INSR 310 ACTUAL EXAMS SCRIPT ALL QUESTIONS
AND ANSWERS SURE A+
✔✔Exposure - ✔✔thing of value subject to being lost
✔✔Maximum Probable/Possible Loss
These are NOT the same thing - ✔✔What does MPL stand for?
✔✔3.5 billion of coverage for each tower vs for one tower of Twin Towers
Probable: coverage for 5 floors of damage
Possible: really needed coverage for 220 floors of damage (worst possible scenario) -
✔✔What is the difference between Maximum Probable and Possible Loss?
✔✔Peril - ✔✔any cause of loss or anything that can cause financial loss to your
exposure
✔✔Hazard - ✔✔anything that increased frequency or severity of loss
✔✔Frequency - ✔✔how common loss is or the number of losses
, ✔✔Severity - ✔✔how bad each individual loss is or the cost of each loss
✔✔physical
moral
morale - ✔✔what are the different types of hazards?
✔✔Physical Hazard - ✔✔a physical condition that increases the chance of loss
example: sloppy housekeeping
✔✔Moral Hazard - ✔✔conscious desire for loss
example: murdering someone for insurance money
very expensive
✔✔Morale Hazard - ✔✔subconscious desire/facilitation of loss
due to carelessness or indifference to a loss
don't want loss but you make it easy to happen
example: not locking house or car
✔✔Adverse Selection - ✔✔misclassification of risk
✔✔Adverse Selection and Moral Hazard - ✔✔What will always be present and very
expensive in insurance?
✔✔Avoid Risk
Retain Risk
Transfer Risk
Control Risk - ✔✔What are the basic tools of Risk Management?
✔✔Don't want to die in a plane crash, don't get on the plane but still not 100% effective
Problem is opportunity costs
Don't want to get on the plane, but you miss the meeting - ✔✔What is an example of
avoiding risk and what is the problem with this method?
✔✔Retaining Risk - ✔✔What is the most common way risk is dealt with?
✔✔Passive Risk - ✔✔risk you assume through carelessness or unawareness
AND ANSWERS SURE A+
✔✔Exposure - ✔✔thing of value subject to being lost
✔✔Maximum Probable/Possible Loss
These are NOT the same thing - ✔✔What does MPL stand for?
✔✔3.5 billion of coverage for each tower vs for one tower of Twin Towers
Probable: coverage for 5 floors of damage
Possible: really needed coverage for 220 floors of damage (worst possible scenario) -
✔✔What is the difference between Maximum Probable and Possible Loss?
✔✔Peril - ✔✔any cause of loss or anything that can cause financial loss to your
exposure
✔✔Hazard - ✔✔anything that increased frequency or severity of loss
✔✔Frequency - ✔✔how common loss is or the number of losses
, ✔✔Severity - ✔✔how bad each individual loss is or the cost of each loss
✔✔physical
moral
morale - ✔✔what are the different types of hazards?
✔✔Physical Hazard - ✔✔a physical condition that increases the chance of loss
example: sloppy housekeeping
✔✔Moral Hazard - ✔✔conscious desire for loss
example: murdering someone for insurance money
very expensive
✔✔Morale Hazard - ✔✔subconscious desire/facilitation of loss
due to carelessness or indifference to a loss
don't want loss but you make it easy to happen
example: not locking house or car
✔✔Adverse Selection - ✔✔misclassification of risk
✔✔Adverse Selection and Moral Hazard - ✔✔What will always be present and very
expensive in insurance?
✔✔Avoid Risk
Retain Risk
Transfer Risk
Control Risk - ✔✔What are the basic tools of Risk Management?
✔✔Don't want to die in a plane crash, don't get on the plane but still not 100% effective
Problem is opportunity costs
Don't want to get on the plane, but you miss the meeting - ✔✔What is an example of
avoiding risk and what is the problem with this method?
✔✔Retaining Risk - ✔✔What is the most common way risk is dealt with?
✔✔Passive Risk - ✔✔risk you assume through carelessness or unawareness
