CAS 5

Start Studying!

Terms

undefined, object

copy deck

According to Finger, List the 4 Summarized Categories of Criteria for Selecting a Rating Variable: 1 Actuarial 2 Operational 3 Social 4 Legal LASO
According to Finger, List the 4 Actuarial Criteria for Selecting a Rating Variable: 1 Credibility 2 Homogeneity 3 Accuracy 4 Reliability CHAR
According to Finger, List the 5 Operational Criteria for Selecting a Rating Variable: 1 Objective Definition 2 Avoidance â€“ of extreme discontinuities 3 Verifiable 4 Administrative Expense 5 Intuitively Related IDAVA
According to Finger, List the 4 Social Criteria for Selecting a Rating Variable: 1 Privacy 2 Affordability 3 Causality 4 Controllability CPAC
According to Finger, List the 3 Legal Criteria for Selecting a Rating Variable: 1 Constitutions 2 Statutes 3 Regulations CSR
According to Finger, What are the 4 Ramifications of restriction if no replacement rating variable is found?: 1 Rates will be leveled and subsidies will be created 2 Availability will diminish 3 Profit and solvency may be affected if the book is mal distributed 4 Less accurate pricing may reduce accident prevention incentives
According to Finger, What are the 5 methods to obtain more data or more reliable data in order to determine classification relativities: 1 Use more years of data 2 Use data from several states 3 Using claim counts 4 Using basic limits data or otherwise limiting the size of claims 5 Using partial premiums
According to Finger, What is the Definition of Efficiency: Efficiency is defined as a measure of accuracy of a classification system.
According to Finger, How is efficiency measured?: It is the variance of the class system divided by the variance of the underlying the insured population
According to Finger, Why is base exposures used instead of actual exposures?: To correct for the varying exposure levels in the non reviewed relativities
According to Bouska, List the 4 characteristics that a good exposure base should have: 1 An Accurate measure of the exposure to loss 2 Easy to determine for the insurer 3 Difficult to manipulate by the insured 4 (Bouska adds) Immune to manipulation by underwriters
According to Bouska, List the 3 types of problems in the selection of an Exposure Base: 1 A Temporal Mismatch between Expected Losses and an Acceptable Exposure Base 2 Interpretive Mismatch 3 Complexity of Hazard
According to Bouska, What are the 2 steps in the process of selecting an exposure base?: 1 Analyze the coverage offered and the coverage trigger to determine what factors influence the expected losses 2 Those which are usable will be divided into 2 groups: the first group, consisting of 1 factor, will be the exposure base, and the second group will be the rating variables, which influence the projected expected losses indirectly by affecting the rate
According to Bouska, What are 2 alternative rating plans used for LARGE RISKS that modify the usual exposure Base: 1 Composite Rating Plan 2 Loss-Rated
According to Bouska, What are 2 serious problems caused by varying company practices?: 1 The poor coding of Exposure Information 2 The manipulation of Exposure estimates can be "low balled" causing a mismatch in recording premium and loss
According to Bouska, What is composite rating?: Used to simplify rating for insureds with multiple exposures(ie many insured locations) Uses a proxy exposure base.First, a proxy exposure base is selected. Next determine rate per proxy by dividing the riskâ€™s prem
According to Bouska, Summarize the OREGON STUDY, "Premium EQUITY BY Employer Group": Was a WC study, focusing on small to medium companies. The study found no bias against Union/High Wage small employers, but did for medium size employers NCCI had Loss Ratio Adjustment Program for Construction Classes to make the experience rating plan more responsive to company's 3-year Loss Ratio
According to Bouska, Summarize ISO's GL study, "ISO's Commercial Lines Policy and Rating Simplification Project": 1) GL Exposure bases changed to Gross Sales instead of Area/Receipts in some sublines It simplified Rating It made the Exposure Base Inflation Sensitive It made the Exposure Base Sensitive to Economic Cycles
According to Bouska, what are 2 reasons why the uniform multiplicative relationship between the exposure base and the expected loss costs is modified in calculated the premium?: 1 To recognize a reduced exposure to loss (multi-car discount) 2) To recognize the reduction in premium to cover fixed expense on large premium policies.
According to WC Feldblum, List the 4 factors that affect class refinement: 1 Competition 2 Coverage Costs 3 Larger Markets 4 Technology
According to WC Feldblum, List the 3 causes that impact Loss Cost Trends: 1 Economic Inflation 2 Social Inflation 3 Other - systematic non-monetary changes that impact insurance values (changes in economy/work environment) ESO
According to WC Feldblum, What are the 6 things that Statutory Benefit Revisions affect in Workers Comp: 1 Claim Filing 2 Duration 3 Mix of Claims 4 Non-compensation Medical Benefits 5 Attorney involvement 6 Compensable Injuries and Diseases
According to WC Feldblum, List the 5 NCCI programs designed to Reduce the competitiveness of the Pools (depopulating them): 1 Higher Premium Deposit Requirements for Involuntary Risks 2 Payroll Verification Plans 3 Elimination of Premium Discounts 4 Premium Rate Differentials between voluntary and involuntary markets 5 Two loss-sensitive rating plans, ARAP and ARRP, to reflect adverse loss experience
According to WC Feldblum, What are the 6 things that the disparity between wage inflation and benefit trends stem from?: 1 Technological Advances in Medical Treatment 2 Increasing utilization of medical services 3 Patient Claims shifting and Physician Cost shifting 4 Lengthening of disability durations 5 Increasing Frequency and compensability of costly psychological injuries 6 Greater Attorney Involvement
According to WC Feldblum, List 3 reasons why Large Risks have lower loss ratios than small risks: 1 Larger Risks have More incentive to reduce loss expenses since their size gives their own loss experience more credibility in Experience Rating 2 Large Expenditures required to implement safety programs are more cost effective for larger risks 3 Post Injury and Back-to-Work programs may not be offered by smaller risks
According to WC Feldblum, List 3 reasons for using Total Payroll as the exposure base: 1 Accuracy: it may be more predictive of the losses resulting from providing both indemnity and medical benefits 2 Inflation Sensitive 3 Reliability: Since it is used for federal income Tax purposes, it is available and reliable
According to WC Feldblum, state 3 facts about a law amendment that changes the payment base from a gross earnings to net earnings: 1 Within any tax band, if the minimum OR maximum limitation affects all insureds, before and after the change, there is no direct effect 2 Within any tax rate band, the effect of the change is uniform across wage rates if the minimum AND maximum limitations do affect the reimbursement, either before or after the change 3 The direct effect can be quantified using a wage distribution table and an income tax schedule
According to WC Feldblum, list 3 reasons why higher unemployment may increase average claims severity: 1 Higher unemployment levels lead to an increase in utilization, since unemployed people seek whatever income they can get and other people want to extend their benefits because fearing of not having a job to return to 2 Higher unemployment makes people scared to file small claims for fear of job loss 3 The experience and injury mix changes: more older/experienced (low freq. high sev.) employees are returned; and Younger (high freq./low sev.) employees are laid off
According to Finger, Describe 2 ways an insurance company can react to counter the effects due to the abolition of a rating variable.: 1 Insurers have incentive to, and should try and find a replacement variable 2 Insurers may withdraw from marketing to certain groups or refuse to insure them
According to McClenahan, The 3 goals of ratemaking are to determine rates which will provide ____, ___, and ____: 1 Sufficient Funds 2 Adequate Margin 3 Reasonable Return SAR
