Nature of Insurance, Risk, Perils and Hazards

Which of the following can be defined as a cause of a loss? Adversity Risk Hazard Peril

Peril

Which of the following describes the act of insuring a risk against possible loss? Risk avoidance Risk transfer Hazard reduction Loss management

Risk transfer

Which of these statements regarding insurance is false? One way insurers deal with catastrophic loss is through reinsurance The number of losses decrease as the number of insured units increase Speculative risk cannot be insured Pure risk can be insured

The number of losses decrease as the number of insured units increase

The process of analyzing exposures that create risk and designing programs to handle them is called risk allocation management avoidance adjustment

management

ABC Company is attempting to minimize the severity of potential losses within its company. The company is engaged in risk transfer retention reduction avoidance

reduction

"The potential for loss" is also known as a hazard risk transference peril

risk

An insurable risk requires that the chance for both a loss or gain exists the loss must be catastrophic that the chance of loss be measurable that the loss must be incalculable

that the chance of loss be measurable