iii
SOLUTION MANUAL FOR
RISK MANAGEMENT AND INSURANCE 12TH EDITION JAMES TRIESCHMANN SANDRA
GUSTAVSON SANDRA GUSTAVSON, ROBERT HOYT SANDRA GUSTAVSON, ROBERT
HOYT, DAVID SOMMER
CONTENTS
INSTRUCTOR’S MANUAL
PART 1: RISK AND THE RISK MANAGEMENT PROCESS
Chapter 1: Introduction to Risk ................................................................................................1
Chapter 2: Risk Identification and Evaluation ..........................................................................4
Chapter 3: Property and Liability Loss Exposures....................................................................8
Chapter 4: Life, Health, and Loss of Income Exposures ........................................................12
Chapter 5: Risk Management Techniques: Noninsurance Methods .......................................16
Chapter 6: Insurance as a Risk Management Technique: Principles ......................................20
Chapter 7: Insurance as a Risk Management Technique: Policy Provisions ..........................25
Chapter 8: Selecting and Implementing Risk Management Techniques.................................28
PART 2: COMMERCIAL RISK MANAGEMENT APPLICATIONS:
PROPERTY-LIABILITY
Chapter 9: Risk Management and Commercial Property: Part I.............................................31
Chapter 10: Risk Management and Commercial Property: Part II ...........................................34
Chapter 11: Risk Management and Commercial Liability Risk ...............................................38
Chapter 12: Workers' Compensation and Alternative Risk Financing ......................................41
PART 3: PERSONAL RISK MANAGEMENT APPLICATIONS:
PROPERTY-LIABILITY
Chapter 13: Risk Management for Auto Owners: Part I...........................................................44
Chapter 14: Risk Management for Auto Owners: Part II .........................................................47
Chapter 15: Risk Management for Homeowners......................................................................50
PART 4: RISK MANAGEMENT APPLICATIONS: LIFE, HEALTH,
AND INCOME EXPOSURES
Chapter 16: Loss of Life ...........................................................................................................54
Chapter 17: Loss of Health .......................................................................................................59
Chapter 18: Retirement Planning and Annuities ......................................................................65
Chapter 19: Employee Benefits: Life and Health Benefits .......................................................69
Chapter 20: Employee Benefits: Retirement Plans ...................................................................73
Chapter 21: Financial and Estate Planning ...............................................................................77
PART 5: THE RISK MANAGEMENT ENVIRONMENT
Chapter 22: Risk Management and the Insurance Industry ......................................................81
Chapter 23: Functions and Organization of Insurers ................................................................85
,iv
Chapter 24: Government Regulation of Risk Management and Insurance .............................. 89
TEST BANK
PART 1: RISK AND THE RISK MANAGEMENT PROCESS
Chapter 1: Introduction to Risk ............................................................................................. 95
Chapter 2: Risk Identification and Evaluation ..................................................................... 100
Chapter 3: Property and Liability Loss Exposures............................................................... 106
Chapter 4: Life, Health, and Loss of Income Exposures ..................................................... 114
Chapter 5: Risk Management Techniques: Noninsurance Methods .................................... 119
Chapter 6: Insurance as a Risk Management Technique: Principles ................................... 124
Chapter 7: Insurance as a Risk Management Technique: Policy Provisions ....................... 130
Chapter 8: Selecting and Implementing Risk Management Techniques.............................. 135
PART 2: COMMERCIAL RISK MANAGEMENT APPLICATIONS:
PROPERTY-LIABILITY
Chapter 9: Risk Management and Commercial Property: Part I.......................................... 140
Chapter 10: Risk Management and Commercial Property: Part II ........................................ 145
Chapter 11: Risk Management and Commercial Liability Risk ............................................ 150
Chapter 12: Workers' Compensation and Alternative Risk Financing ................................... 155
