RMIN 4000 Test 2 UGA Marc Ragin
questions and answers graded A+
Gross Premium - correct answer ✔✔Total premium charged per unit of coverage
Risk Charge - correct answer ✔✔Estimation of risk of the insurer. 3* SD/ per person
Admin Costs - correct answer ✔✔Money spent in daily operations of company. Ex. Salaries,
overhead, marketing
Expected Loss - correct answer ✔✔Expected frequency * expected severity
Fortuitous - correct answer ✔✔Random, accidental, no control over E(F)/E(S)
Underwriting - correct answer ✔✔process of classifying a risk
Risk based pricing - correct answer ✔✔Higher the risk you are, the more the insurer will charge
you
Determinable loss - correct answer ✔✔easy to verify that a loss occurred
Measurable loss - correct answer ✔✔easy to assign a $ value to a loss
Adverse Selection - correct answer ✔✔High risks most likely to buy coverage, at the lowest
price
, Asymmetric info - correct answer ✔✔insured has more info about their risk and are unwilling to
give up that info
Principle of Indemnity - correct answer ✔✔The insurer agrees to pay no more than the actual
amount of the loss
Principle of Insurable Interest - correct answer ✔✔The insured must be in a position to lose
financially if a covered loss occurs
Principle of subrogation - correct answer ✔✔insurer can go after a responsible 3rd party to
collect claim payments made to their insured
Principle of Utmost good faith - correct answer ✔✔Parties to an insurance contract are held to
a higher standard of honesty than parties to non-insurance contracts
Representation - correct answer ✔✔a statement made by the applicant
Misrepresentations - correct answer ✔✔Providing false statements to the insurer, even if
unintentional
Concealments - correct answer ✔✔Failure on the part of the insured to reveal material fact
about the risk
Aleatory contracts - correct answer ✔✔Value exchanged may not be equal and depends on
chance
Commutative contracts - correct answer ✔✔values are equal
questions and answers graded A+
Gross Premium - correct answer ✔✔Total premium charged per unit of coverage
Risk Charge - correct answer ✔✔Estimation of risk of the insurer. 3* SD/ per person
Admin Costs - correct answer ✔✔Money spent in daily operations of company. Ex. Salaries,
overhead, marketing
Expected Loss - correct answer ✔✔Expected frequency * expected severity
Fortuitous - correct answer ✔✔Random, accidental, no control over E(F)/E(S)
Underwriting - correct answer ✔✔process of classifying a risk
Risk based pricing - correct answer ✔✔Higher the risk you are, the more the insurer will charge
you
Determinable loss - correct answer ✔✔easy to verify that a loss occurred
Measurable loss - correct answer ✔✔easy to assign a $ value to a loss
Adverse Selection - correct answer ✔✔High risks most likely to buy coverage, at the lowest
price
, Asymmetric info - correct answer ✔✔insured has more info about their risk and are unwilling to
give up that info
Principle of Indemnity - correct answer ✔✔The insurer agrees to pay no more than the actual
amount of the loss
Principle of Insurable Interest - correct answer ✔✔The insured must be in a position to lose
financially if a covered loss occurs
Principle of subrogation - correct answer ✔✔insurer can go after a responsible 3rd party to
collect claim payments made to their insured
Principle of Utmost good faith - correct answer ✔✔Parties to an insurance contract are held to
a higher standard of honesty than parties to non-insurance contracts
Representation - correct answer ✔✔a statement made by the applicant
Misrepresentations - correct answer ✔✔Providing false statements to the insurer, even if
unintentional
Concealments - correct answer ✔✔Failure on the part of the insured to reveal material fact
about the risk
Aleatory contracts - correct answer ✔✔Value exchanged may not be equal and depends on
chance
Commutative contracts - correct answer ✔✔values are equal
