or unemployment

A

Personal loss exposure

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27
Q

A condition that presents the possibility of loss caused by a reduction in net income

A

Net income loss exposure

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28
Q

Goals to be accomplished before a loss, involving social responsibility, externally imposed goals, reduction of anxiety, and economy

A

Pre-loss goal

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29
Q

Risk management program goals that should be in place in the event of a significant loss

A

Post-loss goals

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30
Q

The financial statement that reports the assets, liabilities, and owners equity of an organization as of a specific date

A

Balance sheet

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31
Q

The financial statement that reports an organization’s profit or loss for a specific period by comparing the revenues generated with the expenses incurred to produce those revenues

A

Income statement

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32
Q

The financial statement that summarizes the cash effects of an organizations operating, investing, and financial activities during a specific period

A

Statement of cash flows

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33
Q

A contractual provision that obligates one of the parties to assume the legal liability of another party

A

Hold-harmless agreement (or indemnity agreement)

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34
Q

The process of restoring an individual or organization to a pre-loss financial condition

A

Indemnification

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35
Q

A method of analysis that identifies conditions that increase the frequency or severity of loss

A

Hazard analysis

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36
Q

Probability that is based on theoretical principles rather than on actual experience

A

Theoretical probability

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37
Q

A probability measure that is based on actual experience through historical data or from the observation of facts

A

Empirical probability (a posteriori probability)

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38
Q

A technique for forecasting events, such as accidental and business losses, on the assumption that they are governed by an unchanging probability distribution

A

Probability analysis

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39
Q

A mathematical principle stating that as the number of similar but independent exposure units increases, the relative accuracy of predictions about future outcomes (losses) also increases

A

Law of large numbers

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40
Q

A presentation (table, chart, or graph) of probability estimates of a particular set of circumstances and of the probability of each possible outcome

A

Probability distribution

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41
Q

The single outcome that is the most representative of all possible outcomes included within a probability distribution

A

Central tendency

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42
Q

The weighted average of all the possible outcomes of a probability distribution

A

Expected value

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43
Q

The sum of the values in a data set divided by the number of values

A

Mean

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44
Q

The value at the midpoint of a sequential data set with an odd number of values, or the mean of the two middle values of a sequential data set with an even number of values

A

Median

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45
Q

The most frequently occurring value in a distribution

A

Mode

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46
Q

The variation among values in a distribution

A

Dispersion

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47
Q

A measure of dispersion between the values in a distribution and the expected value (or mean) of that distribution, calculated by taking the square root of the variance

A

Standard deviation

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48
Q

A measure of dispersion calculated by dividing a distribution’s standard deviation by its mean

A

Coefficient of variation

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49
Q

A probability distribution that, when graphed, generates a bell-shaped curve

A

Normal distribution

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50
Q

A conscious act or decision not to act that reduces the frequency and/or severity of losses or makes losses more predictable

A

Risk control

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51
Q

A risk control technique that involves ceasing or never undertaking an activity so that the possibility of a future loss occurring from that activity is eliminated

A

Avoidance

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52
Q

A risk control technique that reduces the frequency of a particular loss

A

Loss prevention

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53
Q

A risk control technique that reduces the severity of a particular loss

A

Loss reduction

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54
Q

A plan for backup procedures, emergency response, and post disaster recovery to ensure that critical resources are available to facilitate the continuity of operations in an emergency situation

A

Disaster recovery plan

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55
Q

A risk control technique that isolates loss exposures from one another to minimize the adverse effect of a single loss

A

Seperation

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56
Q

A risk control technique that uses backups, spares, or copies of critical property, information, or capabilities and keeps them in reserve

A

Duplication

57
Q

A risk control technique that spreads loss exposures over numerous projects, products, and markets or regions

A

Diversification

58
Q

The portion of fire safety that focuses on the minimum building design, construction, operation, and maintenance requirements necessary to assure occupants of a safe exit from the burning portion of the building

A

Life safety

59
Q

A risk financing technique by which losses are retained by generating funds within the organization to pay for losses

A

Retention

60
Q

In the context of risk management, a risk financing technique by which the financial responsibility for losses and variability in cash flows is shifted to another party

A

Transfer

61
Q

The first level of insurance coverage above any deductible

A

Primary layer

62
Q

Insurance that covers losses above an attachment point, below which there is usually another insurance policy or self-insured retention

A

Excess coverage

63
Q

A liability policy that provides excess coverage above underlying policies and may also provide coverage not available in the underlying policies, subject to a self-insured retention

