RMIN4000 FINAL EXAM BROWN WITH COMPLETE SOLUTIONS!

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? - 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? - 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): - ANSWER-direct loss What is the most important step in the risk management process? - 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? - ANSWER-retention Insurance is the most appropriate risk management technique for which of the following types of loss exposures? - 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 - 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: - 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 d) supply chain - ANSWER-A Heisenberg Insurance has a home office in Albuquerque, New Mexico and they specialize in insuring chemical manufacturers. Heisenberg is owned by its policyholders and any annual profits are distributed through rate reductions. Which type of insurer is Heisenberg? - ANSWER-mutual insurer Reubens work in insurance sales. He sells insurance through several different unrelated insurance carriers that he legally represents. What is Reuben's job? - ANSWER-independent agent