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P&C UNIT 1 CRAM SHEET > Unit 1 Cram Sheet > Flashcards

Unit 1 Cram Sheet Flashcards

1
Q

Insurance

A

Transfer of risk from a person or business to an insurer

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2
Q

Risk

A

uncertainty/possibility of a loss

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3
Q

Speculative Risk

A

chance of loss or gain; not insurable

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4
Q

Pure Risk

A

chance of loss only; insurance companies will insure

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5
Q

Exposure

A

possibility that a loss will occur

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6
Q

Example Exposure 1

A

Auto Accident

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7
Q

Example Exposure 2

A

Luggage lost on a trip

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8
Q

Example Exposure 4

A

Employee hurt on the job

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9
Q

Example Exposure 3

A

Pet biting a mailman

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10
Q

Example Exposure 5

A

House fire

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11
Q

Peril

A

a cause of loss

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12
Q

Peril Example 1

A

House burns down, peril is the fire

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13
Q

Direct

A

Physical loss

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14
Q

Direct Example 1

A

indirect- consequence of the direct loss

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15
Q

Hazard

A

increases the chance of loss

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16
Q

Hazard Example 1 Physical Hazard

A

the hazard can be seen

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17
Q

Hazard Example 2 Moral Hazard

A

dishonesty

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18
Q

Hazard Example 3 Morale Hazard

A

carelessness

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19
Q

STARR!

A

Method of handling risk

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20
Q

S in STARR!

A

Sharing

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21
Q

T in STARR!

A

Transfer

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22
Q

A in STARR!

A

Avoidance

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23
Q

R in STARR!

A

Retention

24
Q

R in STARR!

A

Reduction

25
Q

Contract (policy)

A

an agreement between the insured and the insurer

26
Q

Contract (policy) 1st Party

A

Insured (customer)

27
Q

Contract(policy) 2nd Party

A

insurer( insurance company)

28
Q

Law of large numbers

A

the larger the group, the more accurately future losses can be predicted

29
Q

CANHAM

A

Elements of an insurable risk

30
Q

C in CANHAM

A

Calculable

31
Q

A in CANHAM

A

Affordable

32
Q

N in CANHAM

A

Non-catastrophic

33
Q

H in CANHAM

A

Homogenous

34
Q

A in CANHAM

A

Accidental

35
Q

M in CANHAM

A

Measurable

36
Q

Adverse Selection

A

risks that have a greater-than-average chance of loss

37
Q

Adverse Selection Example 1

A

not warranted by insurers

38
Q

Adverse Selection Example 2

A

Tendency for high-risk individuals to get and keep insurance

39
Q

Adverse Selection Example 3

A

Why insurers go through the underwriting process

40
Q

Adverse Selection Example 4

A

High risk= higher rate or refusal to insure

41
Q

Reinsurance-

A

an insurance company( the ceding company) paying another insurance company (reinsurer) to take some of the company’s risk

42
Q

Reinsurance Example 1

A

Reinsurers help spread the insurer’s risk

43
Q

Reinsurance Example 2

A

Facultative- the reinsurer evaluates each risk before allowing the transfer

44
Q

Reinsurance Example 3

A

Treaty- the reinsurer accepts the transfer according to an agreement called a treaty

45
Q

Stock Insurer Example 1

A

Owned by stockholders

46
Q

Stock Insurer Example 2

A

Dividend is not guaranteed

47
Q

Stock Insurer Example 3

A

Dividend is paid to stockholder

48
Q

Stock Insurer Example 4

A

Dividend is taxable to stockholders

49
Q

Stock Insurer Example 5

A

Issues non-participating policies

50
Q

Mutual Insurer Example 1

A

Owned by the policyholders (customers)

51
Q

Mutual Insurer Example 2

A

Dividend is not guaranteed

52
Q

Mutual Insurer Example 3

A

Dividend is paid to policyholder

53
Q

Mutual Insurer Example 4

A

Issues participating policies

54
Q

Fraternal Insurer Example 1

A

Provides insurance and other benefits

55
Q

Fraternal Insurer Example 2

A

Must be a member of the society to get the benefits

P&C UNIT 1 CRAM SHEET (1 decks)

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