Principles of insurance

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Who gets the money in life insurance when they die

*Beneficiaries (Not the insured)

Techniques for managing risks 1)Risk control refers to techniques that reduce the frequency or severity of losses

-Avoidance -Loss prevention (activities to reduce the frequency of losses) -Loss reduction (reduce the severity of losses) *Sprinklers help stop fires from spreading *Tornado sirens for communities

Insurance vs Hedging

-Both risk is transferred by a contract -Insurance involves the transfer of pure risk while hedging is typically speculative risks also insurance can reduce objective risk while hedging is normally a form of risk transfer

Adverse selection can be controlled by

-Carefully underwriting (selection and classification) -Policy provisions (suicide clause in life insurance- commit suicide after 2 years then pay out)

Social cost of insurance

-Cost of doing business *Expense loading -Fradulent claims -Inflated claims

Objective probability can be determined by

-Deductive reasoning -inductive reasoning

Benefits of risk management

-Enables firm to attain its pre-loss and post-loss objectives more easily -Risk management program can reduce a firm's cost of risk -Reduction in pure loss exposures -Direct and indirect losses are reduced which benefits society

Advantages of retention

-Encourages loss prevention *Because you're the one paying for it if a loss occurs -Increases cash flow (Not purchasing insurance on that loss-premium) -Save on loss costs

What are the perils in the following examples: -Your house burns because of a fire -Your car is damaged in an accident with another car

-Fire -The collision *Other things include lighting, hail, tornados, burglary, etc

Underwriting cycle

-Hard markets -Soft markets

**Most important Risk management process

-Identify potential losses -Measure and analyze the loss exposures -Select the appropriate combination of techniques for treating the loss exposures -Implement and monitor the risk management program

Burdens of risk on society:

-In the absence of insurance, how would someone pay for losses -Risk of a liability lawsuit may discourage innovation, depriving society of certain goods and services -Risk causes worry and fear (mental unrest)

Insurance vs Gambling

-Insurance is always socially productive while gambling is not *For insurance both parties have a common interest in the prevention of a loss *While gambling the winner's gain comes at the expense of the loser (speculative risk)

What are the six characteristics of insurable risks

-Large number of exposure units -Loss must be accidental and unintentional -Loss must be determinable and measurable -Loss should not be catastrophic (allow pooling technique; reinsurance) -Chance of loss must be calculable (calculate average frequency of future loss) -Premium must be economically feasible (so people can afford to purchase the policy) *Based on these requirements, most personal, property, and liability risks can be insured while market, financial, production, and political risks are hard to insure

What is a deductible used for

-Lowers your premium *Because you are not buying as much coverage

What are some examples of loss exposure

-Manufacturing plants that may be damaged by an earthquake or flood -Defective products that may result in lawsuits -Possible theft of company property because of inadequate security -Potential injury to employees because of unsafe working conditions

How are social insurance programs eligibility and benefit rights prescribed

By statute

Combines into a single unified treatment program all major risks faced by the firm

Enterprise risk

______ encompasses all major risks faced by a business firm (pure, speculative, strategic, operational, financial, etc. risks)

Enterprise risk

**ON test The amount needed to pay all expenses, including commissions, general administrative expenses, state premium taxes, acquisition expenses, and all allowances for contingencies and profit

Expense loading

______ must be added to the pure premium to cover the expenses incurred by insurance companies in their daily operations

Expense loading

As the number of exposure units increases, the more closely the actual loss experience will approach the expected loss experience

Law of large numbers

Risk reduction is based on _______

Law of large numbers

Characteristics of the legal system or regulatory environment that increases the frequency or severity of loss such as large jury verdicts, dry county laws, regulatory changes by state insurance departments

Legal hazard

Covers the insured's legal liability arising our of property damage or bodily injury to others

Liability insurance

Involve the possibility of being held legally liable for bodily injury or property damage to someone else such as sexual harassment, pollution, defective products

Liability risks (most important when getting insurance for a company)

Pays death benefits to beneficiaries when the insured dies

Life insurance

A plant that may be damaged by an earthquake or an automobile that may be damaged in a collision

Loss exposure

Defective products that may result in a law suit and potential injury from unsafe working conditions are examples of

Loss exposure

Any situation or circumstance in which a loss is possible regardless of whether a loss occurs

Loss exposure *Pharmaceutical companies, defective products

Refers to the probable number of losses that may occur during some time period

Loss frequency

If a firm has to shut down fir several months because of physical damage loss occurs the firm would lose business income. This is an example of a ___________

Loss of business income (commercial risk)

-Motorists that take a safe-driving course and drive defensively to prevent auto accidents -Individuals exercise, control their weight, and eat healthy diets to prevent heart attacks -Having strict security measures at airports and aboard flights to reduce terrorism are examples of

Loss prevention

Aims at reducing the probability of loss so the frequency is then reduced

Loss prevention

High loss frequency and low loss severity

Loss prevention and retention

-A department store that installs a sprinkler system so that a fire will be extinguished -A community warning system reduces the numbers of injuries and deaths from an approaching tornado are examples of

Loss reduction

Reducing the severity of a loss after it occurs

Loss reduction

Refers to the probably size of the losses that may occur

Loss severity

Which is more important: Loss frequency or loss severity

Loss severity

______ is a policy specially tailored for the firm

Manuscript policy

Who are the insured

People who purchase insurance

The actual cause of a loss

Peril

Coverages that insure the real estate and personal property of individuals and families or provide protection against legal liability

Personal lines *Conversations with the general public

Risks that directly affect an individual or family. They involve the possibility of a loss or reduction of income, extra expenses or depletion of financial assets such as premature death of family head, Insufficient income during retirement, etc

Personal risk

The identification of pure risks faced by an individual or family, and to the selection of the most appropriate technique for treating such risks

Personal risk management

Protection against a catastrophic lawsuit or judgement

Personal umbrella liability insurance

A large corporation self insures or funds part or all of the group health insurance benefits paid to employees

Self insurance

A special form of planned retention by which part or all of a given loss exposure is retained by the firm

Self insurance

Premiums paid to a __________ captive are generally not income-tax deductible while _______ are usually income-tax deductible

Single parent (pure) ; group

Financed entirely or in large part by contributions from employers and or employees

Social insurance programs

Social security, unemployment, workers compensation, and disability are examples of

Social insurance programs

A situation in which either profit or loss is possible such as gambling, investments, etc. (ways in which you can make money off of it)

Speculative risk

10,000 houses are insured with 1% coverage. Some years as few as 90 houses are burned and others as many as 110 are burned. -What is the variation risk -What is the objective risk

Square root of 10,000 = 100 So 100-90 = 10, and 110-100 = 10 1)So the variation risk is 10 2)Objective risk is 10/100 =10%

A firm enters a new line of business and the line may be unprofitable. This is an example of a ________ risk

Strategic

The uncertainty regarding the firm's financial goals and objectives

Strategic risk

A person picks the same lottery numbers each time for powerball thinking he has a better chance at winning rather than losing

Subjective probability

A person who buys a lottery ticket on their birthday because they believe its their lucky day and over-estimates the small chance of winning is an example of

Subjective probability

The individuals personal estimate of the chance of loss

Subjective probability

Assume that a drover with several convictions for drunk driving is drinking heavily in a neighborhood bar and foolishly attempts to drive home. The driver may be uncertain whether he will arrive home safely without being arrested by the police for drunk driving. This is an example of __________ risk

Subjective risk

Uncertainty based on a person's mental condition or state of mind

Subjective risk

Assume that the chance of loss is 3% for two different fleets of trucks. Explain how it is possible that objective risk for both fleets can be different even though the chance of loss is identical

The variation loss may be quite different

Low loss frequency and high loss severity

Transfer

a)City bus corporation...

a) -Identify major steps - - -Implement and monitor b) -Liability (anyone on buss or anyone hit) -Propert loss on bus -Loss prevention services (driving courses) -Insurance (collision and liability insurance) -Loss of business income -Workers compensation -Disability

High subjective risk often results in

conservative and prudent behavior

The law of large numbers can be applied more easily to _______ than ______

pure risk ; speculative risk

In an excess insurance policy, the insurer (insurance company) pays only if

the actual loss exceeds the amount a firm has decided to retain

Identify loss exposures Delbert williams is the owner and operator of a diner. Last month, del's meat supplier recalled some hamburger for fear of E. Coli contamination. One of Del's cooks was recently injured in a kitchen fire and a waitress is complaining about pain in her elbow from carrying serving trays. Del noticed two weeks ago that there was 60 dollars missing from the cash register, and this week another 80. Del's has an excellent take-out business, and the diner is considering providing a delivery to a limited area using a vehicle owned by the diner. Del's bookkeeper suggested that delbert should establish a risk management program to address the many loss exposures.

