RMIN 5100S Test 1 Atkinson Questions and Answers 100% Pass

RMIN 5100S Test 1 Atkinson Questions and Answers 100% Pass Risk Manager - "insured" buyer of insurance - Larger companies will have one personal one - Small to mid-sized companies will have someone else who serves this role - Must evaluate risks and determine the best approach to manage risks -- including Loss Control, Retention and transfer techniques Agent or Broker "Intermediary" Facilitates the purchase of insurance. Advises insured. Negotiates with the insurer. Independent Agent - The agent has contracts with several to many companies - More frequently used in Commercial P&C Exclusive Agent - More frequently used in personal lines and very small businesses - Agents ONLY sell products for this insurance company. Broker vs Independent Agent (Brokers) Legally work on behalf of the insurance buyer (Independent Agent) Legally works on behalf of the insurance company Underwriter "insurer" Provides insurance coverage aka the insurance company Underwriting refers to the process of selecting, classifying, and pricing applicants for insurance (set terms, conditions, pricing) Line underwriter makes daily decisions concerning the acceptance or rejection of business the Chief Underwriting Officer who sets the standards and guidelines Why is it so difficult to figure out what to charge in rating and ratemaking? With insurance, we do not know the cost of the goods until AFTER the product is sold. Ratemaking refers to the pricing of insurance and the calculation of insurance premiums. rate price per unit of insurance Premiums equation Rate X Exposure units What are the objectives of the claims settlement process? - Verification of a covered loss. "Is it covered? Did it happen?" - Fair and prompt payment of claims - Personal assistance to the insured McCarren Ferguson Act of 1945 Insurance is regulated by the individual states, Federal laws may also apply so long as the legislation specifies that it applies to the business of insurance. Admitted (standard or retail) Insurance companies Regulated by the state, They often must subscribe to rating and form regulations of that state. Non-admitted insurance Company (EXCESS & SURPLUS "E&S", SURPLUS LINES, WHOLESALE) they are simply not regulated in the state for which they are doing business Captive insurance SELF INSURED NOT TRANSFER Reinsurance insurance for insurance policies; The arrangement by which the primary insurer that initially writes the insurance traders to another insurer part or ALL of the potential losses associated with such insurance. Why would an insurance company want to reinsure their insurance? - Increase underwriting - Provide protection against catastrophic loss - Stabilize profits Common property exposures Fire Burglary, robbery, and employee theft Explosion Windstorm Flood Earthquake Fire heat, oxygen, fuel, and an unbroken chain To prevent or control fire, what must you do? - pull something out of the equation - Construction materials - Fire stops, Fire divisions, Fire walls - Fire departments