6/28/25, 9:30
AM
2-15 INSURANCE LICENSE FLORIDA EXAM QUESTIONS AND
ANSWERS WITH COMPLETE SOLUTIONS VERIFIED GRADED
A++ LATEST VERSION 2025
Terms in this set (617)
Speculative Risk Risk that involves chance of both loss and gain; not insurable
Pure Risk Risk that involves the chance of loss only, there is no opportunity
for gain; insurable
Basic principle of insurance that the larger the number
Law of Large Numbers of individual risks combined into a group, the more
certainty there is in predicting the amount of loss that
will be incurred in any given period.
Loss must be: due to chance, definite and measurable,
Elements of Insurable Risk predictable, cannot be catastrophic, loss exposures to
be insured must be large, loss exposures to be insured
must be randomly selected.
Hazard Any factor that gives rise to a peril.
Specific event causing loss and giving rise to risk. (Fire
Peril
is a peril to a burning building)
Basic principle of insurance whereby a large number
Risk Pooling
contribute to cover the losses of a few. The risk is
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, 6/28/25, 9:30
AM
transferred from an individual to a group.
Physical Hazard Individual characteristics that increase the chance of peril.
(Blindness or deafness)
Tendencies that people may have that increase risk
Moral Hazard
and the chance of loss. (Alcohol and drugs)
Individual tendencies that arise from an attitude or state
Morale Hazard
of mind causing indifference to loss. (Driving reckless
with no fear of death)
Risk Avoidance Avoiding as many risks as possible. (Never flying, never driving,
never investing)
Risk Reduction Taking actions to reduce risk. (Installing a smoke alarm)
Risk Retention Accepting the risk and confronting it if and when it occurs. (Self-
insurance)
The practice of passing on the risk in question to
Risk Transfer
another entity, such as an insurance company.
less favorable insurance risks (people in poor health)
Adverse Selection to seek or continue insurance to a greater extent than
other risks. Tendency of policymakers to take
advantage of favorable options in insurance
contracts.
Multi-line insurers Companies that write more that one line of insurance
A private insurance company owned and controlled
by a group of stockholders whose investment in the
Stock Insurance Company company provides the safety margin necessary in
issuance of guaranteed, fixed premium, nonparticipation
2/
12
AM
2-15 INSURANCE LICENSE FLORIDA EXAM QUESTIONS AND
ANSWERS WITH COMPLETE SOLUTIONS VERIFIED GRADED
A++ LATEST VERSION 2025
Terms in this set (617)
Speculative Risk Risk that involves chance of both loss and gain; not insurable
Pure Risk Risk that involves the chance of loss only, there is no opportunity
for gain; insurable
Basic principle of insurance that the larger the number
Law of Large Numbers of individual risks combined into a group, the more
certainty there is in predicting the amount of loss that
will be incurred in any given period.
Loss must be: due to chance, definite and measurable,
Elements of Insurable Risk predictable, cannot be catastrophic, loss exposures to
be insured must be large, loss exposures to be insured
must be randomly selected.
Hazard Any factor that gives rise to a peril.
Specific event causing loss and giving rise to risk. (Fire
Peril
is a peril to a burning building)
Basic principle of insurance whereby a large number
Risk Pooling
contribute to cover the losses of a few. The risk is
1/
12
, 6/28/25, 9:30
AM
transferred from an individual to a group.
Physical Hazard Individual characteristics that increase the chance of peril.
(Blindness or deafness)
Tendencies that people may have that increase risk
Moral Hazard
and the chance of loss. (Alcohol and drugs)
Individual tendencies that arise from an attitude or state
Morale Hazard
of mind causing indifference to loss. (Driving reckless
with no fear of death)
Risk Avoidance Avoiding as many risks as possible. (Never flying, never driving,
never investing)
Risk Reduction Taking actions to reduce risk. (Installing a smoke alarm)
Risk Retention Accepting the risk and confronting it if and when it occurs. (Self-
insurance)
The practice of passing on the risk in question to
Risk Transfer
another entity, such as an insurance company.
less favorable insurance risks (people in poor health)
Adverse Selection to seek or continue insurance to a greater extent than
other risks. Tendency of policymakers to take
advantage of favorable options in insurance
contracts.
Multi-line insurers Companies that write more that one line of insurance
A private insurance company owned and controlled
by a group of stockholders whose investment in the
Stock Insurance Company company provides the safety margin necessary in
issuance of guaranteed, fixed premium, nonparticipation
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12
