Question List # 8
1. Describe reinsurance functions
Reinsurance has 6 principal functions:
1) Increase large line capacity- reinsurance allows a primary insurer to assume more
significant risks that its financial condition and regula
Question List # 1
1. Describe the major goals of an insurer.
The 5 major goals are:
1) Earn a profit-insurers need to make a profit to keep the company going. If it is
proprietary insurer they need to make a profit to pay their stockholders (their
Question List # 4
1. Why risk control?
Risk controls main purpose is to assess loss exposures to help with the underwriting
function. The risk control function has 4 purposes: earn a profit, meet customer needs,
comply with legal req
Question List # 2
1. Why insurance regulation?
1) To protect consumers- insurance agreements arent easy to understand for the general
public, so many consumers wont be able to tell if the policy that they are purchasing are
Question List # 3
1. Why underwriting?
Underwriting is very important to the insurance industry because it: protects insurers against
adverse selection, ensures that the insurer maintains enough policyholders surplus, and lets
Question List # 6
1. Why adjusting?
Adjusting is used in both the claims, and the actuarial departments. Claims adjustments is
to ensure that the insureds claim is paid properly, not excessive and not unfair. Actuaries
Question List # 7
1. Describe the actuarial function.
The actuarial function serves to put a price tag on risk for the insurance company. One
major part of this is ratemaking operations. Ratemaking involves estimating trends and
Question List # 5
1. Why claim?
The claim function serves two main purposes, to comply with the agreed upon contract,
and to support the insurers financial goals.
The insurer complies with the contract by agreeing to pay, defend, or
Question List # 2: Insurance and Risk
1. Insurance- is 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
Question List # 2: Risk Management in Financial Planning
1. Effective budgeting
An estimation of the revenue and expenses over a specified future period of time.
A budget can be made for a person, family, group of people, business, governme
Question List for Exam # 2
1. Underwriting cycles are most prominent in the P&C industry but less so in life, health, and
disability lines of insurance. Explain.
P&C: the underwriter may require a physical inspection before the application is approved.
Auto damage, repair
expenses, insurance fees
Legal expenses, Settlement
Medical Expenses /Loss of
Final Question List FIN 324
Exam date: 04/28/2016
1. Describe differences between group insurance and individual insurance.
Group insurance differs from individual insurance in several respects. A distinct
characteristic is the coverage of many persons un
Summary Quiz # 2
Due date: 03/09/2016
1. Risk managers use a number of methods for managing risk. For each of the following, what
method for handling risk is used? Explain your answer.
a. The decision not to carry earthquake insurance on a
How does the dollars rise affect the Federal Reserve Plan for raising interest rates?
After the 2008 financial crisis the Federal Funds Rate was set near 0% . This was done to boost
spending in the U.S. economy and reduce saving. This puts
Liability Question List
1. What are the three classes of legal wrongs, and which legal wrong will insurance pay for?
2) Breach of Contract
3) Tort- insurance will pay for.
2. What are the four elements that must exist to prove negligence?
Question List for Final
1. When is proof of financial responsibility typically required?
A financial responsibility law is one that does not require proof of financial responsibility
until after the driver has his or her first accident or until after conv
Sole proprietorships are business formed by one person. That person is the business and the business is
him. In the us most businesses are sold proprietorships.
Easy to form.
Using own money regulations are fewer
Fiscal year is JanuaryDecember. All values USD
Cash & Short Term Investments 48.09B
Cash & Short
Cash & ST
n = nper
I = rate
future value =
pv= present value
PMT = payment
numer of periods
1/YR . Move to decimal
Cost of Car
Down Payment or Trade in
Net amount financed
Number of Payments
APR or interest