PART 3: PERSONAL RISK MANAGEMENT APPLICATIONS:
PROPERTY-LIABILITY
Chapter 13: Risk Management for Auto Owners: Part I........................................................ 160
Chapter 14: Risk Management for Auto Owners: Part II ...................................................... 165
Chapter 15: Risk Management for Homeowners................................................................... 168
PART 4: RISK MANAGEMENT APPLICATIONS: LIFE, HEALTH,
AND INCOME EXPOSURES
Chapter 16: Loss of Life ........................................................................................................ 173
Chapter 17: Loss of Health .................................................................................................... 178
Chapter 18: Retirement Planning and Annuities ................................................................... 184
Chapter 19: Employee Benefits: Life and Health Benefits .................................................... 190
Chapter 20: Employee Benefits: Retirement Plans ................................................................ 195
Chapter 21: Financial and Estate Planning ............................................................................ 200
PART 5: THE RISK MANAGEMENT ENVIRONMENT
Chapter 22: Risk Management and the Insurance Industry ................................................... 205
Chapter 23: Functions and Organization of Insurers ............................................................. 211
Chapter 24: Government Regulation of Risk Management and Insurance ............................ 218
CHAPTER 1
, v
Introduction to Risk
THE BURDEN OF RISK
DEFINITIONS OF RISK
Pure versus Speculative Risk
Static versus Dynamic Risk
Subjective versus Objective Risk
SOURCES OF PURE RISK
Property Risks
Liability Risks
Life, Health, and Loss of Income Risks
Financial Risk
MEASUREMENT OF RISK
Chance of Loss
Physical Hazard
Morale Hazard
Moral Hazard
Degree of Risk
MANAGEMENT OF RISK
KEY TERMS AND CONCEPTS
Chance of loss
Chief risk officer
Cost of risk
Degree of risk
Dynamic risks
Enterprise risk
management
Financial risks
Frequency
Hazards
Integrated risk
management
Moral hazard
Morale hazard
Objective risk
Peril
Pure risk
Risk
Risk management
Risk management
process
Risk manager
Severity
Speculative risk
Static risks
Subjective risk
,
SOLUTION MANUAL FOR
RISK MANAGEMENT AND INSURANCE 12TH EDITION JAMES TRIESCHMANN SANDRA
GUSTAVSON SANDRA GUSTAVSON, ROBERT HOYT SANDRA GUSTAVSON, ROBERT
HOYT, DAVID SOMMER
CONTENTS
INSTRUCTOR’S MANUAL
PART 1: RISK AND THE RISK MANAGEMENT PROCESS
Chapter 1: Introduction to Risk ................................................................................................1
Chapter 2: Risk Identification and Evaluation ..........................................................................4
Chapter 3: Property and Liability Loss Exposures....................................................................8
Chapter 4: Life, Health, and Loss of Income Exposures ........................................................12
Chapter 5: Risk Management Techniques: Noninsurance Methods .......................................16
Chapter 6: Insurance as a Risk Management Technique: Principles ......................................20
Chapter 7: Insurance as a Risk Management Technique: Policy Provisions ..........................25
Chapter 8: Selecting and Implementing Risk Management Techniques.................................28
PART 2: COMMERCIAL RISK MANAGEMENT APPLICATIONS:
PROPERTY-LIABILITY
Chapter 9: Risk Management and Commercial Property: Part I.............................................31
Chapter 10: Risk Management and Commercial Property: Part II ...........................................34
Chapter 11: Risk Management and Commercial Liability Risk ...............................................38
Chapter 12: Workers' Compensation and Alternative Risk Financing ......................................41
PART 3: PERSONAL RISK MANAGEMENT APPLICATIONS:
PROPERTY-LIABILITY
Chapter 13: Risk Management for Auto Owners: Part I...........................................................44
Chapter 14: Risk Management for Auto Owners: Part II .........................................................47
Chapter 15: Risk Management for Homeowners......................................................................50
PART 4: RISK MANAGEMENT APPLICATIONS: LIFE, HEALTH,
AND INCOME EXPOSURES
Chapter 16: Loss of Life ...........................................................................................................54
Chapter 17: Loss of Health .......................................................................................................59
