Risk Management

Business

Quiz 6 :

The Insurance Solution and Institutions

Quiz 6 :

The Insurance Solution and Institutions

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If there is no transfer of at least 10 percent of the risk, regulators regard the transaction as a noninsurance transaction that has less favorable accounting treatment for losses and taxes.
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True False
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True

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Risk increases as the number of exposures increases.
Free
True False
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False

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Property/casualty insurance excludes insurance to cover the possibility of being held legally liable to pay damages to another person.
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True False
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False

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The use of deductibles to eliminate insurance reimbursement for frequent small losses makes automobile collision premiums unattractive for the insureds.
True False
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In the U.S., flooding is covered by the federal government, not by private insurers.
True False
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The stated purpose of mutual insurers is to make a profit for stockholders rather than to provide low-cost insurance.
True False
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The larger the number of exposures, the lower the risk of missing the prediction of future losses.
True False
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Staff in the group underwriting division are trained to look for risk factors that influence the frequency and severity of claims among individuals and families.
True False
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Insurance Services Office (ISO) is a data collection and statistical analysis organization that helps small insurers reduce the uncertainty in predicting losses by providing them with data that exists in the insurance industry.
True False
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The risk of an insurer with more exposures is relatively higher than that of an insurer with fewer exposures under the same expected distribution of losses.
True False
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The suicide clause, in life insurance contracts, is a provision designed to reduce adverse selection.
True False
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Unemployment and workers' compensation insurance are forms of involuntary social insurance provided by the government.
True False
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Insurance can reduce the financial and noneconomical uncertainty of risk.
True False
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Insurance is created by an insured that, as a professional risk-bearer, assumes the financial aspect of risks transferred to it by insurer.
True False
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In order for the law of large numbers to work, the pooled exposures must be heterogeneous.
True False
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Risk retention groups and captives are forms of self-insurance.
True False
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Being part of pooling is an insurance arrangement by itself.
True False
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Risk pooling is done across ages, not by ages.
True False
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The insurer does not guarantee that the event insured against will not happen.
True False
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Pooling the exposures together permits less accurate statistical prediction of future losses.
True False
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