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 d) supply chain -Correct 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? -Correct 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? -Correct Answer-independent agent Who handles the ratemaking function within insurance companies? -Correct Answer-Actuaries Agent Michael Scarn sells insurance for the Federal Bureau of Insurance (FBI). He is quoting a property insurance policy for Samuel Chang, the owner of an office building. The office building is 15,000 square feet and FBI charges a gross rate of $25 per 100 square feet. What is the gross premium for the property policy covering the office building? -Correct Answer-3750 (15K feet/ 100 feet = 150ft * 25$ = 3750$) Antonio is employed by an insurance company. He reviews applications to determine whether his company should insure the applicant. Antonio assigns the applicant to a rating category based on the applicant's degree of risk. Antonio is a(n): -Correct Answer-underwriter Walter White is the owner of A1A Car Wash. Jesse Pinkman is a regular A1A customer. One day, while waiting for his car to be washed, Jesse slipped on a wet spot on the floor and injured his back. As a result of his injury, he threatens to file suit against Walt and A1A Car Wash. Walt quickly notifies his insurer to start the claim p