According to McClenahan, List the 4 factors affecting the selection of an Exposure Base: 1 Reasonableness 2 Ease of Determination 3 Responsiveness to Change 4 Change in Historical Practice RERC
According to McClenahan, Describe the Distinction between the profit factor and the contingency factor: The profit factor is based generally on some target rate of return, and the contingency factor addresses the potential for adverse deviation
According to McClenahan, Why are Other Acquisition Expenses related to Written Premium, while General Expenses are related to Earned Premium: Other Acquisition Expenses are assumed to be incurred mainly at the beginning of the policy, so it makes more sense to relate it to Written Premium. General Expenses would continue to be incurred even if policies ceased to be written, so it makes more sense to relate to EP
According to McClenahan, List the 3 causes of Loss Development: 1 Development on Known Claims 2 Newly Reported Claims 3 Re-opening of prior closed claims DNR
According to McClenahan, why is it appropriate to both Develop and Trend Losses?: Because there is no double counting of severity trend and loss development factors in the ratemaking process The Trend factor reflects the severity trend from the midpoint of the experience period to the midpoint of the exposure period The loss development factor reflects the underlying severity trend from the midpoint of the exposure period to ultimate
According to McClenahan, Briefly describe each of the 3 methods available for the review of Increased Limits factors: 1 A severity Trend Factor is applied to each closed claim from the date of closure to the effective period for the ILF's 2 Loss Development patterns by layer 3 A theoretical size of Loss Distribution is fit to individual loss data
According to McClenahan, what is skimming the cream vs adverse selection: Skimming the cream is when a rate fails to reflect a positive characteristic and adverse selection is it fails to reflect a negative characteristic
According to McClenahan, what is the diff between LRM and PPM: PPM 1 Develops indicated rates 2 Based on exposure 3 does not require existing rates 4 does not use on-level prem LRM 1 Develops indicated rate change 2 Based on Prem 3 Requires existing rates 4 Uses on-level earned premium
According to McClenahan, what is a pos and neg of Calendar Yr. What LOB should use this: Available in annual statement pg 14. Susceptible to changes in reserve level adequacy for yr to yr. LOB- Auto PD pricing â€“ short tail
According to McClenahan, what is a pos and neg of Calendar Yr./Acc Yr What LOB should use this: Data is readily available at the end of the yr. Acc Yr losses at the end of the first yr are very immature. LOB- Auto Liability- responsive to change
According to McClenahan, what is a pos and neg of Policy Yr. What LOB should use this: Data not available until 2 calendar years after first policy written. Data more mature but the delay in availability makes it less responsive to identifying change. LOB â€“ Comm GL â€“ more stable
According to McClenahan, what is a pos and neg of Report Yr. What LOB should use this: Convenient for claims made pricing since # of claims reported are frozen at the end of the year. LOB- claims made
According to McClenahan, why is it important to use base exposures instead of actual exposures: It corrects for the varying exposure levels in the non-reviewed relativities
According to McClanehan, why is the off balance factor necessary?: The off balance factor is necessary because the average relativity underlying the indicated rates is different from the average relativity underlying the current rates
According to Bouska, What is the distinction between a Rating Variable and an Exposure Base?: An Exposure Base has a) a uniform and continuous multiplicative relationship to E[loss costs] and rates b) has a simple and obvious relationship to losses A rating variable has a discrete nonlinear relationship with E[loss]
According to WC Feldblum, List the 3 factors for REDUCING the Involuntary Market Burden: 1 Higher Premium Deposit Amounts 2 Elimination of Premium Discounts 3 Payroll Verification plans HEP
According to Graves and Castillo, Give 5 major changes to Premises and Operations ratemaking since McManus's 1980 Update: 1 Inclusion of Multiline detain the rate level review 2 Loss Development by state 3 Use of Bailey Min. Bias to determine Type of policy and class group relativities 4 Changes were made to the standards for full credibility by subline 5 Changes were made to the number of policy years used
According to Graves and Castillo, What are the 4 advantages of using a Monoline-ML database?: 1 More Stable Rate level indications 2 Creation of more accurate GL Trend factors 3 Creation of more stable loss development factors 4 Resolves regulator concern that only a portion of the data was being used
According to Graves and Castillo, How many years of experience do you use in the indication?: 3 policy years of experience
According to Graves and Castillo, What are the weights assigned to the years: 20 30 50
According to Graves and Castillo, Do you use BL or TL losses, prem, ULAE, ALAE: Use BL losses (except in calculation of ULAE factor) Use BL Premiums Use Total ALAE Use Total ULAE
According to Graves and Castillo, State 2 reasons why it is appropriate to use Basic Limits data when calculating a rate level indication: 1 Basic limits data is less effected by single large severity events (catastrophes) 2 Basic Limits data is not affected by shifts in policy limit distribution
According to Graves and Castillo, why is appropriate to both Trend and develop losses: Trending projects losses from the midpoint of the experience period to the midpoint of the exposure period. Loss Development considers a different period in time. Losses are developed from the midpoint of their exposure period to their ultimate value.
According to Graves and Castillo, what is the Implicit Package Modification Factor (IPMF): IPMF is the discount, implied for a particular coverage, written on a package policy rated with a given published Package Modification Factor (PMF)
According to Graves and Castillo, why does their state loss development method give less cred to more mature evaluations: At more mature evaluations, the S/W and C/W LDFs tend to converge to 1.0. Also, the between variance(var between S/W and C/W avg ratio) of the K constant gets small; which makes the K constant large and the cred small
According to Graves and Castillo, what is the concern with the method in which the ALAE expense is used in ratemaking: There is a concern that ALAE is becoming a larger and larger component of losses and could potentially distort the development factors being applied to loss and ALAE
According to Jones, what are the 3 items that can reduce the usefulness of the historical loss ratio?: 1) If the future book of business is significantly different from the past book of business, due to either cancellations, nonrenewals, or writing new business, this could affect the expected loss ratio. 2) The economic, legal, and social environments of insurance are constantly changing, affecting loss severity and loss frequency. 3) Changes in an insurer's rate levels will affect average premiums.
According to Jones, what are 4 items that can cause the future avg. premium level to differ from the past avg. prem level?: 1) Past rate changes: one-time, abrupt, and measurable 2) Past rating plan changes: one-time, abrupt, and measurable 3) The existence of rating plans which change the premium level over time: measurable, gradual, and continuous 4) Past and expected future shifts in the mix of business: gradual and continuous
According to Jones, what are 2 methods of adjusting historical experience for changes that affected the average premium level?: 1) A direct adjustment 2) Apply premium trend
According to Jones, What is the advantage of the 2-step trending procedure over the 1-step trending procedure?: The 2-step method recognizes situations where a single annual premium trend may not be appropriate for each year in the experience period.
