REV Mod 1 Study 1, 2, 3 + 6 Flashcards
(40 cards)
What is a Risk?
The chance of a loss
What is the difference between Pure Risk and Speculative Risk and what one does insurance insure
Pure risk - only loss
Speculative risk - loss with a chance of gain (ex lottery)
What are the 3 types of insurable Risks
- Personal Risks
- Property Risks
- Liability Risks
What is Direct vs Indirect Loss
Direct loss involves damage or destruction to the property insured
Indirect loss occurs because of direct loss - Since there was damage to an apartment, the indirect loss is the rent incurred from that apartment.
There are 3 categories of risk.
Personal lines insurance relates to..
Individuals in their private capacity: home, auto, seasonal dwellings, boats, jewellery, furs. Further split into Personal Auto and Personal Property
There are 3 categories of risk.
Commercial lines insurance relates to..
Commercial operations: retail stores, professional offices, construction vehicles
There are 3 categories of risk.
Special risks insurance relates to..
Insurance related to marine exposures, aviation and high-risk industrial operations.
What is a peril
An event that may cause a loss
What is Negligence
The doing of something a reasonable person would not do or not doing something a reasonable person would do
What is a Hazard
A condition that may cause a peril to occur or make the loss more severe.
Physical and moral Hazards
What is Proximate Cause
The cause is the immediate and effective cause of the loss. In a chain, what leads naturally and directly to the loss.
Not necessarily the last event before the occurrence.
What is Remote Cause
The middle man in the chain of proximate and immediate cause
What is Immediate cause
The last link in the chain leading to a loss
The Risk Management Process is 3 points to
Determine the exposures clients need to manage
Provide a plan of action to manage those risks
Recommend insurance coverage for those risks
What are the 4 categories of pre-loss objectives
- Social responsibility
- Externally imposed obligations
- Peace of mind
- Cost of risk
What are the 5 categories of post-loss objectives
- Social Responsibility
- Survival
- Operational Continuity
- Stable Earnings
- Sustained Growth
What are the duties of a Risk Manager
Identifying loss exposures Preventing loss Reducing loss Financing loss Educating other corporate Managers Acting as a resource to other managers
In order, what is the 5 step process used to minimize loss exposures
- Identifying and analyzing exposures
- Formulating options
- Selecting the best techniques
- Implementing the risk management plan
- Monitoring results and modifying the plan
Loss control technique avoidance means to
Eliminate an exposure - avoid it
Loss control technique loss prevention means to
Anticipatory safety measures can prevent accidents
Loss control technique loss reduction means to
Lessen the severity of those losses that do occur
Loss control technique separation or diversification means to
Separate locations - reduce the concentration of value should a loss occur at one location
Loss control technique non-insurance risk transfer means to
Risk can be transferred to others via contractual agreements
There are two functions of insurance. The primary function is to spread risk - the losses of the few are shared by many. What are some of the secondary functions that enhance the economy
Aiding security Aiding credit Promoting loss prevention Providing capital Providing employment