Chapter 18: Retirement Planning and Annuities ......................................................................65
Chapter 19: Employee Benefits: Life and Health Benefits .......................................................69
Chapter 20: Employee Benefits: Retirement Plans ...................................................................73
Chapter 21: Financial and Estate Planning ...............................................................................77
PART 5: THE RISK MANAGEMENT ENVIRONMENT
Chapter 22: Risk Management and the Insurance Industry ......................................................81
Chapter 23: Functions and Organization of Insurers ................................................................85
,iv
Chapter 24: Government Regulation of Risk Management and Insurance .............................. 89
TEST BANK
PART 1: RISK AND THE RISK MANAGEMENT PROCESS
Chapter 1: Introduction to Risk ............................................................................................. 95
Chapter 2: Risk Identification and Evaluation ..................................................................... 100
Chapter 3: Property and Liability Loss Exposures............................................................... 106
Chapter 4: Life, Health, and Loss of Income Exposures ..................................................... 114
Chapter 5: Risk Management Techniques: Noninsurance Methods .................................... 119
Chapter 6: Insurance as a Risk Management Technique: Principles ................................... 124
Chapter 7: Insurance as a Risk Management Technique: Policy Provisions ....................... 130
Chapter 8: Selecting and Implementing Risk Management Techniques.............................. 135
PART 2: COMMERCIAL RISK MANAGEMENT APPLICATIONS:
PROPERTY-LIABILITY
Chapter 9: Risk Management and Commercial Property: Part I.......................................... 140
Chapter 10: Risk Management and Commercial Property: Part II ........................................ 145
Chapter 11: Risk Management and Commercial Liability Risk ............................................ 150
Chapter 12: Workers' Compensation and Alternative Risk Financing ................................... 155
PART 3: PERSONAL RISK MANAGEMENT APPLICATIONS:
PROPERTY-LIABILITY
Chapter 13: Risk Management for Auto Owners: Part I........................................................ 160
Chapter 14: Risk Management for Auto Owners: Part II ...................................................... 165
Chapter 15: Risk Management for Homeowners................................................................... 168
PART 4: RISK MANAGEMENT APPLICATIONS: LIFE, HEALTH,
AND INCOME EXPOSURES
Chapter 16: Loss of Life ........................................................................................................ 173
Chapter 17: Loss of Health .................................................................................................... 178
Chapter 18: Retirement Planning and Annuities ................................................................... 184
Chapter 19: Employee Benefits: Life and Health Benefits .................................................... 190
Chapter 20: Employee Benefits: Retirement Plans ................................................................ 195
Chapter 21: Financial and Estate Planning ............................................................................ 200
PART 5: THE RISK MANAGEMENT ENVIRONMENT
Chapter 22: Risk Management and the Insurance Industry ................................................... 205
Chapter 23: Functions and Organization of Insurers ............................................................. 211
Chapter 24: Government Regulation of Risk Management and Insurance ............................ 218
CHAPTER 1
, v
Introduction to Risk
THE BURDEN OF RISK
DEFINITIONS OF RISK
Pure versus Speculative Risk
Static versus Dynamic Risk
Subjective versus Objective Risk
SOURCES OF PURE RISK
Property Risks
Liability Risks
Life, Health, and Loss of Income Risks
Financial Risk
MEASUREMENT OF RISK
Chance of Loss
Physical Hazard
Morale Hazard
Moral Hazard
Degree of Risk
MANAGEMENT OF RISK
KEY TERMS AND CONCEPTS
Chance of loss
Chief risk officer
Cost of risk
Degree of risk
Dynamic risks
Enterprise risk
management
Financial risks
Frequency
Hazards
Integrated risk
management
Moral hazard
Morale hazard
Objective risk
Peril
Pure risk
Risk
Risk management
Risk management
process
Risk manager
Severity
Speculative risk
Static risks
Subjective risk
,
