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32 Cards in this Set
- Front
- Back
- 3rd side (hint)
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RISK |
A guarantee that loss will occur. |
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Two types of risk |
Pure and Speculative |
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Pure Risk |
Guarantee loss will happen. |
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Speculative Risk |
Possibility of a gain or a loss, not insured. |
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Exposure |
Risk companies rely on. |
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Hazard |
Anything that increases the chance of loss. |
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Three types of hazard |
Physical, Moral, Morale |
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Physical Hazard |
It can be seen before loss happens |
Loose cables, wet floor sign |
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Moral Hazard |
Faking the loss, Dishonesty |
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Morale Hazard |
Carelessness of person |
Leaving door open, car on and open. |
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Peril |
The cause of loss |
Tornado, fire, lightning |
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Loss |
Unintended, Unseen damage to property. |
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Two types of Loss |
Direct and Indirect |
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Direct loss |
Physical loss. |
House |
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Indirect Loss |
Consequence of direct loss. |
House burn down, no where to live, go to hotel, extra money wasted. |
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Methods of Handling risk |
S.T.A.R.R |
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S.T.A.R.R. |
S hare T ransfer A void R educe R etention |
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Share |
Two individuals agree to pay for damages in between them. |
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Transfer |
What happens with insurance, insurance takes care of it. |
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Avoidance |
Individual chooses not to participate in certain scenarios. |
Chooses not to drive, but take bus. |
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Reduction |
Lessening the chance of a loss happening |
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Retention |
Individual, business, will pay deductible. |
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Elements of insurable risk |
C.A.N.H.A.M |
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C.A.N.H.A.M |
C alculable A ffordable N on-catastrophic H omogeneous A ffordable M easurable |
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Calculable |
Law of large numbers determines who can and can not. |
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Affordable |
Affordable to the average costumers |
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Non-Catastrophic |
Natural happening, no war. |
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Homogeneous |
Similar losses to similar factors |
Wood frame house, fire destroys. Brick frame house, fire can't destroy. |
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Accidental |
Must be accidental, intentional losses will not be covered. |
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Measurable |
Stuff always in money value not reference value. |
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Adverse Selection |
Calculated by underwriters, is it a good fit? Dangerous to company? |
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Reinsurance |
The insurance of the insurance. They help spread risk. |
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