According to Jones, why is 2-step trending more suitable for trending premium than for trending loss freq and sev: This procedure relies on the assumption that the latest yearâ€™s average written premium is a "true number". For premiums this assumption holds because premiums are relatively stable, not so for loss severity and frequency
According to Jones, What are the 2 trending periods in the two step trending procedure?: Step 1: Trend the premium to the midpoint of the latest trend data point in the series Step 2: Trend the Premium from the midpoint of the latest trend data point to the average written date for future the future policy period
According to Jones, Discuss the appeal of using average Written trend vs. Average Earned Trend in a 2-step Trending procedure.: A trend analysis based on average written premium will have a longer trending period for step 1 and a shorter period for step 2. This adds to the appeal of using Ave. Written, in that the length of the inherently uncertain projection period is minimized.
According to Jones, what are 2 challenges in the task of adjusting for the changes affecting the average premium level?: 1)Choosing an adjustment method 2) Avoid double counting
According to Marker/Mohl, Give 3 situations in which a tail policy (in claims-made) is able to provide necessary coverage: 1) Insureds entering retirement 2) Death and Disability situations 3) Changing Insurance Carriers
According to Marker/Mohl, List the 5 principles of Claims-Made Rating: 1) A CM should always cost less than an occurrence policy, as long as claim costs are rising 2) Whenever there is a sudden, unpredictable CHANGE (positive or negative) in the underlying TREND, CM policies priced on basis of prior trend will be closer to the correct price than the pricing of occurrence policies 3) Whenever there is a sudden, SHIFT in the REPORTING pattern, the cost of CM coverage will be affected very little if at all, relative to occurrence coverage. 4) CM policies incur no liability for IBNR claims so the risk of reserve inadequacy is greatly reduced. If the claim is not reported, it is not covered. The IBNR need for a CM policy is always 0. 5) The investment income earned from a CM policy is substantially less than under an occurrence policy. The longer the reporting lag or the shorter the settlement lag, the greater the difference will be.
According to Schofield, What are 3 the 3 assumptions made in the study note?: 1 All Quantities are accurately measured 2 All Rates are at an adequate level 3 Rating plans are multiplicative
According to Schofield, What are the 2 methods of calculating Fixed Expenses (policy/Exposure)?: 1 Expense fee Method (per exposure basis) 2 Worker's Comp Method (per policy basis)
According to Schofield, When is it good to use the Expense Fee Method?: In the Expense Fee Method, Fixed and Variable Expenses are treated on a per Exposure Basis. It should be used when the range of exposures written on a policy is small (Ex: Personal Auto)
According to Schofield, When is it good to use the Workers' Comp Method?: In the Worker's Comp Method, Fixed and Variable Expenses are treated on a per Policy Basis. It should be used with a wider range of exposures written on a policy can exist (Ex: Worker's Comp)
According to Schofield, In the McClenahan Pure Premium Method, on which basis are expense fees calculated?: Per Exposure Basis
According to Werner, List the 3 considerations when deciding whether to calculate fixed expenses on an exposure or a policy basis: 1) The range of exposures on a policy 2) The correlation of overhead expenses with policy exposures 3) Current company practices with regard to allocation of expenses
According to Werner, what are 3 items which can cause an excessive or inadequate overall rate indication: 1) Rate changes 2) Significant premium trend 3) Countrywide expense ratio usages
According to Werner, what are 5 concerns that remain after using the proposed procedure?: 1) Splitting expenses 2) Average expense levels by location 3) Fixed expenses that vary slightly with premium 4) Fixed expenses that vary by other statistics 5) Economies of scale
According to CAS, What are the 4 items that the Standard of Practice states that the actuary should consider in trending model evaluation?: 1) the historical data being used 2) The success of the model in making prior projections 3) The statistical goodness of fit of the model to the historical data 4) The impact of any sudden, nonrecurring changes (tort reform) not yet incorporated in the data
According to CAS, What are the 4 specific areas of evaluation of historical data for trending procedures recommended by Standard 13: 1) Those established by precedent or common usage in the actuarial profession 2) Those used in previous analyses 3) The choice of the database and methodology, with emphasis given to the credibility of the data 4) The effect of known biases or distortions (Cats, Seasonality, Policy limits etc.)
According to CAS, What is social inflation and give 2 examples of it: Itâ€™s the impact on insurance costs from changes in claim consciousness, court practices, judicial attitudes and other non-economic factors. Examples: 1) Changes in claim consciousness spark insureds to file more claims 2) Changes in judicial attitudes results in more liberal awards for plaintiffs
According to CAS, What are the 3 sources of data that actuaries rely on for trend selections: 1 Company data 2 Insurance data 3 Non Insurance data
According to CAS, List the 4 principles of P&C Insurance Ratemaking: 1) A rate is an estimate of the expected value of future costs 2) A rate provides for all costs associated with the transfer of risk 3) A rate provides for the costs associated with an individual risk transfer 4) A rate is reasonable and NOT excessive, inadequate, or unfairly discriminatory if it is an actuarially sound estimate of the expected value of all future costs associated with an individual risk transfer
According to CAS, what are the 3 desirable features for exposure units to have: 1 vary with hazard 2 be practical 3 be verifiable
According to CAS, what is the defn of credibility: Credibility is a measure of the predictive value that the actuary attaches to a particular body of data
According to Boor, what are the 4 types of issues to consider when selecting the complement: 1) Practical issues 2) Competitive market issues 3) Regulatory issues 4) Statistical issues
According to Boor, what are the 6 desirable qualities for the statistic which is assigned the complement of credibility: 1) unbiased 2) accurate 3) independent 4) available 5) easily computed 6) explainable relationship
According to Boor, does trended present rates have the 6 desirable quantities: 1) unbiased 2) accurate â€“ as process variance increases it becomes more inaccurate 3) independent 4) available 5) easily computed 6) explainable relationship
According to Boor, does Classic Bayesian credibility have the 6 desirable quantities: 1) biased 2) inaccurate 3) independent 4) available 5) easily computed 6) explainable relationship
According to Boor, does the larger related class method have the 6 desirable quantities: 1) biased 2) inaccurate 3) independent 4) not available 5) not easily computed 6) explainable relationship
According to Boor, does Harwaynes method have the 6 desirable quantities: 1) unbiased 2) 3) independent 4) available 5) not easily computed 6) no explainable relationship
According to Boor, what are the 3 desirable and 3 undesirable characteristics of using competitor rates for a credibility comp: Desirable 1 Independence Prediction error in competitor rates is independent of loss costs 2 Availability 3 Process Error â€“ More data Undesirable 1 Explainable Relationship 2 Bias â€“ might be biased due to different underwriting and claim practices 3 Computation
According to Boor, does using loss costs of a larger group bias the results and is it easy to implement: Since the true class expected losses are not equal to the group expected losses, the statistic is biased. Very practical as long as all of the classes in the group have something in common. (ie statewide or nationwide avgs)
According to Boor, does using trended present rates bias the results and is it easy to implement: The pure trended loss costs are unbiased since they are based on present rates which are presumed unbiased. Very practical as long as all of the classes in the group have something in common. (ie statewide or nationwide avgs)
According to Boor, does competitor rates bias the results and is it easy to implement: Might be biased due to different underwriting and claim practices. The rates are often available from regulators although the process is very manually intensive and time consuming.
