Karteikarten
G1: Basic Insurance Concepts & Principles
Karten in diesem Stapel (33)
- 1InsuranceA contract that the insurer protects the insured against loss, damage, or liability from a contingent or unknown event.
- 2Profitable Distribution of Exposures AKA Spread of RisksDont put all eggs in one basket. Spread the risk geographically in case of catastrophic events.
- 3Principle Distribution ExposurePrinciple where insurers accept risks that are spread geographically so as to not have catastrophic losses if its only in one area.
- 4Adverse SelectionThe tendency of higher risk person to seek out insurance more aggressively.
- 5Underwriter Responsibilities1. Analyze and Evaluate Risks
2. Accept or Reject Risks
3. Protect again Adverse Selection - 6UnderwriterPerson that works in the Underwriting Department
- 7Underwriting DepartmentDepartment responsible for making decisions whether or not a policy will be issued.
- 8Principle of IndemnityGoal of insurance is to restore one back to his previous condition that existed before the loss.
- 9Large GroupCharacteristic to be Ideally Insurable. Group must be large enough so that enough premiums can be collected by the risk pool to cover losses of individuals within than group. Loss must create an ECONOMIC HARDSHIP.
- 10HardshipCharacteristic to be Ideally Insurable. Any insured loss must create an economic hardship to prevent moral and morale hazards.
example: setting fire to your own home just collect insurance would also create economic loss. - 11CatastrophicLosses covered by an insurance company CANNOT be catastrophic.
Example: Flood is the most damaging peril and insurance exclude flood in regular home insurance because its catastrophic. - 12UncertainCharacteristic to be Ideally Insurable.
The risk of losses to the insured must be uncertain, accidental and due to chance. - 13Definite and MeasurableCharacteristic to be Ideally Insurable.
Must be measurable=Insurer must be able measure amount of loss
Definite=spell out time and place - 14PredictableCharateristic to be Ideally Insurable.
Insured losses must be predictable to determine premiums etc. - 15Large C-H-U-M-PCharacteristic to be Ideally Insurable.
Large= Large Group
C=Catastropic
H-Economic Hardship
U=Uncertain & Accidental
M= Measurable & Definite
P=Predictable - 16Insurable InterestHaving legal and economic interest in the safety and preservation of the person/property insured.
- 17Loss ExposureAny situation with a risk of loss.
- 184 Types of Loss Exposure1. Property Loss
2. Liability Loss
3. Personal (Human) Loss
4. Personnel Loss - 19Property Loss ExposureRisk of loss to ones property due to theft or destruction.
- 20Liability Loss ExposureRisk of having to pay for injuries to another person or for damage to anothers property.
- 21Personal (Human) Loss ExposureRisk of financial loss due to injury, sickness, death or unemployment.
- 22Personnel Loss ExposureRisked faced by a business due to death, disability, retirement or resignation of a key employee.
- 23PerilCause of a Loss.
Example: Fire, Theft - 24HazardAnything that increases the chances of loss occuring.
- 253 Types of Hazards1. Physical
2. Moral
3. Morale - 26Physical HazardPhysical condition of person/thing that increases the chance of loss.
example: health of a person or Faulty breaks on a car - 27Moral HazardIncrease chance of loss due to the insured dishonesty.
ex: lying about health - 28Morale HazardIncreased loss due to insureds carelessness and indifference because they carry insurance.
Example: leaving keys in car because insurance will cover the cost of a new one. - 29Law of Large NumbersUsed for statistical prediction of losses so accurate rates can be determined.
"The larger the number individual, but similar risks combined into a group, the more certainty as to the number of losses within that group" Can predict the losses within a group but DOES not predict losses for an individual. - 30Pure RisksInvolves the possibility of a Loss.
No gain and is insurable.
example: car accident (no gain in wrecking a car) - 31Speculative RisksInvolves the possibility of both Loss & Gain. UNinsurable.
example: Gambling (gain=winning) - 32RiskThe UNCERTAINTY of loss occuring.
- 332 Types of Risks1. Pure
2. Speculative
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- Beschreibung
- Code & Ethics Karteikarten am G1: Basic Insurance Concepts & Principles, erstellt von Det Ferraris am 29/05/2013.
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- Det Ferraris
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