_____________Quiz____________?
risk pooling -
Answer✓✓
spreading risk over a large group of people
_____________Quiz____________?
law of large numbers -
Answer✓✓
larger the group, the more certain the predictions
_____________Quiz____________?
speculative risk -
Answer✓✓
not insurable - involves both chance of loss or gain
_____________Quiz____________?
pure risk -
Answer✓✓
insurable - involves chance of loss, never gain or profit
_____________Quiz____________?
peril -
1
, Answer✓✓
event causing loss
Ex: fire, death, accident, windstorm, disease
_____________Quiz____________?
hazard -
Answer✓✓
any factor that gives rise to peril or increase likelihood of a loss from a peril
_____________Quiz____________?
physical hazard -
Answer✓✓
slippery floor, blindness, deafness, past medical history
_____________Quiz____________?
moral hazard -
Answer✓✓
intentional act, tendencies to take risks;
Ex: alcoholism, drugs, dishonesty
_____________Quiz____________?
morale hazard -
Answer✓✓
carelessness, indifference
Ex: driving recklessly with no fear of injury
_____________Quiz____________?
risk avoidance -
2
, Answer✓✓
avoiding the risk, don't do anything
Ex: choosing not to drive, fly or invest (not practical)
_____________Quiz____________?
risk reduction -
Answer✓✓
reducing the risk of a loss
Ex: installing smoke detectors, quit smoking, don't test and drive
_____________Quiz____________?
risk retention -
Answer✓✓
self-insure, setting up fund to offset your losses; should be limited to what you
can easily afford to pay
_____________Quiz____________?
risk transfer -
Answer✓✓
purchasing insurance, best way; transferring risk from an individual to an
insurance company
_____________Quiz____________?
adverse selection -
Answer✓✓
tendency for less favorable insurance risks to seek and continue insurance to
greater extent than other risks
Ex: people in poor health
3
risk pooling -
Answer✓✓
spreading risk over a large group of people
_____________Quiz____________?
law of large numbers -
Answer✓✓
larger the group, the more certain the predictions
_____________Quiz____________?
speculative risk -
Answer✓✓
not insurable - involves both chance of loss or gain
_____________Quiz____________?
pure risk -
Answer✓✓
insurable - involves chance of loss, never gain or profit
_____________Quiz____________?
peril -
1
, Answer✓✓
event causing loss
Ex: fire, death, accident, windstorm, disease
_____________Quiz____________?
hazard -
Answer✓✓
any factor that gives rise to peril or increase likelihood of a loss from a peril
_____________Quiz____________?
physical hazard -
Answer✓✓
slippery floor, blindness, deafness, past medical history
_____________Quiz____________?
moral hazard -
Answer✓✓
intentional act, tendencies to take risks;
Ex: alcoholism, drugs, dishonesty
_____________Quiz____________?
morale hazard -
Answer✓✓
carelessness, indifference
Ex: driving recklessly with no fear of injury
_____________Quiz____________?
risk avoidance -
2
, Answer✓✓
avoiding the risk, don't do anything
Ex: choosing not to drive, fly or invest (not practical)
_____________Quiz____________?
risk reduction -
Answer✓✓
reducing the risk of a loss
Ex: installing smoke detectors, quit smoking, don't test and drive
_____________Quiz____________?
risk retention -
Answer✓✓
self-insure, setting up fund to offset your losses; should be limited to what you
can easily afford to pay
_____________Quiz____________?
risk transfer -
Answer✓✓
purchasing insurance, best way; transferring risk from an individual to an
insurance company
_____________Quiz____________?
adverse selection -
Answer✓✓
tendency for less favorable insurance risks to seek and continue insurance to
greater extent than other risks
Ex: people in poor health
3
