RMIN 4000 FINAL EXAM BROWN UNIVERSITY ACTUAL QUESTIONS AND ANSWERS

RMIN 4000 FINAL EXAM BROWN UNIVERSITY ACTUAL QUESTIONS AND ANSWERS Lannister Insurance Company insures 200,000 vehicles. In 2019, they paid a total of $136,000,000 in collision losses to the owners of 16,000 of those vehicles. What was Lannister's collision loss frequency in 2019? -Correct Answer-0.08 (16k/200k) Lannister Insurance Company insures 200,000 vehicles. In 2019, they paid a total of $136,000,000 in collision losses to the owners of 16,000 of those vehicles. What was Lannister's collision loss severity in 2019? -Correct Answer-8500 (136M/16K) Michael Scott owns a condominium in Scranton, PA. A fire breaks out when his girlfriend, Jan, is dancing and knocks over a candle. The fire damages the condo and Michael's most prized possession - his plasma TV. The damage to Michael's plasma TV is considered a(n): -Correct Answer-direct loss What is the most important step in the risk management process? -Correct Answer-Step 1: identify loss exposures I have a high deductible ($2,200) in my health insurance plan. The high deductible is an example of which type of risk management technique? -Correct Answer-retention Insurance is the most appropriate risk management technique for which of the following types of loss exposures? -Correct Answer-high severity, low frequency Review The Very Good Building & Development Company is a general contractor (builder). Due to difficulty finding affordable workers compensation insurance (covering employee injuries), Very Good established its own insurance company based in Vermont for the purpose of insuring Very Good's workers compensation loss exposures. The company that Very Good formed is called a - Correct Answer-captive insurer Jim Halpert and his wife, Pam, are selling the home they've lived in for the past seven years. They are aware of an electrical problem in the home that they do not want to fix because it would be expensive. Potential buyers of the home are unaware of the electrical problem. This is an example of: -Correct Answer-Asymmetric Information All of the following are examples of operational risks EXCEPT: a) changing conditions in financial markets b) employment practices c) customer service