RMIN 4000 Test 2 UGA Marc Ragin
Exam Q’s and A’s
Gross Premium - -Total premium charged per unit of coverage
- Risk Charge - -Estimation of risk of the insurer. 3* SD/ per person
- Admin Costs - -Money spent in daily operations of company. Ex. Salaries,
overhead, marketing
- Expected Loss - -Expected frequency * expected severity
- Fortuitous - -Random, accidental, no control over E(F)/E(S)
- Underwriting - -process of classifying a risk
- Risk based pricing - -Higher the risk you are, the more the insurer will
charge you
- Determinable loss - -easy to verify that a loss occurred
- Measurable loss - -easy to assign a $ value to a loss
- Adverse Selection - -High risks most likely to buy coverage, at the lowest
price
- Asymmetric info - -insured has more info about their risk and are unwilling
to give up that info
- Principle of Indemnity - -The insurer agrees to pay no more than the actual
amount of the loss
- Principle of Insurable Interest - -The insured must be in a position to lose
financially if a covered loss occurs
- Principle of subrogation - -insurer can go after a responsible 3rd party to
collect claim payments made to their insured
- Principle of Utmost good faith - -Parties to an insurance contract are held
to a higher standard of honesty than parties to non-insurance contracts
- Representation - -a statement made by the applicant
Exam Q’s and A’s
Gross Premium - -Total premium charged per unit of coverage
- Risk Charge - -Estimation of risk of the insurer. 3* SD/ per person
- Admin Costs - -Money spent in daily operations of company. Ex. Salaries,
overhead, marketing
- Expected Loss - -Expected frequency * expected severity
- Fortuitous - -Random, accidental, no control over E(F)/E(S)
- Underwriting - -process of classifying a risk
- Risk based pricing - -Higher the risk you are, the more the insurer will
charge you
- Determinable loss - -easy to verify that a loss occurred
- Measurable loss - -easy to assign a $ value to a loss
- Adverse Selection - -High risks most likely to buy coverage, at the lowest
price
- Asymmetric info - -insured has more info about their risk and are unwilling
to give up that info
- Principle of Indemnity - -The insurer agrees to pay no more than the actual
amount of the loss
- Principle of Insurable Interest - -The insured must be in a position to lose
financially if a covered loss occurs
- Principle of subrogation - -insurer can go after a responsible 3rd party to
collect claim payments made to their insured
- Principle of Utmost good faith - -Parties to an insurance contract are held
to a higher standard of honesty than parties to non-insurance contracts
- Representation - -a statement made by the applicant
