Exam 3: Introduction to Risk Management

All of the following are disadvantages of noninsurance transfers EXCEPT

Which of the following statements about an excess insurance plan is true?

Mark owns a 1998 sedan.The last time Mark renewed his auto insurance,he decided to drop the physical damage insurance on this vehicle.How is Mark dealing with the auto physical damage exposure in his personal risk management program?

Which of the following types of loss exposures may be appropriately handled through the purchase of insurance? I.High-frequency,low-severity loss exposures II.Low-frequency,high-severity loss exposures

Members of Mid-South Petroleum Distributors,a trade group,had trouble obtaining affordable pollution liability insurance.The members formed a group captive that is exempt from many state laws that apply to other insurers.This group captive is called a(n)

Which of the following statements about self-insurance is (are)true? I.It is a form of planned retention. II.State law usually prohibits its use for workers compensation.

Low-frequency,low-severity loss exposures are best handled by

All of the following statements about the administration of a risk management program are true EXCEPT

Which of the following statements about the use of a captive insurance company by a parent firm is true?

Cal was just hired as XYZ Company's first risk manager.Cal would like to employ the risk management process.The first step in the process Cal should follow is to

Which of the following is a source of information a risk manager could use to help identify pure loss exposures?

The worst loss that is likely to happen is referred to as the

Loss frequency is defined as the

Which of the following statements about captive insurance companies is (are)true? I.A captive insurance company established by a U.S.company must be domiciled in the United States. II.A captive insurance company may be owned by several parents.

Morris Company self-insures its workers compensation loss exposure.The risk manager of Morris Company is concerned about the possible impact of a single catastrophic claim.She decided to set a retention limit of $500,000 per-claim,and to purchase insurance that will be begin to pay once Morris Company has paid $500,000 on a single claim.The insurance the risk manager purchased is called

The U.S.government is concerned that terrorists might try to crash a vehicle filled with explosives into a U.S.embassy in a foreign country.Inside the gate to the embassy,they installed steel and cement posts in the road.These posts can be raised up from the ground to form a barrier against suicide bombers.The posts can be lowered back into the ground to allow safe vehicles to pass.This physical barrier system illustrates which risk management technique?

A useful measure for an organization is the total of the organization's expenditures for treating loss exposures including retained losses,loss control expenses,insurance premiums,and other related expenses.This measure is called the organization's

Barb,who is self-employed,is the main breadwinner for her family.Barb does not have disability income insurance because she has never stopped to consider the impact of a long-term disability upon her family.Barb's treatment of the risk of disability is best described as

Which of the following is least likely to occur during a "hard" insurance market period?

Which of the following conditions is (are)appropriate for using retention? I.Losses are difficult to predict. II.The worst possible loss is not serious.