Insurance Terms and Concepts, Quizzes of Credit and Risk Management

Download Insurance Terms and Concepts and more Quizzes Credit and Risk Management in PDF only on Docsity! TERM 1 Insurance DEFINITION 1 the pooling of fortuitous losses by transfer of such risk to insurers, who agree to indemnify insureds for such losses, to provide otherpecuniarybenefits on their occurrence or to render services connected with the risk TERM 2 Key characteristics of Insurance DEFINITION 2 Pooling of losses, payment of fortuitous losses, Risk transfer, Indemnification(cant profit) TERM 3 Pooling DEFINITION 3 the spreading of losses incurred by the few over the entire group so that the process average loss is substituted for actual loss TERM 4 what type of risks are insurable DEFINITION 4 Large number of exposure units, Accidental and unintentional, Determinable andmeasurable Not catastrophic, Chance of loss is calculable, Reasonable premium TERM 5 Techniques to deal with catastrophe DEFINITION 5 Reinsurance, Dispersion over large geographical area, Catastrophe bonds, State Beach plans or wind pools TERM 6 Is fire insurable DEFINITION 6 yes TERM 7 do insurance companies insure against the risk of flood DEFINITION 7 no TERM 8 why do insurance companies consider flood uninsurable DEFINITION 8 Catastrophic TERM 9 What is the problem with Adverse selection DEFINITION 9 people with above average chance of loss seeking insurance at standard rates, usually based on withholding information from the insurance company TERM 10 Auto liability insurance indemnifies the insured even if the insured is negligent and causes the accident DEFINITION 10 true