-Meat -Liability exposure (people suing for bad meat) -Loss of revenue due to meat -Fined for serving bad meat -Safety at workplace -Workers comp -Bad work environments -Employee theft -Wrongful termination possibly -liability from workers using vehicle -Insurance rates go up due to more liability -Operations risk from placing orders over the phone( credit card fraud)

What are the three risks when dealing with liability risks

-No maximum set amount you can be sued for -A lien can be placed on your income and financial assets until payed in full -Legal defense amounts can be enormous

What is the maximum upper limit with respect to a liability loss

-None. You can be sued for any amount

Andrew owns a gun shop in a high-crime area. The store does not have a camera surveillance system. The high cost of burglary and theft insurance has substantially reduced his profits. A risk management consultant points out that several methods other than insurance can be used to handle the burglary and theft exposure. Identify and explain two non insurance methods that could be used to deal with the burglary and theft exposure

-Not Practical: avoidance (if you don't want to be robbed you would completely have to go out of business) - Loss prevention: Alarm systems, relocating, security guards, etc. -Retention: Puts money aside to pay for the first x amount stollen then insurance pays for the rest

What are the two private insurance coverages

-Personal lines -Commercial lines

What are the 4 different hazards

-Physical -Moral -Attitudinal/Morale -Legal

What is an insurance plan or arrangement characteristics

-Pooling of losses -Payment of fortuitous losses -Risk transfer -Indemnification

Risk management objectives

-Pre-loss objectives -Post-loss objectives

What are the four main personal risks

-Premature death -Insufficient income during retirement -Poor health -Unemployment

Pre-loss objectives

-Prepare for potential losses in the most economical way -Reduce anxiety

What are the different types of personal lines

-Private passenger auto insurance -Homeowners insurance -Personal umbrella liability insurance -Earthquake insurance -Federal flood insurance

Identify loss exposures

-Property loss exposures -Liability loss exposures -Business income loss exposures -Human resources loss exposures *Purchasing life insurance on key employees -Crime loss exposures -Employee benefit loss exposures -Intangible property loss exposures

Major commercial risks:

-Property risks -Liability risks -Loss of business income (when the firm must shut down for some time after a physical damage loss), -other risks

What risks are involved with enterprise risks

-Pure -Speculative -Strategic -Operational -Financial

Classification of risk

-Pure vs. Speculative -Diversifiable vs nondiversifiable

2)Risk Financing refers to techniques that provide for payment of losses

-Retention (An individual or business firm retains part or all of the losses that can result from a given risk. Can be active or passive) -Active retention -Passive retention -Self insurance

Identifying loss exposure techniques

-Risk analysis questionnaires and checklists -Physical inspection (looking at physical property first hand) -Flowcharts -Financial statements -Historical loss data *If something happens to a competitor then company looks to fix this for their firm

Government insurance

-Social insurance programs

Post-loss objectives

-Survival of the firm -Continure operations -Stability of earnings -Continued growth

What are the social benefits of insurance

-The indemnification for loss (stability) -Reduction of worry and fear -Source of investment funds -Loss prevention -Enhancement of credit (protects lender's financial)

Objective risk declines as the number of ________ increases

-exposures

What are the steps risk managers use in selecting insurance

1)Risk manager selects the coverages needed, and policy provisions 2)Risk manager selects the insurer, or insurers, to provide the coverages 3)Risk manager negotiates the terms of the insurance contract 4)Information concerning insurance coverages must be disseminated to others in the firm

Risk transferred is used because....