According to Brown and Schmitz, what are the 4 reasons the use of large deductible policies has increased and why: 1) Insurance cost saving to the insured. If the insured believes it is a better than avg risk, then they may be able to reduce ins cost. 2) Loss control incentives for the insured, since they now have to pay part of the claim. 3) Reduced residual market burdens for the insurer â€“ premium is reduced and hence itâ€™s share of assigned risk losses is reduced 4) Cash flow advantages to the insured â€“ the insured can now invest the money they would have to pay to the insured
According to Brown & Schmitz, what are 3 reasons for use of small deductibles: 1) To avoid expenses associated with processing and investigating claims for a small payment 2) Most insureds can afford to pay a small deductible (since it does not have a significant impact on the insured's financial condition) 3) Can discourage the filing of small nuisance claims and frivolous claims and also controlling moral hazard
According to Brown & Schmitz, What are 5 considerations when pricing a deductible policy? How are...: 1 the insurer's net losses affected? 2 ALAE costs affected? 3 other expenses affected? (should larger relative profit/risk margin be charged for the deductible policy? 4 prices impacted give that policy cash flows are affected 5 insured bankruptcy situations handled?
According to Brown & Schmitz, what are 3 additional fixed expense categories an insurance company is subject to issuing deductible policies?: 1 billing insureds for deductible payments 2 monitering payment of deductibles 3 pursuing in some cases deductible funds through collection agency/lawsuit.
According to Feldblum PAP, Why is it not appropriate to assume the same pattern of persistency rates for both direct writers and independent agency companies?: Direct writers have high retention rates because they offer low premium rates and provide renewal premium discounts. Many independent agency companies have low retention rates because the agent can move the insured to whichever company has the lowest rates.
According to Feldblum PAP, explain how asset share pricing models and property and casualty insurance ratemaking models differ in their consideration of the profitability of an insurance policy.: Traditional P&C ratemaking considers only the profitability of the future policy period. Asset share pricing models look at profitability over the life of the policy, taking into account policy persistency patterns.
According to Feldblum, what are the 4 factors that affect the differing ratemaking philosophies of life vs. P&C?: 1) Cancellation 2) Claim Costs 3) Expenses 4) Level Premiums
According to Feldblum PAP, what are 3 attributes that motivate asset share pricing: 1) commissions â€“ they tend to be higher in the 1st year 2) cancellations â€“ insurers rarely cancel or non-renew policies since profitability depends on the stability of the book of business 3) loss costs â€“ expected loss costs are greater for new over renewal business
According to Feldblum PAP, what are 4 reasons why asset share pricing is not common: 1) The data needed are not always available 2) Casualty pricing techniques are still somewhat undeveloped 3) The casualty insurance policy allows great flexibility in premiums and benefit levels 4) Liability claim costs are uncertain, both in magnitude and in timing
According to Feldblum PAP, what are 3 things that the correct rate relativities depend on: 1) Classification system 2) Average losses and persistency rates by classification 3) Strength of loss ratio improvement by policy year
According to Feldblum PAP, the principal benefit to asset share pricing is: The determination of profitability over the entire time a policyholder stays with the company
According to Feldblum PAP, give 4 factors that help explain the relationship between duration of policy and claim frequency: 1) Experience 2) Youth 3) Transience 4) Acqusition of the Vehicle YETA
According to Lange, what 3 factors tend to increase with each layer of loss: 1) LDFs 2)Trend 3) Risk or security loadings
According to Lange, list the 6 difficulties in ascertaining the profitability of writing IL of liability: 1) Inflationary trends have a substantially different impact in the increased limits area 2) Long term nature of claims 3) Since IL's losses are in the tail of the distribution of losses by size, considerable statistical variation exists 4) IL's premiums are generally lumped together with BL's premiums and other unrelated charges 5) added expense for cost of reinsurance protection 6) amount of large risk assumed by the company
According to Lange, what are the advantages to his method for calculating ILFs over PPM or LRM: In LRM, premiums must be known with accuracy, but IL and BL are usually clumped together. Even if one were to reconstruct separate IL premiums the utility of the resulting loss ratios would be low. In PPM, since ILâ€™s data is of lesser volume and subject to greater statistical variation, the resulting PPs would have little credibility
According to Lange, list 2 reasons why IL losses increase more rapidly than BL loss trends: 1) For loss> BLs, the whole effect of the trend is in the excess portion of the claim, with 0 effect on the BL portion 2) A rising cost trend will cause an increased freq. of ILs losses since additional claims will break through the lower boundary of the IL layer and become new excess claims
According to Tiller, what are 6 attributes of a good individual risk rating system: 1) Honest 2) Useful 3) Simple 4) Balance 5) Understandable 6) Stable HUSBUS
According to Tiller, what are the 3 types of prospective individual risk rating plans: 1) Schedule Rating 2) Experience Rating 3) Composite Rating
According to Tiller, what are the 3 qualities the credibility must have when weighting the actual vs Expected LRs: 1) 0 < Z < 1 2) Cred should increase as the size of the risk increases 3) The % charge for any loss of a given size should decrease as the size of the risk increases
According to Tiller, what 5 elements are included in basic premium: 1) Profit and Cont 2) LAE in excess of those provided by the LCF 3) Acquisition and service costs 4) Net charge for limiting the retro prem between the min and max 5) Risk control services, prem audit, and general administration of insurance
According to Tiller, what is the purpose of the D-ratio in the experience rating plan: It adjusts the expected basic limits losses for the impact of the Maximum Single Limit, by reducing the expected basic limits losses and ALAE by the proportion of expected loss and ALAE higher than the MSL
According to Tiller, what is the standard prem equal to?: Manual premium modified for the experience rating, loss constants, min prem, excluding prem discount and expense constant
According to Fitzgerald, what are the 5 major limitations in determining loss costs in states that have significant hurricane exposures: 1 Not enough historical insurance data 2 Over reliance on long term premium and loss information 3 Grouping states into regions can mask hurricane potential 4 Individual storms can have a disproportionate impact 5 Not all portions of a state are equally exposed to hurricanes
According to Fitzgerald, what is used for cred weighting for modeled loss costs: No credibility weighting is performed, because modeled territorial loss cost is considered fully credible. Credibility is taken into account only for the non-hurricane loss costs.
