{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Lesson 1 - LESSON1 NATUREAND TREATMENTOFRISK 1 Introduction...

Info icon This preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon
    1 LESSON 1 NATURE AND  TREATMENT OF RISK
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
2 Introduction Definitions and terms Insurance Financial arrangement that redistribute the costs of an  unexpected losses from an insurance pool. Two main elements 1) Financial intermediation 2) Contractual relationship Loss  Being without something previously possessed Types of losses Direct Loss: immediate, first result Indirect Loss: 2 nd  result Chance of Loss Probability that an event will occur
Image of page 2
3 Introduction Definitions and terms Peril - The cause of a loss or contingency that causes a loss “Named peril” or Specified peril contracts ”Open-peril" contracts burden of proof is different Hazard Something that increases the probability of loss or increases the  severity when a loss occurs (or both) Physical hazards  are physical conditions that increase the chance  of loss (icy roads, defective wiring) Moral hazard  is dishonesty or character defects in an individual,  that increase the chance of loss (faking accidents, inflating claim  amounts)  Attitudinal Hazard (Morale Hazard)  is carelessness or indifference  to a loss, which increases the frequency or severity of a loss  (leaving keys in an unlocked car) Legal Hazard  refers to characteristics of the legal system or  regulatory environment that increase the chance of loss (large  damage awards in liability lawsuits)
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
4 Introduction Definitions and terms Proximate cause of the loss Also known as the  Doctrine of proximate  cause First insured peril in an unbroken chain of  events leading to the loss - all is paid.
Image of page 4
5 Introduction Definitions and terms Risk - many definitions - the term is used in a  variety of ways 1) To describe that there is a possibility of loss 2) To identify the probability of loss 3) To identify the cause of loss -  peril 4) To identify conditions that increase frequency of 
Image of page 5

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 6
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern