API 28 part 1

Loss reduction.

Air bags in an automobile are an example of:

Loss prevention.

A deadbolt lock on a door is an example of which one of the following risk management techniques? -Loss avoidance -Loss prevention -Loss reduction -Duplication

Install deadbolt locks on his doors.

Crime has been increasing in Randy's neighborhood. Randy's insurance agent described loss prevention measures and loss reduction measures Randy could implement. Which one of the following is a loss prevention measure Randy could implement to reduce his frequency of theft losses? -Install an interior motion detection alarm system. -Install a wall safe in his house. -Install deadbolt locks on his doors. -Install surveillance cameras in his house.

They must have highly developed interpersonal skills to deal directly with customers.

In which one of the following ways have the task of personal lines underwriters changed over time? -They oversee individual policies rather than books of business. -They no longer have written premium goals. -They must have highly developed interpersonal skills to deal directly with customers. -There is less emphasis on analysis and planning skills to interpret vast amounts of data.

Obtain money from one source and redirect it to another.

Insurers act as financial intermediaries, which means that insurers:

Individuals and families generally share the same needs for property and liability coverage.

Insurers are able to pool insured's loss exposures to determine premiums for property and liability policies purchased by individuals and families because:

Semi-compulsory

John wants to finance the purchase of a new car. The lender will require him to carry property insurance on the car as a condition of the loan. This is an example of insurance having which characteristic?

Retaining loss exposures and buying insurance.

Personal insurance customers have few risk financing alternatives available other than:

Prevents law suits.

Personal insurance serves all of the following purposes, EXCEPT: -Prevents lawsuits. -Helps pay for medical treatment. -Protects families from catastrophic losses. -Replaces income for disabled workers.

Retention.

Ruth was recently given an old family ring by an elderly aunt. Although the ring has great sentimental value, it has little monetary value. As a result, Ruth decided there was no reason to insure the ring. Ruth is practicing which risk management technique?

As a condition for a loan.

Semi-compulsory insurance is insurance that is required: -By statute. -As a condition for a loan. -As a consequence of case law. -As a condition of employment.

The potential to cause prolonged financial impairment.

Some loss exposures should not be retained because they might have critical consequences. Critical consequences are defined as those that have which one of the following characteristics? -The potential to cause prolonged financial impairment. -A legal requirement o purchase insurance. -The unavailability of commercial insurance. -The inability to use loss prevention techniques.

Auto Insurance

The bulk of personal lines property-casualty insurance premium comes from which line of insurance?

Reduces the frequency of a loss.

The risk management technique of loss prevention:

A larger role in adjusting claims.

Which one of the following is a way in which the functions of personal insurance professionals have changed over time? -Little focus on determining loss exposures. -Less emphasis on acting as portfolio managers. -Increasingly distinct job functions. -A larger role in adjusting claims.

Identifying loss exposures.

Which one of the following is the first step in the risk management process? -Analyzing loss exposures. -Implementing selected risk management techniques. -Identifying loss exposures. -Selecting appropriate risk management technique.

Personal insurance customers have few risk financing alternatives available other than retaining loss exposures or buying insurance.

Which one of the following statements about personal insurance customer characteristics and expectations is true? -Personal insurance customers needs are the only way of characterizing insurance customers. -Personal insurance customers have significant negotiating power in insurance professionals. -Personal insurance customers rarely need to rely on the expertise of personal insurance professionals -Personal insurance customers have few risk financing alternatives available other than retaining loss exposures or buying insurance.

They form the public image of their employers.

Which one of the following statements about representatives who have direct contact with customers is true? -They form the public image of their employers. -They are required to be licensed as producers. -They are prohibited from having any claim payment authority. -They have little involvement with using risk management techniques.

-Their responsibilities may include generating and executing marketing strategies.

Which one of the following statements about the role of insurance professionals is true? -They must be employed directly by insurance companies. -They focus little on choosing among risk management techniques or tools to manage identified loss exposures. -Their responsibilities may include generating and executing marketing strategies. -Their jobs are very distinct with regard to tasks performed.

They have little negotiating power.

Which one of the following statements describes the extent, if any, to which individuals and families typically have negotiating power in insurance transactions? -They have little negotiating power. -They can negotiate over price. -They can negotiate over policy terms. -They can obtain policies on a basis other than as-written.

The true value of insurance is its potential rather than immediate benefits.

Which statement is true about the nature of personal insurance? -For most households, the sum of the payment of insurance premiums over a lifetime is equal to the sum of any loss recoveries. -Personal lines insurance promotes public safety only for those who purchase coverage. -The true value of insurance is its potential rather than immediate benefits. -Because of premiums involved, personal insurance actually reduces security and peace of mind.