According to Lange, what are the 2 advantages to his method for calculating ILFs over the Pure Premium Method?: In PPM, since ILâ€™s data is of lesser volume and subject to greater statistical variation, the resulting PPs would have little credibility 2 The PP approach is not useful in testing the present rating procedure in which IL's charges are expressed as a function of BL's rates.
According to Lange, what are the advantages to his method for calculating ILFs over the Loss Ratio Method?: In LRM, premiums must be known with accuracy, but IL and BL are usually clumped together. Even if one were to reconstruct separate IL premiums the utility of the resulting loss ratios would be low. Increased limit rates are a function of BL limits rates so the IL experience cannot provide an indication of the relationship between IL losses and BL losses
According to Lange, Basic limits rates include only a provision for the expenses of the direct primary insurer; why is that a problem?: Unless some provision is made for the expenses of the reinsurer, the increased limits charges would be inadequate
According to Tiller, Briefly describe internal manipulation with regard to individual risk rating systems and give an example.: Internal manipulation occurs when an entity to which costs are being allocated can influence the cost allocation. Ex: an entity that sets its cases reserves (used in individual risk rating calculation)
According to Tiller, Briefly describe external manipulation with regard to individual risk rating systems and give an example.: External manipulation occurs when some agency, other than the entity to which costs are being allocated, influences the cost allocation. EX: marketing manager overrides the pricing results of the individual risk rating calculation without justifiable cause
According to Tiller, explain why the retrospective rating process tends to produce back and forth payments between insurer and insured?: Retrospective premium adjustments that modify the premium based on loss experience cause back-and-forth payments. The first adjustment (typically 18 month after inception is usually a refund of premium because minimal loss experience is reported, Subsequent adjustments typically require more premium as losses develop.
According to Fitzgerald, what are the 4 steps in calculating net MDRs: 1) Express damage ratios on a 1st dollar basis 2) Derive a beta cumulative distribution function 3) Calculate a net MDR for EACH event 4) Calculate a net MDR for ALL events
According to Fitzgerald, what are the 6 limitations of the hurricane model: 1) Limitations of Meteorological History 2) Limitations of Understanding Hurricanes 3) Limitations of Exposure Inventory 4) Demand Surge 5) Limitations of Damageability Information 6) Limitations of the Model in specific pricing situations
According to Fitzgerald, what are the 4 other uses of the model: 1) Pricing Optional Coverages 2) Development of Territory Definitions 3) Building Code Effectiveness Grading 4) Risk Load
According to Fitzgerald, List 3 key parameters in RMS model that pertain to the hurricane event: 1 Observed Central Pressure Differentials (fit to Weibull distribution) this is the key parameter of the storms strength 2 Observed Forward velocities (lognormal) 3 Track Angles (normal distribution
According to Fitzgerald, why is the risk load important?: The distribution of losses around the expected value is often just as important as the expectation itself. The distribution around the average determines the degree of risk underlying the coverage. The model provides this information!
According to Fitzgerald, what is one important advantage of the hurricane Model?: It provides more accurate estimates of hurricane losses by territory within a state. The prior territory reviews were limited by the sparseness of the data.
According to Fitzgerald, state 3 reasons why full credibility is given to the model: 1 The MDR's are based on all available meteorological data over the past century 2 There is no credibility standard for the volume of data needed to determine reliable estimates from the model 3 There is an absence of a source to use as the compliment of credibility
According to Fitzgerald, Explain why you should give caution about this assignment of credibility: Since the hurricane model determines the hurricane loss cost by fitting the parameters of a hurricane to probability distributions, the user should be aware that there is parameter uncertainty in the results
According to Anderson, what are 7 assumptions that simplify the general pure premium rate equation?: 1) Premium rates are equitable and just adequate 2) All insured properties are homogeneous 3) The rate determinants (frequency and severity) are known and stable 4) Losses are precisely adjusted 5) Each insured carries no other property insurance 6) There is no interest on the pure premium collected 7) Each policy has no more than one loss per period.
According to Anderson, What are the 3 forms that the designated insurance represented in the numerator of the coinsurance apportionment ratio may take?: 1) The face amount of the policy requiring insurance 2) The total face amounts of the insured's applicable policies 3) Under provisional reporting form policies, such as on inventories, full insurance on the property values last reported before a loss.
According to Anderson, what are 3 criteria that the coinsurance rate tables should satisfy?: 1) A wide range of coinsurance percentages should be offered at separate rates. 2) Premium reversals should not occur, inevitably, at the borders between bands of premium rates. 3) Whenever losses less than the policy face are possible, the pure premium rate should fall as the policy face increases.
According to Anderson, do the rates for percentage coinsurance requirements vary by policy size?: NO
According to Anderson, when does a premium reversal occur?: A reversal occurs if the percentage decrease in gross premium rate is greater than the percentage increase in the policy face
According to Kelly, what is an adjustment clause and what is itâ€™s purpose on the homeowners policy?: Adjustment clauses are designed to automatically update the dwelling coverage amounts at policy renewal for inflation
According to Kelly, what is a disadvantage to the company of offering GRC?: Itâ€™s dependence on it inspections, inflation coverage, etc. to ensure that the dwelling is initially and ultimately insured at full replacement cost
According to Kelly, what are the 6 potential rating impacts of changing levels of insurance to value?: 1) Additional premiums (per policy) generated by larger coverage amounts from inspections and re-inspections. 2) Additional total, and near total losses as a result of providing greater coverage amounts 3) The reduced premium from increased numbers of cancellations and non-renewals. 4) The reduced claim payouts from increased numbers of cancellations and non-renewals 5) The reduced claim payouts when suggestions after re-inspection programs result in reduced risk of loss 6) Changes in expenses. (greater cost of additional inspection)
According to Prevesto, what are the 4 date fields collected on each transactional record?: 1) Accounting 2) Inception 3) Effective/Expiration 4) Date of Loss
According to Prevesto, what are 3 examples where coded as rated may not be followed?: 1) Extra detail collected 2) Regulatory requirements for a data element to be captured and maintained 3) Less detail collected
According to Prevesto, what are the 3 amount fields collected for the ISO statistical plans: 1) Written premium 2) Loss indemnity 3) Loss-ALAE
According to Prevesto, what are the 4 additional data elements collected for the lines of insurance subject to natural disasters?: 1) zip code 2) day of loss 3) expanded cause of loss detail 4) Building Code Effectiveness Grading Schedule code
According to Prevesto, what are the 3 areas that regulators monitor and regulate in the insurance business?: 1) Financial solvency and solidity of insurance companies 2) Market conduct 3) Rate regulation
According to Prevesto, Describe "Summary-Based" Statistical Plans: "Summary-Based" Statistical Plans - data is summarized by line of business, state, class and by coverage and sent to the statistical agent The purpose of "summary Based" is to satisfy regulatory requirements
According to Prevesto, Describe "Transaction-Based" Statistical Plans: "Transaction-Based" Statistical Plans transaction level records are sent to the statistical agent. These records include the dollar amount of the premium and substantial information about risk characteristics. On the loss side, transaction records every time a loss is paid, including partial payments an the establishing of a case reserve. The purpose of transaction based statistical plans is to collect more detailed information to support the business need for data.
