Question 1

Match the descriptions with their terms:
-A/An _________________ is one that is incorporated in the United States.

Accepted Answer

A)  assigned risk plan 
B)  association captive 
C)  excess insurance 
D)  experience modification factor 
E)  float
F) industry captive
G) large deductible plan
H) liquidating damages
I) loss conversion factor
J) offshore captive
K) onshore captive
L) partial permanent injury
M) RMIS
N) single parent captive
O) standard premium
P) workers' compensation insurance 
A)  assigned risk plan 
B)  association captive 
C)  excess insurance 
D)  experience modification factor 
E)  float
F) industry captive
G) large deductible plan
H) liquidating damages
I) loss conversion factor
J) offshore captive
K) onshore captive
L) partial permanent injury
M) RMIS
N) single parent captive
O) standard premium
P) workers' compensation insurance

Question 2

Match the descriptions with their terms:
-The _________________ equals the manual premium times the experience modification factor.

Accepted Answer

A)  assigned risk plan 
B)  association captive 
C)  excess insurance 
D)  experience modification factor 
E)  float
F) industry captive
G) large deductible plan
H) liquidating damages
I) loss conversion factor
J) offshore captive
K) onshore captive
L) partial permanent injury
M) RMIS
N) single parent captive
O) standard premium
P) workers' compensation insurance 
A)  assigned risk plan 
B)  association captive 
C)  excess insurance 
D)  experience modification factor 
E)  float
F) industry captive
G) large deductible plan
H) liquidating damages
I) loss conversion factor
J) offshore captive
K) onshore captive
L) partial permanent injury
M) RMIS
N) single parent captive
O) standard premium
P) workers' compensation insurance

Question 3

Firms with unstable work forces are candidates to self-insure workers' compensation.

Accepted Answer

A) True 
 B)False

Question 4

Match the descriptions with their terms:
-A/An _________________ is one where members of a trade association create the captive

Accepted Answer

A)  assigned risk plan 
B)  association captive 
C)  excess insurance 
D)  experience modification factor 
E)  float
F) industry captive
G) large deductible plan
H) liquidating damages
I) loss conversion factor
J) offshore captive
K) onshore captive
L) partial permanent injury
M) RMIS
N) single parent captive
O) standard premium
P) workers' compensation insurance 
A)  assigned risk plan 
B)  association captive 
C)  excess insurance 
D)  experience modification factor 
E)  float
F) industry captive
G) large deductible plan
H) liquidating damages
I) loss conversion factor
J) offshore captive
K) onshore captive
L) partial permanent injury
M) RMIS
N) single parent captive
O) standard premium
P) workers' compensation insurance

Question 5

Assigned risk assessment for workers' compensation are usually quite low.

Accepted Answer

A) True 
 B)False

Question 6

Match the descriptions with their terms:
-Another name for a risk management information system is _________________.

Accepted Answer

A)  assigned risk plan 
B)  association captive 
C)  excess insurance 
D)  experience modification factor 
E)  float
F) industry captive
G) large deductible plan
H) liquidating damages
I) loss conversion factor
J) offshore captive
K) onshore captive
L) partial permanent injury
M) RMIS
N) single parent captive
O) standard premium
P) workers' compensation insurance 
A)  assigned risk plan 
B)  association captive 
C)  excess insurance 
D)  experience modification factor 
E)  float
F) industry captive
G) large deductible plan
H) liquidating damages
I) loss conversion factor
J) offshore captive
K) onshore captive
L) partial permanent injury
M) RMIS
N) single parent captive
O) standard premium
P) workers' compensation insurance

Question 7

Match the descriptions with their terms:
-Under a/an _________________, an insured is rejected by the regular market and is placed in a special plan for such risks.

