Finance

Which of the following statements about captive insurance companies is

Which of the following statements about captive insurance companies is (are) true? I. A captive insurance company established by a U.S. company must be domiciled in the United States. II. A captive insurance company may be owned by several parents. A) I only B) II only C) both I and II D) neither I nor […]

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Date: September 19th, 2020

Members of Mid-South Petroleum Distributors, a trade group, had troubl

Members of Mid-South Petroleum Distributors, a trade group, had trouble obtaining affordable pollution liability insurance. The members formed a group captive that is exempt from many state laws that apply to other insurers. This group captive is called a(n) A) reinsurance pool. B) Lloyd’s association. C) alien insurer. D) risk retention group.     ANSWER […]

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Date: September 19th, 2020

A restaurant owner leased a meeting room at the restaurant to a second

A restaurant owner leased a meeting room at the restaurant to a second party. The lease specified that the second party, not the restaurant owner, would be responsible for any liability arising out of the use of the meeting room, and that the restaurant owner would be “held harmless” for any damages. The restaurant owner’s […]

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Date: September 19th, 2020

Acme Company has three identical manufacturing plants, one on the Texa

Acme Company has three identical manufacturing plants, one on the Texas Gulf Coast, one in southern Alabama, and one in Florida. Each plant is valued at $200 million. Acme’s risk manager is concerned about the damage which could be caused by a single hurricane. The risk manager believes there is an extremely low probability that […]

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Date: September 19th, 2020

Which of the following statements about the use of a captive insurance

Which of the following statements about the use of a captive insurance company by a parent firm is true? A) The captive may not write outside, non-parent company, business. B) Captives are not permitted to use reinsurance, so any business insured by the captive stays with the captive. C) The captive may be used to […]

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Date: September 19th, 2020

Ryan decided to review his personal risk management program. His car i

Ryan decided to review his personal risk management program. His car is 10 years old, and he would receive little money from his insurer if the car was damaged or destroyed. Ryan decided to drop the physical damage insurance on the car. From a risk management perspective, dropping the physical damage insurance on the car […]

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Date: September 19th, 2020

All of the following are disadvantages of noninsurance transfers EXCEP

All of the following are disadvantages of noninsurance transfers EXCEPT A) The party to whom the potential loss is transferred may be unable to pay. B) The transfer may fail because the contract language is ambiguous. C) The only potential losses that can be transferred are those that are not commercially insurable. D) The noninsurance […]

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Date: September 19th, 2020