Forms of insurance

Question 1

What does the form of insurance affect?

Answer 1

The contract used

Question 2

What is the form of insurance

Answer 2

Deals with the relationship of damage and compensation

Question 3

What is the formula for intensity of insurance

Answer 3

Compensations/Loss

Question 4

i<1

Answer 4

Under coverage

Question 5

i=1

Answer 5

Full insurance

Question 6

i>1

Answer 6

Over insurance - usually reduced to i=1

Question 7

What are the 2 main groups of insurance?

Answer 7

Sum insured and damage insured

Question 8

Sum insured

Answer 8

The insurer and the prospective policyholder agree on a sum insured if the loss event occurs regardless of the extent

Question 9

Principal of abstract coverage

Answer 9

Full amount is paid out if event occurs, there is not in between value - eg. life insurance

Question 10

Damage insurance

Answer 10

Indemnity is paid out with respect to the amount of damage that happened

Question 11

Principal of concrete coverage

Answer 11

There is a definite value attached to the loss

Question 12

Subforms of Damage insurance

Answer 12

Unlimited damage insurance
First loss insurance
Full value insurance

Question 13

Unlimited damage insurance

Answer 13

Covers all losses

Question 14

Intensity in unlimited damage insurance

Answer 14

i=1

Question 15

Describe the indemnity function for unlimited damage insurance

Answer 15

Straight-line where loss and compensation are always equal

Question 16

Example of unlimited damage insurance

Answer 16

Glass insurance, vehicle insurance in some countries

Question 17

First loss insurance

Answer 17

The insurer covers all losses up to a limit (sum insured) anything over this will not be paid out

Question 18

Describe indemnity function for first loss insurance

Answer 18

c=l until s(sum insured) is reached

Question 19

Describe the intensity function of first loss insurance

Answer 19

i=1 until s where it falls down (half u shaped)

Question 20

Full value insurance

Answer 20

The insurer covers all losses in the proportions of the sum insured to the value insured

Question 21

Value insured

Answer 21

This is the value of the object has in reality

Question 22

What happens if the value insured is wrong

Answer 22

If there is under insurance then there (s

Question 23

What does the indemnity function look like in the event of the value indicated being smaller

Answer 23

Tilted down stoping at the sum insured

Question 24

What is the intensity in full value insurance

Answer 24

s/v

Question 25

Partial value insurenace

Answer 25

When you assume a certain proportion of the loss

Question 26

What are the three variables in partial value insurance

Answer 26

The value indicated, value insured, sum insured

Question 27

Value indicated (partial value insurance)

Answer 27

The value of the item in the contract

Question 28

What does the insurer cover in partial value insurance

Answer 28

value indicated/value insured to the sum insured

Question 29

What happens with a lower sum insured

Answer 29

Insured retains more of the risk

Question 30

Sum insured (partial value insurance)

Answer 30

A fraction of the value indicated

Question 31

Formula for compensation in partial value insurance

Answer 31

C=L*vind /Vins

Question 32

What is the intensity of the value indicated is correct and lower than is correct

Answer 32

1, if incorrect then the intensity drops. Intensity always reduces as the loss passes the sum insured

Question 33

Full insurance refers to what

Answer 33

Intensity

Question 34

Full value insurance refers to

Answer 34

A subform of damage insurance

Question 35

Deductible

Answer 35

An amount of damage/loss the insurer does not compensate for

Question 36

Invoulentery deductibles

Answer 36

unintentional under insurnace

Question 37

Voulentery dedeuctibles

Answer 37

Agreed upon before

Question 38

What are the functions of deductibles

Answer 38

- Prevent morale hazard moral hazard - Avoids the admin costs of small claims - Allows the insured to save on premiums

Question 39

Morale hazard

Answer 39

Carlesness

Question 40

Moral hazard

Answer 40

Intention loss/fraud

Question 41

What are the 3 types of deductibles

Answer 41

Absolute, relative, past a point

Question 42

Absolute deductible

Answer 42

A deductible is a fixed amount at the start

Question 43

What is the intensity function of an absolute deductible like?

Answer 43

pushed out from the start point

Question 44

What is the intensity function of an absolute deductible like?

Answer 44

half n shape that approaches but never touches 1

Question 45

Where are absolute deductibles seen

Answer 45

Car insurance, house insurance ...

Question 46

Relative deductible

Answer 46

The insurer deducts a percentage

Question 47

Indemnity function of a relative/co-insurance deductible

Answer 47

pivots down

Question 48

When are relative deductibles used

Answer 48

Hospital expenses, storm insurance...

Question 49

Past a point deductibles

Answer 49

Pays out in full if the damage reaches a certain level

Question 50

When are past a point deductibles used?

Answer 50

Marine cargo insurance