A pure risk is transferred from the insured to the insurer who is typically stronger financially than the insured

There are several techniques available for managing risk. For each of the following risks, identify an appropriate technique, or combination of techniques that would be appropriate for dealing with the risk a) A family head may die prematurely because of a heart attack b)An individual's home mat be totally destroyed in a hurricane c)A new car may be severely damaged in an auto accident d)A negligent motorist may be ordered to pay a substabtial liability judgement to someone who is injured in an auto accident e) A surgeon mat be sued for medical malpractice

A) Life insurance and risk control activities (check-ups, etc.) B) Homeowners insurance and deductibles (portion you are responsible for) C) Collision insurance, deductibles, and loss retention D) Liability insurance (most important insurance for individuals) E) Liability insurance

Several types of risk are present in the U.S. economy. For each of the following, identify the type of risk that is present. Explain a) The department of homeland security alerts the nation of possible attack by terrorists b)A house may be severely damaged in a fire c) A family head may be totally disabled in a plant explosion d)An investor purchases 100 shares of microsoft stick e)A river that periodically overflows may cause substantial property damage to thousands of homes in the floodplain f)Home buyers may be faced with higher mortgage payments if the Fed raises interest rates at its next meeting g)A worker on vacation plays the slot machines in a casino

A) Non-diversifiable because it affects a large number of people B) A pure diversifiable risk C) Pure risk or personal risk D) Speclitive risk because there is a chance for gain E)Non-Diversifiable because it affects a large number of people F)Non-Diversifiable because affecting large number of people G)Speclitive risk because chance for gain/loss

-Definition of risk, -difference between objective and subjective risk -How objective risk with square root of number of cases -Difference between peril and hazard -Diversifiable and nondiversifiable -Different types of commercial risks -Identify examples of risk retention, risk transfer, risk avoidance -Difference in active and passive retention Chapter 2: -Pooling of losses definition -Law of large numbers -Characteristice of an ideally insurable risk -Examples of risk that are normally uninsurable risk by private insurance companies -Adverse selection -Definition of casualty insurance -Requirements of an ideally insurable risk -How insurance benefits society -Define expense loading -Know what re-insurance is Chapter 3: -What is risk management and risk managers -Type of information risk managers use for pure loss exposures -Define loss severity and loss frequency -when loss matrix should be used -Examples of non-insurance transfer, excess insurance -Steps in risk management process -Know what underwriting cycle is -Fact scenario of loss control, loss retention, insurance, etc.

About 35-37 question on exam

A motorist wishes to retain the risk of a small collision by purchasing an auto insurance policy with a $500 or higher deductible

Active retention

An individual is aware of the risk and deliberately plans to remain all or part of it

Active retention

Advantages and Disadvantages of non-insurance transfers

Advantages: -Can transfer some losses that are not insurable -Less expensive -

Advantages and Disadvantages of Insurance

Advantages: -Firm is indemnified for losses -Uncertainty is reduced Disadvantages:

Individual has several speeding tickets and a DUI charge who is charged at standard rates is an example of

Adverse selection

The tendency of persons with a higher-than-average chance of loss to seek insurance at standard rates

Adverse selection

Carelessness or indifference to a loss which therefore increases the frequency or severity of a loss such as leaving your keys in your car overnight or changing lanes frequently in heavy traffic

Attitudinal / Morale hazard

High loss frequency and high loss severity

Avoidance

An insurer owned by a percent firm for the purpose of insuring the parent firm's loss exposures

Captive insurer *A captive insurer is an insurance company *Typically doctors

**Refers to insurance that covers whatever is not covered by fires, marine, and life insurance (on test)

Casualty insurance

The probability that an event that causes a loss will occur

Chance of loss

Property and casualty coverages for business firms, nonprofit organizations, and government agencies

Commercial lines *Dont need people to sell them insurance because they know they need it

The law of large numbers explains that when the number of exposure units increases, the actual loss or risk _______

Decreases

Specified amount subtracted from the loss payment otherwise payable to the insured

Deductible

Two major types of loses associated with the destruction of theft or property

Direct and indirect loss

A financial loss that results from the physical damage

Direct loss

Pay income benefits

Disability plans

Affects only individuals and small groups and not the entire economy such as car theft, robberies, small house fires, etc. (one where an insurance company can offer more than one line)

Diversifiable risk

A food company agrees to deliver cereal at a fixed price to a supermarket chain in six months and lose money because grain prices rise. This is an example of

Financial risk

The uncertainty of loss because of adverse changes in commodity prices, interest rates, foreign exchange rates, and time value of money

Financial risk

Person slips on an icy sidewalk and breaks a leg.

Fortuitous loss

______ is one that is unforeseen, unexpected, and occur as a result of chance *Loss must be accidental

Fortuitous loss

How are social insurance programs paid for

General public paid by taxes

The condition that increases the chance of a loss

Hazard

Covers medical expenses because of sickness or injury

Health insurance

Who benefits mostly on social insurance programs

Heavily weighted in favor of low income groups

A technique for transferring the risk of unfavorable price fluctuations to a speculator by purchasing and selling future contracts on an organized exchange

Hedging

If a firm is a sole proprietorship the owner;s personal assets can be attached by creditors for satisfaction of debts

Incorporation

The insured is restored to his or her approximate financial position prior to the occurrence of a loss

Indemnification

Your home burns in a fire and your homeowners policy restores you to your previous position

Indemnification

A financial loss that results indirectly form the occurrence from physical damage

Indirect loss

As a result of the fire to your home, you incur additional living expenses to maintain your normal standard of living. This is an example of an

Indirect loss

Seeking more than the claim is worth

Inflated claims

The pooling of fortuitous losses by transfer of such risks to insurers, who agree to indemnify insureds for such losses, to provide other pecuniary benefits on their occurrence, or to render services connected with the risk

Insurance

____ is the most practical method for handling major risks

Insurance

______ is appropriate for low-probability, high-severity loss exposures

Insurance

Banks lend individuals money because of

Insurance (because you have credit on whatever you're paying for)

Who are the insurers

Insurance companies

Dishonesty or character defects in an individual that increases the frequency or severity of a loss such as faking an accident to collect insurance money and intentionally burning unsold merchandise that is insured

Moral hazard

______ is the reason insurance premiums are higher for everyone

Moral hazard

Method other than insurance by which a pure risk and its potential financial consequences are transferred to another party

Non-insurance transfer

Contracts, leases, hold-harmless agreements are examples of

Non-insurance transfers

Affects the entire economy or large numbers of persons or groups such as rapid inflation, floods, earthquakes, etc.

Nondiversifiable risk

Government assistance may be necessary in _________ and many insurance companies do not like covering this as much

Nondiversifiable risk

Transferring a risk to another party by contract, such as through a service contract or a hold-harmless clause in a clause

Noninsurance transfer

The probability of getting a head from the toss of a balanced coin is 1/2, and the probability if rolling a 6 with a single die is 1/6 because each only has one chance is an example of

Objective deductive probability/reasoning

The probability that a person age 21 will die before age 26

Objective inductive reasoning (not logically deduced)

Analyzing past mortality rates in order to determine the probability of death for a certain age group and charging premiums based on number of deaths in the certain categories is an example of

Objective probability

The long-run relative frequency of an event based on the assumption of an infinite number of observations and of no charge in the underlying conditions

Objective probability

The long-term relative variation of actual loss from expected loss

Objective probability

The relative variation of actual loss from expected loss

Objective risk

A bank offers online banking services and may incur losses if hackers break in to the bank's computers. This is an example of

Operational risk

Results from the firm's business objectives/operations

Operational risk

Individuals who earn incomes and are not insured against the risk of permanent disability

Passive retention

Means risk may be unknowingly retained because of ignorance, laziness, or indifference

Passive retention

Difference between chance of loss and objective risk: -Assume that a property insurer has 10,000 homes insured in LA and in Philadelphia and that the chance of a fire in each city is 1 percent. Thus on average, 100 homes should burn annually in each city. However the annual variation in losses ranges from 75-125 in Philadelphia and 90 - 110- in LA. Who has the greater objective risk even thought the chance of loss in both cities are the same

Philadelphia *100-75 = 25 *125-100 = 25 so objective risk is 25 LA *100-90 = 10 *110-100 = 10 objective risk is 10 so higher objective risk in Philadelphia

Physical condition that increases the frequency of a severity of loss such as icy roads, defective wiring, floods

Physical hazard

The _____ techniques is used to spread the losses of the few over the entire group

Pooling

______ involves spreading losses incurred by the few over the entire group so that in the process average loss is substituted for actual loss

Pooling

_______ is the heart of insurance

Pooling of losses

Disadvantages of retention

Possibly higher -losses -expenses -taxes

How do insurance make their money off of individuals

Premiums

_____ must be increased to pay additional losses with inflated claims

Premiums

Hard market

Profitability is declining, underwriting standards are tightened, premiums increase, and insurance is hard to obtain

Soft Market

Profitability is improving, premiums decline, and insurance is easier to obtain

Indemnifies property owners against the loss or damage of real or personal property

Property insurance

Involve the possibility of losses associated with the destruction of theft of property (Perils)

