Insurance and Actuarial Science: Terms and Concepts, Quizzes of Psychology

Download Insurance and Actuarial Science: Terms and Concepts and more Quizzes Psychology in PDF only on Docsity! TERM 1 Ratemaking DEFINITION 1 The pricing of insurance and the calculation of insurance premiums TERM 2 Actuary DEFINITION 2 Professional who determines rates and premiums TERM 3 Underwriting DEFINITION 3 Process of selecting, classifying, and pricing applicants for insurance TERM 4 Cheif Underwriting Officer DEFINITION 4 Sets company underwriting guidelines TERM 5 Line underwriter DEFINITION 5 Makes daily decisions concerning the acceptance or rejection of business TERM 6 Principles of underwriting DEFINITION 6 1. Attain a profit2. Select prospective insureds according to company's underwriting standards3. Maintain equity among the policyholders TERM 7 Premium Formula DEFINITION 7 Rate x # of exposure units TERM 8 Gross Premium Formula DEFINITION 8 Gross Premium = Pure Premium / (1-Pure Premium) TERM 9 Two Major Factors Influencing the markets DEFINITION 9 Insurance industry capacityInvestment returns TERM 10 Combined Ratio DEFINITION 10 Losses+Loss Adjustment Expenses + Underwriting Expenses__________________________________________________Premiums TERM 21 Pro-rata (Quota-Share Treaty) DEFINITION 21 The ceding company and reinsurer agree to share premiums and losses based on some proportion TERM 22 Ceding commission DEFINITION 22 Paid by reinsurer to primary insurer to help compensate for the expenses incurred in writing the business. TERM 23 Excess-of-Loss Reinsurance DEFINITION 23 Designed largely for protection against a catastrophic loss. TERM 24 Reinsurance Pool DEFINITION 24 An organization of insurers that underwrites insurance on a joint basis. TERM 25 Securitization of risk DEFINITION 25 Alternative to Traditional ReserveInsurable risk is transferred to the capital markets through the creation of a financial instrument, such as a futures contract. Also called risk-linked securities TERM 26 Catastrophe Bonds DEFINITION 26 Corporate bonds that permit the issuer of the bond to skip or reduce scheduled interest payments if a catastrophe occurs. Growing market. TERM 27 Special Purpose Reinvestment Vehicle DEFINITION 27 Entity in which catastrophe bonds are made available to institutional investors. TERM 28 General Account DEFINITION 28 Division of life insurance investments that support the obligation for fixed dollar benefits, such as life insurance death benefits.Consist mostly of bonds TERM 29 Separate Account DEFINITION 29 Division of life insurance investments that support the liabilities for risk-investment products, such as variable annutites, variable life insurance, and private pension benefits.Consist mostly of stocks TERM 30 Other Insurance Company Function DEFINITION 30 1. Information systems2. Accounting3. Legal4. Loss-control services TERM 31 Loss-control Services DEFINITION 31 Advice on alarm systems, automatic sprinklers, fire prevention, etc. TERM 32 Real Property DEFINITION 32 Things that can't be moved. Including land, structures, buildings, crops TERM 33 Personal Property DEFINITION 33 Cash, cars, airplanes.More at risk than real property TERM 34 Loss of copyright or goodwill; raw land DEFINITION 34 Things that cannot be insured by property insuranc3 TERM 35 Jail time DEFINITION 35 Remedy for criminal lawEx: murder, rape TERM 46 Contributory Negligence DEFINITION 46 if the injured person's conduct falls below the standard of care required for protection, they cannot collect damages TERM 47 Comparative Negligence DEFINITION 47 both the plaintiff and defendant contribute to the plaintiff's injury TERM 48 Pure Rule DEFINITION 48 You can collect damages even if you are negligent, but your award is reduced proportionately. TERM 49 50 percent rule DEFINITION 49 You cannot recover if you are 50 percent or more at fault TERM 50 51 percent rule DEFINITION 50 You cannot recover if you are 51 percent or more at fault21 states use this TERM 51 Last clear chance DEFINITION 51 A plaintiff who is endangered by their own negligence can still recover damages from defendant if the defendant has a last clear chance to avoid the accident but doesn't TERM 52 Assumption of risk DEFINITION 52 A person who understands and recognizes that danger inherent in a particular activity cannot recover damages in the event of an injuryex:sporting events TERM 53 Imputed Negligence DEFINITION 53 under certain condiitons, the negligence of one person can be attributed to another TERM 54 Vicarious liability law DEFINITION 54 a motor's negligence is imputed to the vehicle's owner TERM 55 Family Purpose Doctrine DEFINITION 55 The owner of a car can be held liable for the negligent acts committed by immediate family members TERM 56 Dram Shop Law DEFINITION 56 a business that sells liquor can be held liable for damages that may result from the sale of liquor. TERM 57 Trespasser DEFINITION 57 A person who enters or remains on the owner's property without the owner's consent TERM 58 Licensee DEFINITION 58 A person who enters or remains on the premises with the occupant's expressed or implied permissiondoor to door salespeople, police officers, firefighters TERM 59 Duty of slight care DEFINITION 59 the duty to refrain from injurying the trespasser or from setting a trap TERM 60 Invitee DEFINITION 60 someone who is invited onto the premises.Ex: mail carrier, garbage collectors