PNC Insurance questions with
complete solutions
Risk - correct answer ✔✔ Condition where there is a chance, likelihood or probability of a
potential loss. Specifically, risk is the uncertainty concerning a loss. Insurance is a way of
managing or handling risk
Pure Risk - correct answer ✔✔ A situation in which there are only the possibilities of loss or no
loss
Speculative Risk - correct answer ✔✔ A chance of loss, no loss, or gain.
Insurance is only designed to protect against pur risk bevcuase it can only make up for a loss.
Potential for gain insurance will not provide benefits.
Loss - correct answer ✔✔ Reduction, decrease or dissapearnce in value that affects someons
property or financial position
When someone takes action to minimize the severity of a pitential loss they are practicing
what? - correct answer ✔✔ Risk Reduction
Peril - correct answer ✔✔ A peril is the cause of a loss. An insurance company will insure against
specific perils, or causes of loss. Fire, lightning, wind, death, and disability are common perils
covered by various insurance policies.
Hazard - correct answer ✔✔ A hazard is a specific condition that increases the probability or
likelihood that a loss will occur from a peril. There are three types of hazards: physical, moral,
and morale.
, Examples of Peril - correct answer ✔✔ Hail, Lightning, Fire, Theft
Examples of Hazard - correct answer ✔✔ Smoking's, Arson, Icy parking lot, Bungee Jumping
Methods of Managing Risk - correct answer ✔✔ S- Risk Sharing
T- Risk Transfer
A- Risk Avoidance
R - Risk Reduction
R - Risk Retention
Each of the following must be included in an insurable risk except:
A) Calculable chance of loss
B) Accidental losses
C) Excluded catastrophic perils
D) Large group with different risks - correct answer ✔✔ D) Large group with different risks
Law of Large Numbers - correct answer ✔✔ The law of large numbers is a probability theory
stating that the larger the number (sample size) of units with the same or similar exposures, the
greater the accuracy in predicting losses
Adverse Selection - correct answer ✔✔ Adverse selection is the principle that people will seek
insurance for risks that are hard to insure.
Reinsurance - correct answer ✔✔ It is a device used by insurers to spread their risk and limit the
loss they will face in the event of a large claim or catastrophic loss, which helps stabilize profits,
increase the insurer's ability to underwrite risks, and build confidence with consumers and
investors.
complete solutions
Risk - correct answer ✔✔ Condition where there is a chance, likelihood or probability of a
potential loss. Specifically, risk is the uncertainty concerning a loss. Insurance is a way of
managing or handling risk
Pure Risk - correct answer ✔✔ A situation in which there are only the possibilities of loss or no
loss
Speculative Risk - correct answer ✔✔ A chance of loss, no loss, or gain.
Insurance is only designed to protect against pur risk bevcuase it can only make up for a loss.
Potential for gain insurance will not provide benefits.
Loss - correct answer ✔✔ Reduction, decrease or dissapearnce in value that affects someons
property or financial position
When someone takes action to minimize the severity of a pitential loss they are practicing
what? - correct answer ✔✔ Risk Reduction
Peril - correct answer ✔✔ A peril is the cause of a loss. An insurance company will insure against
specific perils, or causes of loss. Fire, lightning, wind, death, and disability are common perils
covered by various insurance policies.
Hazard - correct answer ✔✔ A hazard is a specific condition that increases the probability or
likelihood that a loss will occur from a peril. There are three types of hazards: physical, moral,
and morale.
, Examples of Peril - correct answer ✔✔ Hail, Lightning, Fire, Theft
Examples of Hazard - correct answer ✔✔ Smoking's, Arson, Icy parking lot, Bungee Jumping
Methods of Managing Risk - correct answer ✔✔ S- Risk Sharing
T- Risk Transfer
A- Risk Avoidance
R - Risk Reduction
R - Risk Retention
Each of the following must be included in an insurable risk except:
A) Calculable chance of loss
B) Accidental losses
C) Excluded catastrophic perils
D) Large group with different risks - correct answer ✔✔ D) Large group with different risks
Law of Large Numbers - correct answer ✔✔ The law of large numbers is a probability theory
stating that the larger the number (sample size) of units with the same or similar exposures, the
greater the accuracy in predicting losses
Adverse Selection - correct answer ✔✔ Adverse selection is the principle that people will seek
insurance for risks that are hard to insure.
Reinsurance - correct answer ✔✔ It is a device used by insurers to spread their risk and limit the
loss they will face in the event of a large claim or catastrophic loss, which helps stabilize profits,
increase the insurer's ability to underwrite risks, and build confidence with consumers and
investors.
