Insurance & Risk Management

Question 1

Risk Management Model

Answer 1

identify hazards, assess and prioritize risks, choose control measures, implement controls, monitor and review results

Question 2

Enterprise Risk Management/ERM

Answer 2

state goal, identify risks, evaluate risks, treatrisks, monitor and review results, communicate results

Question 3

Risk Map

Answer 3

a data visualization tool for communicating specific risks an organization faces

Question 4

Risk Profiling

Answer 4

the quantification of an investor’s overall risk tolerance

Question 5

Risk Enhancement

Answer 5

a risk response strategy aimed at increasing the probability of a positive risk occurrence

Question 6

Risk Acceptance

Answer 6

occurs when a business or individual acknowledges that the potential loss from a risk is not great enough to warrant spending money to avoid it

Question 7

Risk Transference

Answer 7

handing the risk off to a willing third party

Question 8

Risk Avoidance

Answer 8

seeks to avoid compromising events entirely

Question 9

Risk Reduction

Answer 9

reduce the frequency or severity of losses

Question 10

Risk Retention

Answer 10

the method secured for all other types of risks, that is, unforeseen or foreseen but not significant

Question 11

Pure Risk

Answer 11

risks that are beyond human control and result in a loss or no loss- there is no possibility of financial gain (classified as personal, property, or legal)

Question 12

Risk Financing

Answer 12

the determination of how an organization will pay for loss events in the most effective and least costly way possible

Question 13

Risk Management

Answer 13

the identification, evaluation, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability or impact of unfortunate events or to maximize the realization of opportunities

Question 14

Auto Liability Coverage

Answer 14

mandatory in most states; Bodily injury liability may help pay for costs related to another person’s injuries if you cause an accident; Property damage liability may help pay for damage you cause to another person’s property while driving

Question 15

Uninsured and Underinsured Motorist Coverage

Answer 15

helps pay for costs incurred by another uninsured or underinsured driver; required in some states

Question 16

(Auto) Collision Coverage

Answer 16

helps cover damages to car or replace car if If you’re involved in an accident with another vehicle, or if you hit an object such as a fence

Question 17

(Auto) Comprehensive Coverage

Answer 17

helps cover costs or replace car if it is damaged by a covered peril other than collisions (theft, fire, vandalism)

Question 18

(Auto) Medical Payments Coverage

Answer 18

helps cover costs if If you, your passengers or family members who are driving the insured vehicle are injured in an accident

Question 19

(Auto) Personal Injury Protection

Answer 19

helps pay for medical and other expenses incurred due to your injury such as childcare expenses or lost income

Question 20

(Auto) Gap Coverage

Answer 20

helps pay off your auto loan if your car is totaled or stolen)

Question 21

Renter’s Insurance

Answer 21

covers losses from theft, water backup damage, certain natural disasters, bodily injuries and more in a rented property

Question 22

Worker’s Compensation

Answer 22

paid by employer who cannot require the employee to contribute to the cost of compensation

Question 23

Disability Insurance

Answer 23

replaces some of a working person’s income when a disability (illness or injury) prevents them from working; It does not cover medical care or long-term care services

Question 24

Long-Term Care Insurance

Answer 24

covers long-term care costs generally not covered by health insurance, Medicare, or Medicaid

Question 25

Co-Payments

Answer 25

a set fee you pay for a doctor visit or a prescription; helps protect against moral hazard

Question 26

Exclusions

Answer 26

types of damage that are not covered by your insurance

Question 27

Underwriting

Answer 27

sign and accept liability under an insurance policy, thus guaranteeing payment in case loss or damage occurs

Question 28

Global Insurance Program

Answer 28

a multinational insurance program with a coverage territory encompassing the entire world, including the country in which the insured is domiciled

Question 29

EPA/Environmental Protection Agency

Answer 29

responsible for the protection of human health and the environment

Question 30

NFPA/National Fire Protection Agency

Answer 30

organization devoted to eliminating death, injury, property, and economic loss due to fire, electrical, and related hazards

Question 31

COBRA/Consolidated Omnibus Budget Reconciliation Act

Answer 31

gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time (18 or 36 months) under certain circumstances (“qualifying acts”)

Question 32

Insurance Cycle/Underwriting Cycle

Answer 32

starts with many competitors and low premiums and then after a surge in claims and insurance company insolvencies, competition declines, and premiums go up

Question 33

Hard Market

Answer 33

increased premium costs for insureds, stricter underwriting criteria, less capacity, restricted terms of coverage and less competition among insurance carriers for new business

Question 34

Soft Market

Answer 34

low premiums, high limits, broader coverages, and a more competitive landscape with high availability of coverage

Question 35

Insurance Agent

Answer 35

represents one or multiple insurance companies and sells their policies, usually for a commission; licenced professionals

Question 36

Insurance Broker

Answer 36

an intermediary who sells, solicits, or negotiates insurance on behalf of a client for compensation; licenced professional

Question 37

Insurance Agent Vs. Broker

Answer 37

Insurance agents represent the insurance provider that employs them and help sell policies from that single provider. Insurance brokers represent the consumers who use them and can help them shop for policies from multiple providers

Question 38

Insurance Actuary

Answer 38

uses mathematics, statistics and financial theory to analyze the financial cost of risks

Question 39

Claims Representative

Answer 39

fulfills the promise to pay the insured or to pay on behalf of the insured by handling a claim when a loss occurs

Question 40

Loss Control Specialist

Answer 40

inspects businesses on behalf of insurance companies and provides loss prevention recommendations to reduce the frequency and severity of losses; performs inspections and prepares reports for insurance underwriting purposes

Question 41

Principle of Subrogation

Answer 41

allows your insurer to recover the costs associated with a claim, such as medical bills, repairs costs, and your deductible, from the at-fault party’s

Question 42

Rider

Answer 42

an addition to an existing life insurance policy that allows you to add specific insurance products to your basic coverage

Question 43

Presumptive Disability

Answer 43

where a loss is presumed to be total and permanent due to loss of sight, hearing, speech or loss of two limbs

Question 44

Health Insurance Portability and Accountability Act (HIPAA)

Answer 44

Required the creation of national standards to protect sensitive patient health information from being disclosed without the patient’s consent or knowledge