According to Prevesto, Define "Code as rated": Means there is a direct correlation between the statistical coding of data that is collected to rate the policy and rating criteria. Example Homeowners: COVA, Deductible, policy limit
According to Prevesto, State the 2 broad categories of Exposure Bases used for General Liability.: 1 Fixed Exposure Base - The exposure base is a definite known quantity at the inception of the policy EX: square feet 2 Variable Exposure base, EX: gross sales
According to Prevesto, what are the two main needs a statistical plan is developed to provide: 1 Regulatory Purposes 2 Business purposes
According to Moncher, list the 5 major data collection programs at NCCI: 1) Annual Financial Call Data 2) WC Statistical Plan Data (WCSP) 3) Detailed Claim Info Data (DCI) 4) Policy Issue Capture System Data (PICS) 5) Residual Market Data
According to Moncher, Which two data collection programs are the primary data sources used for Worker's Compensation Ratemaking?: 1) Annual Financial Call Data. It is aggregate premium and losses used to calculate loss cost and rate level changes 2) WC Statistical Plan Data (WCSP). It is individual loss and exposure info used for loss cost rels and experience rating modifications
According to Moncher, describe what does the Annual Financial Call Data contain and what is it used for?: Aggregate premium and loss data, primarily used to calculate overall loss cost and rate level changes
According to Moncher, describe what does the Work Com Stat Plan (WCSO) contain and what is it used for?: Individual policy loss and exposure info collected with detail by classification, primarily used to calculate loss cost rels and experience rating mods
According to Moncher, describe what does the Detailed Claim Info data contain and what is it used for?: Sample of indemnity claims, used for special analyses
According to Moncher, describe what does the Policy Issue Capture System (PICS) data contain and what is it used for?: Policy docs submitted by insurers. Used to confirm proof of work comp coverage to state accident boards and commissions (NCCI)
According to Moncher, describe what does the Residual Market data contain and what is it used for?: Submissions from servicing carriers, including policy and calendar year premiums, losses and expenses. Used for financial reporting procedures.
According to Webb, give the 3 benefits participants get through insurance: 1) Reimbursement of losses 2) Reduction of uncertainty 3) Services provided by the insurer to reduce the possibility of loss
According to Webb, list the 4 things in which the insurer accomplishes the principle function: 1) Marketing 2) Loss control 3) Underwriting 4) Premium auditing, and claims handling
According to Webb, list the 4 things which a property and liability business in the U.S. can be classified by: 1) Legal form of ownership 2) Place of incorporation 3) Licensing status 4) Marketing or distribution system used
According to Webb, what are the 4 types of participants in the risk transfer process: 1) Risk Manager 2) Consultants 3) Insurance Agents and Brokers 4) Insurers
According to Webb, what are the 8 insurer functions that facilitate the risk transfer process: 1) Policy Contract Development 2) Pricing 3) Marketing 4) Underwriting 5) Claim Adjustment 6) Loss Control 7) Reinsurance 8) Investments
According to Webb, what are the four types of distribution systems: 1) Independent Agency System 2) Exclusive Agency System 3) Direct Writer System 4) Direct Response System
According to Webb, what are the 7 factors to consider when selecting a distribution system: 1) Geographic location 2) Expertise and Reputation of Producers 3) Nature of Existing Business 4) Ability to Service Products 5) Markets to be Targeted (Buyers to be Reached) 6) Insurer Characteristics 7) Degree of Control Required or Desired
According to Webb, what are the 3 widely used bases for transmitting premium to the insurer: 1) the item basis 2) the statement basis 3) the account current basis
According to Webb, what are 3 types of proprietary insurers: 1 Stock Companies 2 Lloyd's 3 Insurance Exchanges Proprietary Insurers are formed to make a profit for their owners
According to Webb, Describe Lloyd's: Lloyd's of London is not an insurance company. It is a marketplace, similar to a stock exchange. The insurance is written on behalf of individual or corporate members. The insurance is backed by their entire personal fortunes. Each member belongs to one ore more syndicate, and delegates the day-to-day management to the syndicate manager
According to Webb, List the 4 types of Cooperative Insurers: 1 Mutual Companies 2 Reciprocal Exchanges 3 Fraternal Organizations 4 Other (Captive Insurers, Risk Retention Groups, Purchasing Groups) Cooperative Insurers are not necessarily formed for profit. Owned by the policyholders, usually formed to provide insurance at a minimal cost.
According to Webb, Describe Pools/Associations: Consist of Several insurers not otherwise related. These are usually used to insure risks that individual companies are not willing to cover alone.
According to Webb, List 8 types of Federal Insurance: 1 Deposit Insurance for Banks 2 Export Credit Insurance 3 "All risks" Crop Insurance 4 Flood Insurance 5 Crime Insurance 6 Insurance against expropriation of foreign investments 7 Mortgage Insurance 8 Life Insurance for some veterans of armed forces
According to Webb, What are 3 alternatives to risk transfer: 1 risk avoidance 2 risk retention 3 loss control
According to Webb, What are the 6 principal steps in the risk management process?: 1 Identify loss exposures 2 Analyze loss exposures 3 Examine available risk management techniques 4 Select Technique to be used 5 Implement technique 6 Monitor Results and implement necessary changes
According to Webb, list 7 functions performed by agents: 1 prospecting - finding new clients 2 sales 3 risk analysis 4 policy issuance 5 collection of premiums 6 claims handling 7 consulting
According to Webb, list the 8 major staff underwriting activities: 1) Formulation of underwriting policy 2) Evaluation of Experience 3) Research and development of Coverages and policy forms 4) Review and revision of Rating plans 5) Conduct of underwriting Audits 6) Education and training 7) Participation in industry associations and bureaus 8) Preparation of Underwriting guides and bulletins
According to Webb, list the 5 major line underwriting activities: 1) Selection of insureds 2) Classification 3) Determination of the proper Coverage 4) Determination of the appropriate Rate or price 5) Producer and Policyholder service
According to Webb, What is the definition of Adverse Selection: Occurs when applicants for insurance present a higher than average probability of loss than is expected from a truly random sample of all applicants. Example Flood Insurance
According to Webb, What are the 3 principle dimensions of an insurer's underwriting policy?: 1 Lines of business and classes to be written 2 territories to be developed 3 forms, rates, and rating plans
According to Webb, List 4 major constraining factors of underwriting policy: 1 capacity - relationship between premiums written and policyholder surplus 2 regulation - 3 personnel 4 reinsurance
According to Webb, what are the 4 specific areas on which property underwriters focus: 1) Construction 2) Occupancy 3) Protection 4) External Exposures
According to ISO, what are the 6 classes of building construction: 1) Class #6 - fire resistive 2) Class #5 - modified fire resistive 3) Class #4 - masonry noncombustible 4) Class #3 - noncombustible 5) Class #2 - joisted masonry 6) Class #1 - frame
