INSR 310 TEST EXAM PAPER ALL QUESTIONS AND
ANSWERS SURE A+
✔✔two added rules of risk management - ✔✔1- insurance is NOT substitute for loss
control
2- having more money is NOT a sub. for good RM
✔✔the risk management process - ✔✔1- identification
2- evaluate alternatives
3- select alternatives
4- implement/administer
5- monitor/feedback
✔✔identification - ✔✔- values/combinations exposed "MPL"
- potential perils AND hazards
- full financial consequences
- coordinate with goals/ objectives
✔✔evaluate alternatives - ✔✔- avoid?
- loss financing; retention? transfer?
-loss control; frequency and severity dimensions; cost effectiveness / efficiency
✔✔select alternatives - ✔✔-budgetary/ resource constraints
, - rational/ impartial
✔✔implement/ administer - ✔✔- managerial commitment
- organizational culture
- benchmarking/ measurement
✔✔monitor/ feedback - ✔✔- it's an information game
- dynamic process!!
✔✔the retention decision - ✔✔retain ONLY when it is more cost effective than transfer
OR if transfer is not available
✔✔key elements for effective "self insurance" (retention) - ✔✔- sufficient number of
exposures
- capable admin./ planning/ staffing; premiums and claims
- firm management MUST be willing/ able to pay claims/ losses
✔✔advantages of "professional" INSCOs to businesses - ✔✔- tax deductibility of
premiums paid
- prior organizational expertise
- disinterested "third party" administration
- transfer of risk = less risk to firm
✔✔the insurance purchase decision - ✔✔- select: agent/ broker
- select: insurance compnay
- select: appropriate policy/ policies that meet your needs
- select: appropriate policy options/ features
✔✔rating organizations - ✔✔- AM Best
-S&P
- Moody's
-D&B
✔✔captive - ✔✔wholly-owned insurance subsidiary of a non insurance parent company
✔✔risk retention group (RRG) - ✔✔- owner controlled INSCO authorize under the
Federal Liability Risk Retention Act (1986) allowing group members engaged in similar/
related business activities to write liability insurance for any/ all portion of a member's
exposures
✔✔the insurance industry common classifications: - ✔✔- life/ health vs. property/ liability
- personal vs. comercial lines
- private vs. public insurers
- voluntary vs. involuntary
- "admitted" markets vs. "excess/ surpluss" lines
ANSWERS SURE A+
✔✔two added rules of risk management - ✔✔1- insurance is NOT substitute for loss
control
2- having more money is NOT a sub. for good RM
✔✔the risk management process - ✔✔1- identification
2- evaluate alternatives
3- select alternatives
4- implement/administer
5- monitor/feedback
✔✔identification - ✔✔- values/combinations exposed "MPL"
- potential perils AND hazards
- full financial consequences
- coordinate with goals/ objectives
✔✔evaluate alternatives - ✔✔- avoid?
- loss financing; retention? transfer?
-loss control; frequency and severity dimensions; cost effectiveness / efficiency
✔✔select alternatives - ✔✔-budgetary/ resource constraints
, - rational/ impartial
✔✔implement/ administer - ✔✔- managerial commitment
- organizational culture
- benchmarking/ measurement
✔✔monitor/ feedback - ✔✔- it's an information game
- dynamic process!!
✔✔the retention decision - ✔✔retain ONLY when it is more cost effective than transfer
OR if transfer is not available
✔✔key elements for effective "self insurance" (retention) - ✔✔- sufficient number of
exposures
- capable admin./ planning/ staffing; premiums and claims
- firm management MUST be willing/ able to pay claims/ losses
✔✔advantages of "professional" INSCOs to businesses - ✔✔- tax deductibility of
premiums paid
- prior organizational expertise
- disinterested "third party" administration
- transfer of risk = less risk to firm
✔✔the insurance purchase decision - ✔✔- select: agent/ broker
- select: insurance compnay
- select: appropriate policy/ policies that meet your needs
- select: appropriate policy options/ features
✔✔rating organizations - ✔✔- AM Best
-S&P
- Moody's
-D&B
✔✔captive - ✔✔wholly-owned insurance subsidiary of a non insurance parent company
✔✔risk retention group (RRG) - ✔✔- owner controlled INSCO authorize under the
Federal Liability Risk Retention Act (1986) allowing group members engaged in similar/
related business activities to write liability insurance for any/ all portion of a member's
exposures
✔✔the insurance industry common classifications: - ✔✔- life/ health vs. property/ liability
- personal vs. comercial lines
- private vs. public insurers
- voluntary vs. involuntary
- "admitted" markets vs. "excess/ surpluss" lines
