Risk identification, risk transfer, and reinsurance concepts used across the insurance industry.
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- What is risk identification?
- The process of discovering and documenting potential threats or exposures that could cause loss or harm to an organization or individual.
- What does risk transfer mean in insurance?
- Shifting financial responsibility for a potential loss from one party to another, typically to an insurer through a policy contract.
- Define pure risk.
- A risk that involves only the possibility of loss, with no potential for gain.
- Define speculative risk.
- A risk that involves the possibility of either loss or gain.
- What is reinsurance?
- Insurance purchased by an insurance company to transfer or share part of its risk and premium with another insurance company.
- What is risk avoidance?
- Eliminating or not undertaking an activity to avoid exposure to a particular risk.
- What is risk mitigation?
- Taking action to reduce the likelihood or severity of a potential loss.
- What is risk retention?
- Accepting and bearing the financial impact of a loss without transferring it to another party.
- What does deductible mean?
- The dollar amount that a policyholder must pay out of pocket before the insurer begins to pay benefits under a policy.
- What is coinsurance?
- A cost-sharing arrangement where the policyholder pays a fixed percentage of covered losses after the deductible, while the insurer pays the rest.
- Define liability insurance.
- Coverage that protects the policyholder from financial loss due to legal liability for bodily injury or property damage caused to others.
- What is property insurance?
- Coverage that protects the policyholder's own buildings, contents, and other property against loss from covered perils like fire, theft, or vandalism.
- Define premium.
- The periodic payment (usually annual or monthly) that a policyholder makes to an insurer to maintain insurance coverage.
- What is underwriting?
- The process by which an insurer evaluates and assesses risks to determine whether to accept or reject an insurance application and at what premium.
- What is claims management?
- The process of handling insurance claims from initial notice through investigation, approval, and payment of benefits.