A

Umbrella policy

64
Q

A level of excess insurance coverage between a primary layer and an umbrella policy

A

Buffer layer

65
Q

A form of retention under which an organization records its losses and maintains a formal system to pay for them

A

Self-insurance

66
Q

An insurance policy with a per occurrence or per accident deductible of $100,000 or more

A

Large deductible plan

67
Q

A subsidiary formed to insure the loss exposures of its parent company and the parent’s affiliates

A

Captive insurer, or captive

68
Q

A group captive formed under the requirements of the Liability Retention Act of 1986 to insure the parent organization

A

Risk retention group

69
Q

An arrangement under which an organization rents capital from a captive, to which it pays premiums and receives reimbursements for its losses

A

Rent-a-captive

70
Q

A corporate entity separated into cells so that each participating company owns an entire cell but only a portion of the overall company

A

Protected cell company (PCC)

71
Q

A risk financing plan that transfers a limited (finite) amount of risk to an insurer

A

Finite risk insurance plan

72
Q

A group of organizations that band together to insure each other’s loss exposures

A

Pool

73
Q

A rating plan that adjusts the insured’s premium for the current policy period based on the insured’s loss experience during the current period; paid losses or incurred losses may be used to determine loss experience

A

Retrospective rating plan

74
Q

The level at which a loss occurrence is limited for the purpose of calculating a retrospective rated premium

A

Loss limit

75
Q

A financial market in which long-term securities are traded

A

Capital market

76
Q

The process of creating marketable investment security based on a financial transaction’s expected cash flows

A

Securitization

77
Q

The process of creating a marketable insurance-linked security based on cash flows that arise form the transfer of insurable risks

A

Insurance securitization

78
Q

A financial transaction in which one asset is held to offset the risk associated with another asset

A

Hedging

79
Q

A financial contract that derives its value from the value of another asset

A

Derivative

80
Q

An agreement, entered into before any losses occur, that enables an organization to raise cash by selling stock or issuing debt at prearranged terms after a loss occurs that exceeds a certain threshold

A

Contingent Capital arrangement

81
Q

A loss that is accidental or unexpected

A

Fortuitous loss

82
Q

The principle that insurance policies should provide a benefit no greater than the loss suffered by an insured

A

Principle of indemnity

83
Q

A contract in which the insurer agrees, in the event of a covered loss, to pay an amount directly related to the amount of the loss

A

Contract of indemnity

84
Q

A legal doctrine that provides that the damages owed to a victim should not be reduced because the victim is entitled to recover money from other sources, such as an insurance policy

A

Collateral source rule

85
Q

Any contract in which one party must either accept the agreement as written by the other party or reject it

A

Contract of adhesion

86
Q

A legal doctrine that provides for an ambiguous insurance policy clause to be interpreted in the way that an insured would reasonably expect

A

Reasonable expectations doctrine

87
Q

Something of value or bargained for an exchanged by the parties to a contract

A

Considerations

88
Q

A contract that one or more parties must perform only under certain conditions

A

Conditional contract

89
Q

A single document that contains all the agreements between the insured and the insurer and that forms a complete insurance policy

A

Self-contained policy

90
Q

Policy that covers only one line of business

A

Monoline policy

91
Q

Policy that covers two or more lines of business

A

Package policy

92
Q

An insurance policy that consists of several different documents, none of which by itself forms a complete policy

A

Modular policy

93
Q

An insurance form that is drafted according to terms negotiated between a specific insured (or group of insureds) and an insurer

A

Manuscript form

94
Q

An insurance policy information page or pages providing specific detail about the insured and the subject of the insurance

A

Declarations page (declarations, or dec.)

95
Q

A statement in an insurance policy that the insurer will, under described circumstances, make a loss payment or provide a service

A

Insuring agreement

96
Q

A policy provision that eliminates coverage for specified exposures

A

Exclusion

97
Q

Any provision that qualifies an otherwise enforceable promise made in the policy

A

Policy condition

98
Q

An interest in the subject of an insurance policy that is not unduly remote and that would cause the interested party to suffer financial loss if an insured event occurred

A

Insurable interest

99
Q

A situation in which a party experiences an economic disadvantage if an insured event does not occur or, conversely, economic harm if the event does occur

A

Factual expectancy

100
Q

In the agency relationship, the party that is authorized by the principal to act on the principal’s behalf

A

Agent

101
Q

Someone who has the legal title to a property but is responsible that it be used, handled, and transferred solely for the benefit of the beneficiary

