Intro to Insurance Flashcards
Three basic rules of risk management
Don’t risk more than you can afford to lose, consider the odds, don’t risk a lot for a little.
Is the client or planner responsible for formulating the risk management policy?
Client
Three major categories of risk evaluation for a client
Property, personal health and injury, liability.
High severity, high frequency
Avoid or reduce.
High severity, low frequency
Insure (risk transfer)
Low severity, high frequency
Retain and reduce.
Low severity, low frequency
Retain
Four elements of an insurable risk
homogenous, definite, fortuitous, not catastrophic
Role of state courts in regulating insurance
render decisions on policy terms, rule on constitutionality of state insurance laws
Does the NAIC have legal power?
No
Four basic parts of an insurance contract
declarations, agreement, exclusions, conditions.
Notice of loss vs. proof of loss
notice of loss is the first step in the process, must be given immediately. proof of loss is a sworn statement that a loss has occured with the amount of the claim.
Strict liability relates to…
Products
true or false: Insurance contracts are required by law to be in writing in order to be of legal form.
True
The purpose of the NAIC is to…
increase the reliability of its oversight of insurance companies.