Property risk

A situation in which there are only the possibilities of loss or no loss such as an earthquake, premature death, job-related accidents etc. (easier to insure) (Either possible for your house to be destroyed or not to be destroyed)

Pure risk

If you can buy it through an insurance company and involves not making money this is a ____ risk

Pure risk

Premature death, job related accidents, medical expenses, and damage to property from natural disasters are examples of

Pure risk

An individual or a business firm retains part of all of the losses that can result from a given risk

Retention

Low loss Frequency and low loss Severity

Retention

Uncertainty concerning the occurrence of a loss

Risk

Techniques that reduce the frequency or severity of losses

Risk control

Techniques that provide for the payment of loses after they occur

Risk financing

(Process that identifies a loss exposure) faced by an organization and selects the most appropriate techniques for treating such exposures

Risk management

Implementation of a risk management program begins with a

Risk management policy statement

A pure risk that is transferred from the insured to the insurer, who typically is in a stronger financial position to pay the loss than the insured

Risk transfer

Private insurance provides numerous coverages that can be used to meet specific loss situations. For each of the following situations, identify a private insurance coverage that would provide the desired protection. a) Emily age 28, is a single parent with two dependent children. She wants to make certain that funds are available for her children's education if she dies before her youngest child finished college. b) Danielle, age 16, reverently obtained her driver's licenses. Her parents want to make certain they are protected if danielle negligibly injures another motors while driving a family car. c) Is married with two dependents. He wants his income to continue if he becomes totally disabled and unable to work. d) Tyler, age 35, recently purchased a house for 200,000 that is located in an area where tornados frequently occur. He wants to make certain that funds are available if the house is damaged or destroyed e) Nathan, age 40, owns an upscale furniture store. He wants to be protected if a customer

a) Life insurance b) Liability auto insurance c) Disability insurance d) Home owners insurance e) Liability commercial insurance

Indicate whether each of the following guarantees is considered insurance a) A new television is guaranteed by the manufacturer against defects for 90 days b) A new set of radial tires is guaranteed by the manufacturer against road defects for 50,000 miles c) A builder of new homes gives a 10-year guarantee against structural defects in the home d) A cosigner of a note agrees to pay the loan balance if the original debtor defaults on the payments e) A large group of homeowners agrees to pay for losses to homes that are damaged or destroyed by fire during the year

a) No (no pooling of losses)- Transfer of risk b) No (no pooling of losses)- Transfer of risk c) No (no pooling of losses) d) No (no pooling of losses) e) Yes (Pooling is the large and fortuitous loss is the fire)

Michael is a college senior who is majoring in marketing. He owns a high-milage 2005 ford that has a current market value of 2,500. The current replacement value of his clothes, television, stereo, cell phone, and other personal property in a rented apartment totals to 10,000. He uses disposable contact lenses, which cost 200 for a six-month supply. He also gas a waterbed in his rented apartment that has leaked in the past month. An avid runner, michael runs five miles daily in a nearby public park that has the reputation of being extremely dangerous because of he drug dealers, numerous assaults, and drive-by shootings. Michaels parents big work to help him pay his tuition. For each of the following risks or loss exposures, identify an appropriate risk management technique that could be used to deal with the exposure.

a) Physical damage to the 2005 Ford because of a collision with another motorist *Self insurance *Liability insurance b) Liability lawsuit against michael arising out of the negligent operation of his car *Liability insurance C) Total loss of clothes, television, stereo, and personal property of a grease fire in the kitchen of a rented insurance *Avoidance D) Disappearance of one contact lens *None E) Waterbed leake that causes property damage to the apartment *Avoidance F)Physical assault on Michael by gang members who are dealing drugs in the park as he runs *Avoidance G) Loss of tuition assistance from Michaels father, who is killed by a drunk driver *Life insurance

Risk managers use a number of methods for managing risk. For each of the following, what method for handling risk is used? a) The decision not to carry earthquake insurance on a firm's manufacturing plant b) The installation of an automatic sprinkler system in a hotel c) The decision not to produce a product that might result in a product liability lawsuit d) Requiring retailers who sell the firm's product to sign an agreement releasing the firm from liability if the product injures someone

a) Retention (They understand there is a risk and decide to retain it) b) Loss reduction (risk control) c) Avoidance d) Non-insurance transfer


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