Accepted Answer

A)  assigned risk plan 
B)  association captive 
C)  excess insurance 
D)  experience modification factor 
E)  float
F) industry captive
G) large deductible plan
H) liquidating damages
I) loss conversion factor
J) offshore captive
K) onshore captive
L) partial permanent injury
M) RMIS
N) single parent captive
O) standard premium
P) workers' compensation insurance 
A)  assigned risk plan 
B)  association captive 
C)  excess insurance 
D)  experience modification factor 
E)  float
F) industry captive
G) large deductible plan
H) liquidating damages
I) loss conversion factor
J) offshore captive
K) onshore captive
L) partial permanent injury
M) RMIS
N) single parent captive
O) standard premium
P) workers' compensation insurance

Question 8

Match the descriptions with their terms:
-Cash _________________ is the difference between accrued benefits and paid benefits.

Accepted Answer

A)  assigned risk plan 
B)  association captive 
C)  excess insurance 
D)  experience modification factor 
E)  float
F) industry captive
G) large deductible plan
H) liquidating damages
I) loss conversion factor
J) offshore captive
K) onshore captive
L) partial permanent injury
M) RMIS
N) single parent captive
O) standard premium
P) workers' compensation insurance 
A)  assigned risk plan 
B)  association captive 
C)  excess insurance 
D)  experience modification factor 
E)  float
F) industry captive
G) large deductible plan
H) liquidating damages
I) loss conversion factor
J) offshore captive
K) onshore captive
L) partial permanent injury
M) RMIS
N) single parent captive
O) standard premium
P) workers' compensation insurance

Question 9

A high deductible workers' compensation plan

Accepted Answer

A)  reduces assigned risk charges, 
B)  reduces losses, 
C)  avoids loss control costs, 
D)  none of these. 
A)  reduces assigned risk charges, 
B)  reduces losses, 
C)  avoids loss control costs, 
D)  none of these.

Question 10

Self-insurers must purchase

Accepted Answer

A)  umbrella insurance, 
B)  excess umbrellas, 
C)  DIC policy, 
D)  excess-of-loss reinsurance. 
A)  umbrella insurance, 
B)  excess umbrellas, 
C)  DIC policy, 
D)  excess-of-loss reinsurance.

Question 11

Match the descriptions with their terms:
-A/An _________________ is the situation where a worker permanently injures a part of his/her body.

Accepted Answer

A)  assigned risk plan 
B)  association captive 
C)  excess insurance 
D)  experience modification factor 
E)  float
F) industry captive
G) large deductible plan
H) liquidating damages
I) loss conversion factor
J) offshore captive
K) onshore captive
L) partial permanent injury
M) RMIS
N) single parent captive
O) standard premium
P) workers' compensation insurance 
A)  assigned risk plan 
B)  association captive 
C)  excess insurance 
D)  experience modification factor 
E)  float
F) industry captive
G) large deductible plan
H) liquidating damages
I) loss conversion factor
J) offshore captive
K) onshore captive
L) partial permanent injury
M) RMIS
N) single parent captive
O) standard premium
P) workers' compensation insurance

Question 12

Match the descriptions with their terms:
-_________________ is where a noninsurance company owns 100 percent of an insurance subsidiary.

Accepted Answer

A)  assigned risk plan 
B)  association captive 
C)  excess insurance 
D)  experience modification factor 
E)  float
F) industry captive
G) large deductible plan
H) liquidating damages
I) loss conversion factor
J) offshore captive
K) onshore captive
L) partial permanent injury
M) RMIS
N) single parent captive
O) standard premium
P) workers' compensation insurance 
A)  assigned risk plan 
B)  association captive 
C)  excess insurance 
D)  experience modification factor 
E)  float
F) industry captive
G) large deductible plan
H) liquidating damages
I) loss conversion factor
J) offshore captive
K) onshore captive
L) partial permanent injury
M) RMIS
N) single parent captive
O) standard premium
P) workers' compensation insurance

Question 13

An advantage of a captive insurer is

Accepted Answer

A)  flexible investment regulation, 
B)  tax deductions for premiums, 
C)  no need for insurance, 
D)  none of these. 
A)  flexible investment regulation, 
B)  tax deductions for premiums, 
C)  no need for insurance, 
D)  none of these.

Question 14

Few firms that self-insure workers' compensation purchase excess insurance.

