RMIN 4000 Test 2 UGA Marc Ragin
Gross Premium - answer Total premium charged per unit of coverage
Risk Charge - answer Estimation of risk of the insurer. 3* SD/ per person
Admin Costs - answer Money spent in daily operations of company. Ex. Salaries,
overhead, marketing
Expected Loss - answer Expected frequency * expected severity
Fortuitous - answer Random, accidental, no control over E(F)/E(S)
Underwriting - answer process of classifying a risk
Risk based pricing - answer Higher the risk you are, the more the insurer will charge
you
Determinable loss - answer easy to verify that a loss occurred
Measurable loss - answer easy to assign a $ value to a loss
Adverse Selection - answer High risks most likely to buy coverage, at the lowest price
Asymmetric info - answer insured has more info about their risk and are unwilling to give
up that info
Principle of Indemnity - answer The insurer agrees to pay no more than the actual
amount of the loss
Principle of Insurable Interest - answer The insured must be in a position to lose
financially if a covered loss occurs
Principle of subrogation - answerinsurer can go after a responsible 3rd party to collect
claim payments made to their insured
Principle of Utmost good faith - answerParties to an insurance contract are held to a
higher standard of honesty than parties to non-insurance contracts
Representation - answera statement made by the applicant
Gross Premium - answer Total premium charged per unit of coverage
Risk Charge - answer Estimation of risk of the insurer. 3* SD/ per person
Admin Costs - answer Money spent in daily operations of company. Ex. Salaries,
overhead, marketing
Expected Loss - answer Expected frequency * expected severity
Fortuitous - answer Random, accidental, no control over E(F)/E(S)
Underwriting - answer process of classifying a risk
Risk based pricing - answer Higher the risk you are, the more the insurer will charge
you
Determinable loss - answer easy to verify that a loss occurred
Measurable loss - answer easy to assign a $ value to a loss
Adverse Selection - answer High risks most likely to buy coverage, at the lowest price
Asymmetric info - answer insured has more info about their risk and are unwilling to give
up that info
Principle of Indemnity - answer The insurer agrees to pay no more than the actual
amount of the loss
Principle of Insurable Interest - answer The insured must be in a position to lose
financially if a covered loss occurs
Principle of subrogation - answerinsurer can go after a responsible 3rd party to collect
claim payments made to their insured
Principle of Utmost good faith - answerParties to an insurance contract are held to a
higher standard of honesty than parties to non-insurance contracts
Representation - answera statement made by the applicant