According to Webb, what are the six categories of occupancies: 1) Habitational 2) Office 3) Institutional 4) Mercantile 5) Service 6) Manufacturing
According to Webb, as part of private protection, what are the 5 major detection systems: 1) A guard system with a clock system 2) A private patrol service 3) Smoke and heat detectors 4) An automatic local alarm 5) A central Station alarm or remote station system
According to Webb, what are the 4 categories of private fire suppression: 1) portable extinguishers 2) standpipes and hoses 3) automatic sprinkler system 4) private fire brigades
According to Webb, what are the 3 measures used to estimate the largest loss a property is likely to produce: 1) Policy amount 2) Amount subject 3) Probable maximum loss (PML)
According to Webb, list 3 groups of factors affecting frequency and severity that vary by occupancy: 1 Sources of ignition or fire causes 2 combustibility 3 damageability
According to Webb, list 9 "construction" things to consider when underwriting property: 1 Types of load bearing members of construction (6 classes) 2 Interior finish 3 Insulation 4 Roofing 5 Age 6 Building height 7 Fire Divisions 8 Building Openings 9 Building Codes - enforcement
According to Webb, list 3 "Occupancy" things to consider when underwriting property: 1 sources of ignition (friendly fires, friction, electricity, exothermic reactions) 2 combustibility 3 damageability - to determine PML
According to Webb, list the 4 common hazards associated with Occupancy: 1 housekeeping (uncollected litter, storage, disposal) 2 heating equipment 3 electrical equipment 4 smoking materials
According to Webb, list the 2 special hazards associated with occupancy: 1 Specialized Hazards of the CLASS 2 Special Hazards of the RISK
According to Webb, what are the 3 recognized classes of persons whose rights the law protects: 1) Invitee 2) Licensee 3) Trespasser
According to Webb, what are the 5 relationships that create vicarious liability: 1) Principle-agent relationship 2) employer-employee relationship 3) parent-child relationship 4) contractual relationship 5) partnership
According to Webb, what are the 6 legislated approaches in AL insurance that alter underwriting decisions: 1) Financial responsibility laws 2) Compulsory automobile liability insurance 3) Shared automobile market mechanisms 4) Mandatory uninsured motorists coverage 5) No-fault automobile laws 6) Restrictions on cancellations and non-renewals
According to Webb, list the 10 major underwriting factors in private passenger auto: 1) Age of operators 2) Age and type of automobile 3) Use of the automobile 4) Driving record 5) Territory 6) Sex and marital status 7) Occupation 8) Personal characteristics 9) Physical condition 10) Safety equipment
According to Webb, list the 7 major industry classifications of commercial auto: 1) Truckers 2) Food delivery 3) Specialized delivery 4) Waste disposal 5) Farmers 6) Dump and transit mix trucks and trailers 7) Contractors
According to Webb, list 4 auto residual market mechanisms: 1 Automobile Insurance Plans 2 Joint Underwriting Associations 3 reinsurance facilities 4 State Funds (MD)
According to Webb, list 4 Commercial Automobile Underwriting Factors: 1 Weight and Type of vehicle 2 Use of Vehicle (Service has lowest rate, Retail has highest) 3 Radius of Operation 4 Special Industry Classification
According to Webb, list 7 essential elements of a good fleet safety program: 1 Driver Selection 2 driver training and motivation 3 equipment control 4 accident reporting and review 5 periodic checking of drivers and vehicles 6 enforcement and reinforcement of the program 7 management support of the program
According to Webb, list 3 sources of products liability: 1 breach of warranty 2 tort of negligence 3 strict liability in tort
According to Webb, list 4 activities that generate "completed Operations Hazard": 1 Construction 2 Service 3 Repair 4 maintenance
According to Economics Boor, List 3 reasons why there is a relatively flat demand curve for insurance.: 1 Requirements by law (personal auto, WC, commercial auto) 2 Requirements by lender - (homeowners, auto phys dam) 3 Preemptory Reasons - potential for lawsuits can drain a company's recourses
According to Economics Boor, since insurance products are often the same, list 6 attributes a company can use to create a brand name.: 1 claims department, and coverage extensions 2 financial strength of insurer 3 insurer flexibility in customizing insurance programs to meet individual's needs 4 insurer record on 3rd party claim defense 5 accessibility of insurer's claim department 6 quality of loss control program
According to Economics Boor, list the stages of the insurance cycle: 1 Insurance is in low supply 2 Insurers raise prices 3 Insurer profitability is high 4 New insurance firms enter the market 5 Excess Capacity exists in market 6 Insurers lower prices 7 Insurer Profitability is low 8 Insurers Exit the market
According to Economics Boor, list 2 reasons why the insurance business cycle is exacerbated: 1 underwriters are not aware of true claims cost 2 companies continue to sell insurance when they are not making a profit (soft market)
According to Homeowners Weining, the definition of "Insured" includes these 3 things: 1 the person named in the declarations as the insured 2 Relatives who reside at the named insureds household, or other persons under 21 in the care of named insured 3 A full-time student who lives away from home, but resided in household before leaving to school
According to Homeowners Weining, "Insured location" includes the residence premises and these 6 other places:: 1 An unlisted residence acquired by the named insured during the policy period 2 A nonowned premises where insured is temporarily residing (hotel room)\\ 3 vacant land (owned or rented excluding farmland) 4 Insured's land on which a residence is being constructed 5 Family cemetery plots 6 Any premises temporarily rented to insured (excludes business use, ex: hall rented for wedding)
According to Homeowners Weining, In the HO-3 policy, what is the special limit on: Money, bank notes, gold and silver other than silverware: $200
According to Homeowners Weining, In the HO-3 policy, what is the special limit on: Securities, Accounts, deeds, evidence of debt, letters of credit, notes other than bank notes, manuscripts personal records, passports, tickets and stamps, airline tickets: $1,500
According to Homeowners Weining, In the HO-3 policy, what is the special limit on: Watercraft (including outboard motors, furnishings, equipment and trailers): $1,500
According to Homeowners Weining, In the HO-3 policy, what is the special limit on: Any trailer not used with watercraft: $1,500
According to Homeowners Weining, In the HO-3 policy, what is the special limit on: The following are subject to loss only by theft: Jewelry, watches, furs, precious stones Firearms silverware, gold ware, pewter ware: $1,500 - Jewelry, watches, furs, precious stones $2,500 - Firearms $2,500 - silverware, gold ware, pewter ware
According to Homeowners Weining, In the HO-3 policy, what is the special limit on: Property used at anytime, in any manner, for any business purpose: $2,500 on premises $500 off premises
According to Homeowners Weining, In the HO-3 policy, what is the special limit on: Electronic Aparatus, that can be plugged into cigarette lighter - this includes CD's/Tapes: $1,500
According to Homeowners Weining, In the HO-3 policy, what is the special limit on: Electronic Apparatus in 7., that is not in or upon car, but away from the residence, and is used at anytime for business purpose: $1,500
According to Homeowners Weining, How are losses to Personal property valued and settled?: Losses to personal property listed under Cov C, are settled at the lesser of the following: Actual Cash Value The amount required to repair or replace the items