Accepted Answer

A) True 
 B)False

Question 15

Workers' compensation pays on a

Accepted Answer

A)  tort basis, 
B)  contributory negligence basis, 
C)  comparative basis, 
D)  no-fault basis. 
A)  tort basis, 
B)  contributory negligence basis, 
C)  comparative basis, 
D)  no-fault basis.

Question 16

High interest rates encourage self-insurance.

Accepted Answer

A) True 
 B)False

Question 17

The major advantage of a captive is

Accepted Answer

A)  lower loss control expenses, 
B)  lower administrative costs, 
C)  tax deduction for premiums paid, 
D)  direct access to reinsurance markets. 
A)  lower loss control expenses, 
B)  lower administrative costs, 
C)  tax deduction for premiums paid, 
D)  direct access to reinsurance markets.

Question 18

Most workers' compensation laws are such that

Accepted Answer

A)  all workers are covered, 
B)  about two-thirds of a workers' income is restored in the event of industrial accident, 
C)  a worker's benefits are fairly consistent between different states, 
D)  fairly complete medical services are provided for occupational injuries, 
E)  none of these is true. 
A)  all workers are covered, 
B)  about two-thirds of a workers' income is restored in the event of industrial accident, 
C)  a worker's benefits are fairly consistent between different states, 
D)  fairly complete medical services are provided for occupational injuries, 
E)  none of these is true.

Question 19

Which of the following expenses are eliminated by self-insurance?

Accepted Answer

A)  administrative, 
B)  loss adjusting, 
C)  loss control, 
D)  none of these. 
A)  administrative, 
B)  loss adjusting, 
C)  loss control, 
D)  none of these.

Question 20

When a firm self-insures workers' compensation, management often becomes more claims conscious.

Accepted Answer

A) True 
 B)False

Exam 12: Workers Compensation and Alternative Risk Financing

Match the descriptions with their terms: -A/An _________________ is one that is incorporated in the United States.

Match the descriptions with their terms: -The _________________ equals the manual premium times the experience modification factor.

Firms with unstable work forces are candidates to self-insure workers' compensation.

Match the descriptions with their terms: -A/An _________________ is one where members of a trade association create the captive

Assigned risk assessment for workers' compensation are usually quite low.

Match the descriptions with their terms: -Another name for a risk management information system is _________________.

Match the descriptions with their terms: -Under a/an _________________, an insured is rejected by the regular market and is placed in a special plan for such risks.

Match the descriptions with their terms: -Cash _________________ is the difference between accrued benefits and paid benefits.

A high deductible workers' compensation plan

Self-insurers must purchase

Match the descriptions with their terms: -A/An _________________ is the situation where a worker permanently injures a part of his/her body.

Match the descriptions with their terms: -_________________ is where a noninsurance company owns 100 percent of an insurance subsidiary.

An advantage of a captive insurer is

Few firms that self-insure workers' compensation purchase excess insurance.

Workers' compensation pays on a

High interest rates encourage self-insurance.

The major advantage of a captive is

Most workers' compensation laws are such that

Which of the following expenses are eliminated by self-insurance?

When a firm self-insures workers' compensation, management often becomes more claims conscious.

Introduction to Risk

Risk Identification and Evaluation

Property and Liability Loss Exposures

Life, Health, and Loss of Income Exposures

Risk Management Techniques: Noninsurance Methods

Insurance As a Risk Management Technique: Principles

Insurance As a Risk Management Technique: Policy Provisions

Selecting and Implementing Risk Management Techniques

Risk Management and Commercial Propertypart I

Risk Management and Commercial Propertypart II

Risk Management and Commercial Liability Risk

Risk Management for Auto Ownerspart I

Risk Management for Auto Ownerspart II

Risk Management for Homeowners

Loss of Life

Loss of Health

Retirement Planning and Annuities

Employee Benefits: Life and Health Benefits

Employee Benefits: Retirement Plans

Financial and Estate Planning

Risk Management and the Insurance Industry

Functions and Organization of Insurers

Government Regulation of Risk Management and Insurance

Filters