A

Trustee

102
Q

The party temporarily possessing the personal property in a bailment

A

Bailee

103
Q

The owner of the personal property in a bailment

A

Bailor

104
Q

Insurance written for an amount approximating the full value of the asset insured

A

Insurance to value

105
Q

The amount of loss, typically measured in dollars, for a loss that has occurred

A

Loss severity

106
Q

The number of losses that occur within a specified period

A

Loss frequency

107
Q

A provision in property insurance policies that encourages insureds to purchase an amount of insurance that is equal to, or close to, the value of the covered property

A

Insurance-to-value provision

108
Q

A clause that requires the insured to carry insurance equal to at least a specified percentage of the insured property’s value

A

Coinsurance clause

109
Q

Optional coverage that suspends the coinsurance condition if the insured carries the amount of insurance agreed to by the insurer and insured

A

Agreed value optional coverage

110
Q

A method of protecting against inflation by increasing the applicable limit for covered property by a specified percentage over the policy period

A

Inflation guard protection

111
Q

Endorsement that covers the fluctuating values of business personal property by providing differing amounts of insurance of certain time periods during the policy period

A

Peak season endorsement

112
Q

Cost to replace property with new property of like kind and quality less depreciation

A

Actual cash value (ACV)

113
Q

The cost to repaid or replace property using new materials of like kind and quality with no deduction for depreciation

A

Replacement cost

114
Q

The price at which particular piece of property could be sold on the open market by an unrelated buyer or seller

A

Market value

115
Q

A court ruling explicitly requiring that all relevant factors be considered in determining the actual cash value

A

Broad evidence rule

116
Q

A method of valuing property in which the insurer and the insured agree, at the time the policy is written, on the maximum amount that will be paid in the event of a total loss

A

Agreed value method

117
Q

A valuation method in which the insurer is required to pay no more than the cost to repaid or replace the damaged or destroyed property with property that is its functional equivalent

A

Functional valuation method

118
Q

Money claimed by, or monetary award to, a party who has suffered bodily injury or property damage for which another party is legally responsible

A

Damages

119
Q

An insurance premium and loss exchange in which the insured pays the insurer premiums for low value losses, and the insurer pays the same dollars back to the insured, after subtracting expenses

A

Dollar trading

120
Q

A dollar amount specified in an insurance policy that the insured must pay before the insurer will make any payment for a claim

A

Self-insured retention (SIR)

121
Q

Sets of data that are too large to be gathered and analyzed by traditional methods

A

Big data

122
Q

The analysis of large amounts of data to find new relationships and patterns that will assist in developing business solution

A

Data mining

123
Q

Obtaining information through language recognition

A

Text mining

124
Q

The use of technological devices in vehicles with wireless communication and GPS tracking that transmit data to businesses or government agencies; some return information for the driver

A

Telematics

125
Q

A network of objects that transmit data to computers

A

Internet of things (IoT)

126
Q

Artificial intelligence in which computers continually teach themselves to make better decisions based on previous results and new data

A

Machine learning

127
Q

Computer processing or output that stimulates human reasoning or knowledge

A

Artificial Intelligence (AI)

128
Q

An interdisciplinary field involving the design and use of techniques to process very large amounts of data from a variety of sources and to provide knowledge based on data

A

Data Science

129
Q

Data organized into databases with defined fields, including links between databases

A

Structured data

130
Q

Data that is not organized into predetermined formats, such as databases, and often consists of text, images, or other nontraditional media

A

Unstructured data

131
Q

Data that is owned by an organization

A

Internal data

132
Q

Data that belongs to an entity other than the organization that wishes to acquire and use it

A

External data

133
Q

Data regarding interest rates, asset prices, exchange rates, the Consumer Price Index, and other information about the global, the national, and regional economy

A

Economic data

134
Q

Data regarding classifications of a population

A

Geodemographic data

135
Q

A field of science that derives knowledge from data; it provides a root understanding of useful approaches to data analysis

A

Statistics

136
Q

A collection of information stored in discrete units for ease of retrieval, manipulation, combination, and other computer processing

A

Database

137
Q

An operational sequence used to solve mathematical problems and to create computer programs

A

Algorithm

138
Q

An accepted standard for the steps in any data mining process used to provide business solutions

A

Cross industry standard process for data mining (CRISP-DM)

139
Q

An organizational process to gather and analyze relevant and verifiable data and then evaluate the results to guide business strategies

A

Data-driven decision making

CPCU 500 (1 decks)

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