UGA RMIN 4000 COMPREHENSIVE EXAMS
QUESTIONS AND ANSWERS SET A+
✔✔underwriting risks - ✔✔process of selecting and classifying applicants for insurance
(standards met, coverage items, and rates)
✔✔types of insurance - ✔✔private and government
✔✔private insurance includes: - ✔✔life & health and property & liability and casualty
✔✔casualty insurance - ✔✔covers whatever is not covered by fire, marine, and life
insurance (usually includes auto and workers' compensation)
✔✔government social programs - ✔✔financed all or mostly by contributions from
employees and/or employers. benefits are weighted in favor of low income groups
✔✔risk management - ✔✔a process that identifies loss exposures faced by an
organization and selects the most appropriate techniques for treatment
✔✔Pre-Loss objectives of risk management - ✔✔efficient cost of risk, permits better
decision making, and meet legal obligations
✔✔Post-Loss objectives of risk management - ✔✔survival of the firm, business
continuity, earnings, & growth, and societal responsibility
✔✔What are the steps in the risk management process? - ✔✔1) Identify loss
exposures, 2) measure and analyze the loss exposure, 3) consider and select
appropriate treatment techniques, and 4) implement and monitor the chosen techniques
✔✔What are some important loss exposures - ✔✔property, liability, income loss, human
resource loss, crime loss, employee benefit, foreign, and intangible and regulatory
, ✔✔What are some ways of identifying loss exposures? - ✔✔analyzing statements, past
losses, staff meetings with RM, inspections, surveys, and flowcharts
✔✔What is a good way to analyze loss exposure - ✔✔rank loss exposures by
importance (severity)
✔✔maximum possible loss - ✔✔the worst loss that could happen to the firm during its
lifetime
✔✔probable maximum loss - ✔✔the worst loss that is likely to happen
✔✔What techniques would we use for loss exposure treatment? - ✔✔Risk control
and/or risk financing
✔✔What are some methods used for paying losses when financing risks? - ✔✔Current
net income, unfunded reserve, funded reserve, and credit line
✔✔current net income - ✔✔losses are treated as current expenses (if a loss is too big,
firm may have to liquidate assets)
✔✔unfunded reserve - ✔✔bookkeeping account that is charged with actual or expected
losses from a given exposure
✔✔funded reserve - ✔✔funds set aside for losses
✔✔Why could a funded reserve not be ideal? - ✔✔because it is not tax deductible and
money could be used elsewhere in the firm
✔✔captive insurer - ✔✔an insurer owned by a parent firm for the purpose of insuring
the parent firm's loss exposures (lower costs, easy to obtain insurance, and possible tax
advantages)
✔✔Can a captive insurer have more than one parent? - ✔✔yes
✔✔self-insurance - ✔✔planned retention by which part or all of a given loss exposure is
retained by the firm
✔✔Risk Retention Group (RRG) - ✔✔a group captive that can write any type of liability
coverage except employers' liability, workers compensation, and personal lines (could
save or have possible higher costs)
✔✔noninsurance transfers - ✔✔methods other than insurance by which a pure risk and
its potential financial consequences are transferred to another party (apartment lease or
contracts)
QUESTIONS AND ANSWERS SET A+
✔✔underwriting risks - ✔✔process of selecting and classifying applicants for insurance
(standards met, coverage items, and rates)
✔✔types of insurance - ✔✔private and government
✔✔private insurance includes: - ✔✔life & health and property & liability and casualty
✔✔casualty insurance - ✔✔covers whatever is not covered by fire, marine, and life
insurance (usually includes auto and workers' compensation)
✔✔government social programs - ✔✔financed all or mostly by contributions from
employees and/or employers. benefits are weighted in favor of low income groups
✔✔risk management - ✔✔a process that identifies loss exposures faced by an
organization and selects the most appropriate techniques for treatment
✔✔Pre-Loss objectives of risk management - ✔✔efficient cost of risk, permits better
decision making, and meet legal obligations
✔✔Post-Loss objectives of risk management - ✔✔survival of the firm, business
continuity, earnings, & growth, and societal responsibility
✔✔What are the steps in the risk management process? - ✔✔1) Identify loss
exposures, 2) measure and analyze the loss exposure, 3) consider and select
appropriate treatment techniques, and 4) implement and monitor the chosen techniques
✔✔What are some important loss exposures - ✔✔property, liability, income loss, human
resource loss, crime loss, employee benefit, foreign, and intangible and regulatory
, ✔✔What are some ways of identifying loss exposures? - ✔✔analyzing statements, past
losses, staff meetings with RM, inspections, surveys, and flowcharts
✔✔What is a good way to analyze loss exposure - ✔✔rank loss exposures by
importance (severity)
✔✔maximum possible loss - ✔✔the worst loss that could happen to the firm during its
lifetime
✔✔probable maximum loss - ✔✔the worst loss that is likely to happen
✔✔What techniques would we use for loss exposure treatment? - ✔✔Risk control
and/or risk financing
✔✔What are some methods used for paying losses when financing risks? - ✔✔Current
net income, unfunded reserve, funded reserve, and credit line
✔✔current net income - ✔✔losses are treated as current expenses (if a loss is too big,
firm may have to liquidate assets)
✔✔unfunded reserve - ✔✔bookkeeping account that is charged with actual or expected
losses from a given exposure
✔✔funded reserve - ✔✔funds set aside for losses
✔✔Why could a funded reserve not be ideal? - ✔✔because it is not tax deductible and
money could be used elsewhere in the firm
✔✔captive insurer - ✔✔an insurer owned by a parent firm for the purpose of insuring
the parent firm's loss exposures (lower costs, easy to obtain insurance, and possible tax
advantages)
✔✔Can a captive insurer have more than one parent? - ✔✔yes
✔✔self-insurance - ✔✔planned retention by which part or all of a given loss exposure is
retained by the firm
✔✔Risk Retention Group (RRG) - ✔✔a group captive that can write any type of liability
coverage except employers' liability, workers compensation, and personal lines (could
save or have possible higher costs)
✔✔noninsurance transfers - ✔✔methods other than insurance by which a pure risk and
its potential financial consequences are transferred to another party (apartment lease or
contracts)
