Iowa Risk Management & Insurance Final Exam Latest Update Graded A

Iowa Risk Management & Insurance Final Exam Latest Update Graded A Objective risk Objective Risks are measurable and can be improved by Loss Prevention & Loss Control Subjective risk Subjective Risk - A state of mind/worry. Improvement by discussion and understanding What are the principles of when you must show insurable interest for property and life insurance? Property - At the time of Loss Life - At the time of Purchase Define pure and speculative risk Pure - Only Negative Results Speculative - Positive or Negative Results What are the reasons for internal policy Sub Limits? To provide limited coverage, and require scheduling of higher limits or insuring elsewhere What impact does an increased amount of exposure units have on the Expected Loss Value? The larger the number of units, the closer the expected value will be to actual results, and a Lower Variance and Standard deviation Define a Peril, A Hazard, and an Exposure A Peril is what causes damage - Wind, Fire, collision, hail A Hazard is a physical condition that increases the chance of an accident/event - Icy roads, poor maintenance, dying tree near your house Exposure - The item subject to possible damage - House, car, people What are the key elements to make risk insurable? Must be identifiable Must be measurable Have a calculable chance of loss Must be a large number of similar exposures Losses must be Fortuitous - Unexpected and accidental Not Catastrophic in nature Have economically feasible premiums Understand the difference between Maximum Possible and Maximum Probable Loss Max Possible - Worst case possible - total of all assets destroyed - Not reduced by Loss Cont. Max Probable - Most likely max loss considering loss control measures Why are there Deductibles in policies Provide incentive for insured to manage exposures/claims Reduce insurance premiums To eliminate small and expensive losses to adjust/settle Understand Objective, Subjective, Systemic Risks Objective Measurable & manageable Subjective - State of mind - Talk it out Systemic - Failure of an entire system _ Economic system - Housing Market Crash Explain the Scope of Enterprise Risk Management Enterprise Risk management assess all Risks, Objective, Subjective, Systemic, Financial, Strategic etc. Define Misrepresentations and Concealments & their implications in insurance claims Misrepresentation is a statement writt