C81 Part 1: Study 6

Question 1

Application

Answer 1

Application by an insured, can be done verbally, in writing ir online. Insured provides information relating to the subject then asses this infrormation then decides wether to accept the risk for insurance and on the terms of such acceptance

Question 2

Applicant

Answer 2

The person or firm requesting insurance. That party answers oral questions or completes and signs written forms that contain information to assess the risk

Question 3

Broker of record

Answer 3

The record currentlt recievinf a commission to handle a policy

Question 4

Disclosure

Answer 4

1) General- Process of revealing all relevant facts
2 Law - The requiremenr that parties to a litigation disclose relevant information or tje material documents that a party intends to rely on to support his or her case

Question 5

Representation

Answer 5

A statement or conduct made to influen e a insurer to decide on a risk. Includes declining the rate & premium to be chsrged. In inshrsnce, these statements are said to be “material to the risk” and are wnough to void a policy from the beggining

Question 6

Named insurance

Answer 6

The person or party designated in the policy as the insured, who has certain rughts under the policy, as opposed to someone who may be covered by the policy but is not specifically named & does not have the same rights as the named insured

Question 7

Effective date

Answer 7

The date of inception of an insurance policy or the date additional coverages become effective

Question 8

Expiry

Answer 8

End of the policy period

Question 9

Loss Payee

Answer 9

A person or entity other than the named insured to whom the proceeds of insurance will be paid

Question 10

Mortgagee

Answer 10

A special class of loss payee that has a registered interest on real property offered as security for the money that the mortgagee has loaned the property owner

Question 11

Mortgage Clase

Answer 11

A clause in an insurance policy that spitulates the rights & obligations of the insurer & the mortgagee

Question 12

Rate

Answer 12

Amount charged to an insured that reflects the expectation of loss for a covered risk, insursnce companu expenses, and profit

(BASIS OF PREMIUM CALCULATION FOR THE INSURANCE PROVIDED FOR THE EXPOSURE)

Question 13

Loss probability

Answer 13

The liklihood id a risk resultin in a loss, taking into account all its various hazards & protections

Question 14

Pure Premium

Answer 14

Portion of the total premium that is needed to pay expected losses & does not take into account money needed for company expenses

Question 15

Loading

Answer 15

An additinal charge included in an insurance rate to reflect a hazard not contemplated in the basic rate for this class

Question 16

Expense Loading

Answer 16

Part of a premium rate that represents the cost to the insurer of producing & maintaing the policy

Question 17

Acquisition cost

Answer 17

The cost of putting buisness on the books & acquiring the premium. The items involved are not standard with all insurers, but generally may include such items as agents/ brokers, commisins, field representatives, costs, premium tax & perhaps some of the relevant head office acquisjtion costs of operations

Question 18

Manuscript Policies

Answer 18

Policies composed of unique wordings drafted to accomodate the needs of a particular risk

Question 19

Frequency of loss

Answer 19

This is a measure of how often losses are likely to occur in the future

assuming the average size of loss is constant, the higher the kiss frequency, the worse the loss experience

Question 20

Severity of loss

Answer 20

This is the average size of the losses. The larger the average loss, the higher the loss severity is. Assuming the loss frequency is constant, the higher the loss severity, the worse the loss experience

Question 21

Special Hazards

Answer 21

Foreseen hazards/ridks common to certain types of buisness that are not covered in an ordinary policy

Question 22

Underwriting riles

Answer 22

Rules used by insurance companies to assess the insurability of a particular risk. These rules are set individually by insurance companies & may differ for each class of buisness

Question 23

Retention

Answer 23

1) Amount if liability the ceding company retains for its own account, may be % or $ of each risk
ALSO REFERS TO
2) Part of the ridk retained by clients without insuring it (b/c insurance is deemed too expensive or loss is not insurable)

Question 24

Manual Rating

Answer 24

A pricing method in ehich an insurer use rates that are baded on its own experience rather on that if a soecific grouo for which it’s calculating a premium