


Study with the several resources on Docsity
Earn points by helping other students or get them with a premium plan
Prepare for your exams
Study with the several resources on Docsity
Earn points to download
Earn points by helping other students or get them with a premium plan
Community
Ask the community for help and clear up your study doubts
Discover the best universities in your country according to Docsity users
Free resources
Download our free guides on studying techniques, anxiety management strategies, and thesis advice from Docsity tutors
Unit 1 Arkansas Insurance Questions and Answers 2025
Typology: Exams
1 / 4
This page cannot be seen from the preview
Don't miss anything!
insurance - answer transfer of risk from a person or business to an insurer Risk - answer uncertainty/possibility of a loss Types of Risk - answer Speculative and Pure Speculative Risk - answer A chance of loss, no loss, or gain. not insurable Pure Risk - answer chance of loss only; insurance companies will insure Exposure - answer possibility that a loss will occur Examples of Exposure - answer Auto Accident; Luggage lost on a trip; Pet biting a mailman; Employee hurt on the job; House fire Peril - answer cause of loss Example of Peril - answer House burns down; peril is fire Direct - answer Physical Loss Indirect - answer consequence of the direct loss Hazard - answer increases the chance of loss Types of Hazards - answer Physical, Moral, Morale Physical Hazard - answer the hazard can be seen Moral Hazard - answer Dishonesty Morale Hazard - answer carelessness STARR (methods of handling risk) - answer Sharing Transfer Avoidance Retention Reduction Contract (Policy) - answeran agreement between the insured and the insurer
1st Party - answer Insured (customer) 2nd Party - answer insurer, insurance company Law of Large Numbers - answer the larger the group, the more accurately future losses can be predicted CANHAM - elements of insurable risk - answer Calculable Affordable Non-catastrophic Homogeneous Accidental Measurable Adverse Selection - answerrisks that have a greater-than-average chance of loss Adverse Selection Causes - answerto be not wanted by insurers; tendency for high-risk individuals to get and keep insurance; Why insurers go through the underwriting process; High risk = Higher rate or refusal to insure Reinsurance - answeran insurance company (the ceding company) paying another insurance company (reinsurer) to take some of the companies risk of catastrophic loss What is the purpose of reinsurance - answerhelp spread the insurer's risk Two Types of Reinsurance - answerTreaty and Facultative Facultative Reinsurance - answerthe reinsurer evaluates each risk before allowing the transfer Treaty Reinsurance - answerthe reinsurer accepts the transfer according to an agreement called a treaty Stock Insureer - answerOwned by Stockholders; Dividend is not guaranteed; Dividend is paid to stockholder; Dividend is taxable to stockholder; Issues non-participating policies Mutual Insurer - answerOwned by the policy holders; Dividend is not guaranteed; Dividend is paid to policy holder; Dividend is not taxable; Issues participating policies Fraternal Insurer - answerProvides insurance and other benefits; Must be a member of the society to get the benefits. Reciprocal Insurers - answerUnincorporated; Member are required to pay assessed amount if a loss to any member of the group occurs; Managed by an attorney-in-fact