1.5 other insurance concepts

Assume there are 4 different mortality tables. Of these, the most reliable would be the mortality table covering

10 million lives

An insurer of an insurer is known as

a reinsurer

The premium for transferring a risk should be

affordable

All of the following are characteristics of an insurable risk EXCEPT

anomalistic

Which of the following is NOT a characteristic of an insurable risk?

expensive

When a reinsurer considers each risk as a single transaction before assuming it, this is called

facultative reinsurance

All of the following are characteristics of an insurable risk EXCEPT

intentional

All of the following are characteristics of an insurable risk EXCEPT

loss must be intentional

Which of the following is NOT a characteristic of an insurable risk?

premediated

A contract in which one insurer cedes all or part of a risk to another insurer is known as

reinsurance

A contract in which one insurer cedes all or part of a risk to another is known as

reinsurance

In order to be insured, a group must be randomly selected to avoid

adverse selection

The inclination of higher-risk individuals to be "first in line" to get and keep insurance is called

adverse selection

The tendency of higher-risk individuals to get and keep insurance is known as

adverse selection

The law of large numbers states that

the larger the number of risk combined into 1 group, the less uncertainty there will be as to the amount of loss that will be incurred

All of the following are elements of an insurable risk EXCEPT

the loss must ne catastrophic

To avoid adverse selection, insurers determine many different factors and rely on extensive amount information before issuing a policy. This process is called

underwriting

Certain perils, like war, are usually excluded from most insurance policies because they have the potential to adversely affect large numbers of insureds at the same time. This explains why one of the characteristics of an insurable risk is that the risk be

non-catastrophic

Which of the following describes facultative reinsurance?

the reinsurer considers each risk before allowing the transfer to be made from the ceding company.

A contract agreement between a ceding insurer and reinsurer to underwrite certain classes of risks is known as

treaty reinsurance