Quiz 1 (Chapters 1-3) Flashcards
How to deal with unavoidable risk?
Risk Avoidance
Two ways to minimize losses
Avoid the risk; Minimize the risk
The devastating event was the catalyst for home insurance
The Great London Fire of 1666
Famous for the unusual policies they write
Lloyds of London
Premature death, loss of income, property damage, Long-term care needs are examples of
Risks that people face
This impacts a large number of people and is not insurable
Fundamental or systemic risk
Icy roads, lightning , poor eyesight are examples of these
Perils
A character flaw
Moral Hazard
A situation to avoid when selling to many polices in a single area is an example of?
Catastrophic loss
Legal representatives of the company
Agent
This type of insurance needs a gate-keeper
Health Maintenance Organization (HMO)
There is no longer a cap on this due to the Affordable Care Act
Benefit Limits
This needs to be met first in a health insurance company
deductible
This term refers to a cap on the insured expense in a health insurance policy
Maximum out of the pocket
Oops I forgot to pay my bill
Grace Period
The last step in the Risk Management Process
Monitoring
Underwriters try to avoid this
Adverse Selection
The type of authority given to agents that can get them in trouble
Apparent Authority
The risk of a lawsuit due to negligence
Personal Liability
Low Frequency, High Severity
Use risk transfer
A large number of exposure units
Law of large numbers
This must be reasonable and affordable
Premiums
This only needs an insurable interest at the time of policy inception at the time of policy inception
Life Insurance
This law eliminated pre-existing conditions for individuals
The Affordable Care Act
