All of the following statements about the independent agency system are true EXCEPT A) Agents are often authorized to adjust small claims. B) Agents are compensated on the basis of commissions. C) The insurer rather than the agent owns the renewal rights to the business. D) The agent is an independent business person who represents […]
Which statement is (are) true concerning catastrophe models? I. Businesses other than insurance companies use catastrophe models. II. Catastrophe models are able to precisely predict disaster occurrences and loss values. A) I only B) II only C) both I and II D) neither I nor II ANSWER Answer: A
Five Below Zero is a new ski resort in Colorado. Five Below Zero is concerned that an abnormally warm winter will prevent the accumulation of snow needed to have a profitable ski season. Five Below Zero purchased a contract that will pay a lump sum if the daily high temperature exceeds 30 degrees for more […]
Which of the following statements regarding terrorism insurance is (are) true? I. There is a federal backstop if terrorism claims are catastrophic. II. Private insurers market terrorism insurance. A) I only B) II only C) both I and II D) neither I nor II ANSWER Answer: C
Last year, XYZ Insurance Company had a combined ratio of 102.4 and lost $10.2 million on the insurance that it sold. The company, however, was required to pay income taxes. The best explanation for this apparent contradiction is that XYZ offset its underwriting loss with A) increased loss reserves. B) investment income. C) increased loss […]
The terrorism risk in the United States A) is of no concern to private companies. B) is limited to attacks by foreign nationals. C) can be addressed through risk control and insurance. D) is an uninsurable risk. ANSWER Answer: C
Which of the following is a demographic factor that has increased losses from climate change in the United States? A) The increasing life expectancy in the United States. B) The increasing population in Southern states such as Florida, Texas, and South Carolina. C) The declining fertility rate (live births per women of child-bearing age) in […]
An emerging concern for risk managers is the greater volatility that has been observed in weather patterns—higher high temperatures, lower low temperatures, record rainfall, drought, etc. Collectively, this risk is called A) seismic risk. B) hurricane risk. C) speculative risk. D) climate change risk. ANSWER Answer: D
Which of the following statements about the risk of terrorism in the United States is (are) true? I. Congress created a federal backstop for terrorism claims. II. Coverage for losses attributable to terrorism is not marketed by private insurers in the U.S. A) I only B) II only C) both I and II D) neither […]
A bank stores depositor data electronically. The data include financial account values, social security numbers, and other information. An outside party was able to gain access to the bank’s customer data through unauthorized access to the bank’s computer system. The outside party was able to steal money from the accounts and to sell customer data, […]
