CPCU 552, Chapter 12

A certified act of terrorism by definition must exceed $______ million

5

According to the Terrorism Risk Insurance Act (TRIA), one of the two required conditions that an insurer must meet at the time of an initial offer, purchase, and renewal of insurance is the disclosure of the premium for terrorism coverage. What is the other condition?

A make-available provision

Ace is an electronics firm that manufactures small circuit boards that are used in cell phones. One of Ace's major customers is XYZ Phones, accounting for seventy percent of total sales for Ace each year. XYZ uses a just-in-time inventory system and orders circuit boards through an on-line system that creates a direct connection between XYZ and Ace. Last week, XYZ was subjected to a denial-of-service cyber attack which shut down XYZ's computer system for several hours, which led to ordering delays that took nearly a day to sort out. Which one of the following statements best describes Ace's cyber risk exposure to this situation?

Ace has a contingent business income exposure.

Which one of the following statements about coverage triggers in cyber risk insurance policies is most accurate?

Both claims-made coverage triggers and occurrence coverage triggers are available, but occurrence coverage triggers are more appropriate for some insuring agreements than for others.

Cyber crime can be controlled through the use of effective loss prevention and loss reduction strategies. Which one of the following loss prevention strategies is considered the most effective against cyber criminals?

Controls and limitations on system access

ABC is a small, regional brewery that has recently revised its entire operation following a devastating fire at its plant. In restoring the plant to its full operating capacity, ABC's management installed a computer-control system that centralizes and automates many of the business and manufacturing functions that were once done by employees. The new computer system monitors the temperature of the beer brewing in the vats, orders additional barley from the agricultural supplier when inventory is depleted, receives shipments, and invoices customer product orders. As a result of the new system, ABC expects to cut costs by more than forty percent this year, primarily by reducing the number of employees from 200 to 70. However, in addition to cutting costs, the innovative new system has created new loss exposures for ABC as well. Which one of the following statements best describes a cyber risk-related net income loss for ABC?

If the computer system goes down, ABC will not be able to manufacture and sell its product

Which one of the following represents a way in which a company that is engaged in technology-related activities may incur cyber risk bodily injury or property damage liability.

Software development is a way in which a company that is engaged in technology-related activities may incur cyber risk bodily injury or property damage liability.

Under the Terrorism Risk Insurance Act (TRIA), the federal government will not make any payment for a certified act of terrorism until the aggregate industry insured losses exceed

The federal government will not make any payment for a certified act of terrorism until the aggregate industry insured losses exceed $100 million.

The Terrorism Risk Insurance Act (TRIA) does not apply to all lines of insurance. Which one of the following types of insurance would be covered by TRIA?

Workers compensation is covered under TRIA.