81 A Chapter 1

Front 1

1.3 Sales Trilogy

Back 1

The elements necessary to the sale of any product:

1) product knowledge
2) market knowledge, and
3) selling skills

Front 2

1.4 Producer

Back 2

One who markets insurance and related services.

Front 3

1.4 Agent

Back 3

The authorized representative of an insurance company.

Front 4

1.4 Broker

Back 4

The authorized representative of an insured.

Front 5

1.4 Marketing

Back 5

Finding, identifying the needs of, selling to, and providing service to insureds.

Front 6

1.4 Markets

Back 6

Homogeneous groups of insureds or potential insureds (people with money to buy products and services from the producer).

Front 7

1.4 Direct loss

Back 7

The reduction in the value of an asset.

Front 8

1.4 Indirect loss

Back 8

The financial consequences of a reduction in the value of an asset.

Front 9

1.5 Risk

Back 9

The chance of financial loss.

Front 10

1.5 Fundamental risk

Back 10

A risk of loss to which all members of a society, or at least a large number of people, are exposed in a single occurrence.

Front 11

1.5 Particular risk

Back 11

A risk of loss to which relatively few members of a society are exposed in a singe occurrence.

Front 12

1.5 Speculative risk

Back 12

Offers the chance of financial loss and also the opportunity for gain.

Front 13

1.6 Loss frequency

Back 13

The number of times loss occurs over a specific period of time.

Front 14

1.6 Loss severity

Back 14

The amount or size of a single loss.

Front 15

1.7 Law of large numbers

Back 15

The larger the number of similar units exposed to similar loss, the more accurate the loss predictions based on that data will be.

Front 16

1.7 Peril

Back 16

A cause of loss

Front 17

1.8 Hazard

Back 17

Anything that increases the frequency or severity of a loss.

Front 18

1.8 Physical hazard

Back 18

One that can be seen, felt, or touched.

Front 19

1.8 Moral hazard

Back 19

A trait of the insured’s character that tends to increase the probability or severity of loss.

Front 20

1.9 Morale hazard

Back 20

A hazard that stems from the insured’s attitude of “Who cares? It’s insured.”

Front 21

1.9 Legal hazard

Back 21

A hazard that can increase the severity of loss because of the involvement of the legal system and its associated costs and can increase the frequency of loss because of the escalating number of suits filed.

Front 22

1.10 Indemnity

Back 22

Restoring the insured to the same financial position held immediately before a loss.

Front 23

1.10 Insurable interest

Back 23

The financial interest an entity has in the continued existence of the subject of insurance.

Front 24

1.11 Independent exposures

Back 24

Group of many persons purchasing insurance independently and not affected by the losses of others.

Front 25

1.12 Similar exposures

Back 25

Exposures that are homogeneous.

Front 26

1.12 Definite

Back 26

A loss must be defined by what caused it, where and when it happened, and what its value is.

Front 27

1.12 Calculable

Back 27

The loss must be able to be calculated.

Front 28

1.12 Accidental

Back 28

A random event, neither intended nor expected by the insured.

Front 29

1.13 Risk management

Back 29

A process to manage the pure risks of an individual or an organization.