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13 Cards in this Set
- Front
- Back
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Pure risks have characteristic that can be remembered by using |
CANHAM |
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CANHAM (pure risk) |
Calculable-premiums must be calculated based on prior loss stats Affordable- the premium transferring risk should be affordable for the average consumer Non-catastrophic- The risk has to be non-catastrophic for insurance companies Homogeneous- the risk must be similar in nature so the same factors affect the chance of loss Accidental- must be caused by an accident Measurable-a definite and measurable loss |
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Adverse selection |
Tendency for higher-risk individuals to get/keep insurance as compared to individuals with average risk level. |
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Who avoids adverse selection? |
Underwriting |
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High risk=? |
High rate to insure of refusal |
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Reinsurance is for______ |
Insurance companies |
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Explain reinsurance |
Transfers risk from one insurance company to another |
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Company reducing its risk is called _____ insurer |
Ceding |
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2 ways reinsurance works |
Facultative reinsurance and treaty reinsurance |
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Facultative reinsurance |
The reinsurer considers each risk before allowing the transfer from the ceding company |
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Treaty insurance |
The reinsurer accepts all risks of a certain type from a ceding company |
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Stock insurer |
A business formed as a corporation and owned by its stockholders -run by board of directors selected by stock holders -profits distributed as dividend *dividens are taxable *dividens aren’t a guarantee |
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The policies issued by stock insurers are called ___________ |
Non participating *since dividens never go to policy holders in this arrangement |