According to Homeowners Weining, How are losses to Coverage A and B valued and settled?: If the insuredâ€™s limit is at least 80% of the replacement cost then they get replacement cost up to the limit. In insuredâ€™s limits are less than 80% then insurer pays the greater of the ACV or (had/needed)*replacement cost up to limit
According to Homeowners Weining, In Section II, what 3 things does Coverage E provide coverage for?: 1) BI 2) PD 3) "personal injuries" (libel, slander, malicious prosecution, wrongful eviction, violation of privacy)
According to Homeowners Weining, Under what coverage will your driveway be covered?: Coverage B
According to Homeowners Weining, Coverage for Personal prop usually located at any residence other than the residence premises is subject to the greater of the following: 1) 5% of Cov A ( 10% of Cov C) 2) $1000
According to Malecki, List the 3 elements of a tort: 1) A legally protected right 2) A wrongful invasion of that right 3) Damages as a proximate, or direct, result of that invasion
According to Malecki, List the 3 broad classifications of torts: 1) Negligence 2) Intentional torts 3) Strict liability torts
According to Malecki, List the 5 defenses to negligence actions: 1) Contributory negligence 2) Comparative negligence 3) Assumption of risk 4) Statutes of limitations 5) Immunities
According to Malecki, List the 4 common examples of strict liability torts: 1) Abnormally Dangerous Instrumentalities 2) Ultra hazardous Activities 3) Dangerously Defective Products. 4) WC
According to Malecki, what is the defn of indirect liability: The â€œindirect liabilityâ€ (aka vicarious liability) imposes liability on a person or organization for torts committed by others
According to Malecki, what are the 4 essential elements of negligence that a plaintiff must establish to successfully sue for damages: 1) The defendant owed a legal duty to the plaintiff to use due care. 2) The defendant breached the legal duty owed to the plaintiff 3) The plaintiff suffered actual damages 4) There was a close casual connection between the defendantâ€™s negligent act and the resulting damages to the plaintiff
According to Malecki, what are the 2 types of compensatory damages and define each: 1) Special damages are compensatory damages that have resulted in, or will result in actual loss (loss of earnings) 2) General damages are compensatory damages for intangible losses such as pain and suffering, mental anguish
According to Malecki, List the 6 conditions for the insurer to pay damages on behalf of the insured: 1) Insured must be legally obligated to pay damages 2) The damages must result from BI or PD 3) The policy must apply to the BI or PD 4) The damages must be caused by an occurrence as defined in the policy 5) The occurrence must take place in the coverage territory 6) The BI or PD must occur during the policy period
According to Malecki, List the 3 types of damages paid by the insurer on a CGL Policy: 1) Special damages 2) General damages 3) Punitive damages
According to Malecki, what is third-party over action?: Results when an injured employee sues and recovers from a negligent third party. The third party, in turn, sues the employer based on joint negligence
According to Malecki, List the 4 advantages to the plaintiff for filing suit in the US: 1) The available of a trial by jury 2) The available of the contingency fee approach 3) Pre-trial discovery 4) Recognition of strict liability in products
According to Malecki, List the 4 types of coverages in a CGL policy: 1) Premises and operations liability coverage 2) Contractual liability coverage 3) Fire legal liability coverage 4) Products and completed operations coverage
According to Malecki, What 3 conditions must be met for BI or PD to be included in the products liability: 1) The BI or PD must arise out of "your product" 2) The BI or PD must occur away from premises 3) The product causing the BI or PD must not be in the insured's physical possession when the BI or PD occurs
According to Malecki, Give the 3 conditions that must be met for BI or PD to be included in the completed operations hazard: 1) The BI or PD must arise out of "your work" 2) The BI or PD must occur away from premises 3) The work causing the BI or PD must be completed or abandoned when the BI or PD occurs
According to Malecki Commercial Liability, what are the 5 steps in the risk management process?: 1 Identify and analyze loss exposures 2 Examine feasibility of alternative risk management techniques 3 Select best risk management techniques 4 Implement techniques 5 monitor program
According to Malecki Commercial Liability, in prem/ops does CGL cover moving and unloading of stuff?: CGL does NOT COVER property 1 loading onto aircraft, auto, or watercraft 2 while on aircraft, auto, watercraft 3 while being moved from aircraft, auto, watercraft to the place where it is finally delivered
According to Malecki Commercial Liability, list the 6 types of property NOT COVERED in CGL: 1 named insured's own property 2 premises sold, given away, or abandoned 3 loaned property 4 property in care, custody, control of insured 5 property being worked on 6 faulty work
According to Malecki Commercial Liability, List the 2 major exceptions for when an employer is not vicariously liable for torts committed by an independent contractor: 1 Non-delagable duties 2 inherently dangerous activites
According to Malecki Commercial Liability, list the 2 exceptions to the pollution exclusion: 1)Smoke damage from fire on insureds premises 2) Pollution damage resulting from operations occurring away from premises as long as pollutants were not brought to site by insured and the operations were not to respond to pollutant cleanup
According to Malecki Commercial Liability, What are the 5 exclusions to products and Completed Operations Coverage: 1) Damage to your product (PD only) 2) Damage to your work (PD only) 3) Damage to impaired prop or prop not physically injured 4) Recall of products 5) Pollution Exclusion
According to Malecki WC and EL, List the 3 common-law defenses by an employer in negligence actions: 1) Assumption of risk 2) Contributory negligence 3) Negligence of a fellow servant
According to Malecki WC and EL, Give the 5 specific objectives of the workers compensation system: 1) Prompt payment of adequate benefits 2) Elimination of the delays and costs of litigation 3) Establishment of a guarantee of benefit payments 4) Promotion of industrial safety and industrial hygiene 5) Payment for medical care services
According to Malecki WC and EL, List the 4 classes of disability: 1) Temporary total 2) Temporary partial 3) Permanent partial 4) Permanent total
According to Malecki WC and EL, List the 6 parts of the standard WC&EL policy form: 1) Workers Compensation Insurance 2) Employers Liability Insurance 3) Other States Insurance 4) Your Duties If Injury Occurs 5) Premium 6) Conditions
According to Malecki WC and EL, List the 4 types of suits or claims that are covered by employers liability coverage: 1) Third -party-over 2) Care and loss of services 3) Consequential bodily injury 4) Dual capacity
According to Malecki WC and EL, List the 5 methods of financing Work Comp benefits: 1 State Funds 2 Assigned Risk Plans 3 Self-Insurance Plans 4 Private Insurance 5 Excess Insurance
According to Malecki WC and EL, Who is covered and what is remedy for Federal Employer's Liability Act: Employees of Interstate RAILROADS - negligence suit against employer
According to Malecki WC and EL, Who is covered and what is remedy for Jones Act: Member's of a vessel's Crew surviving family members can sue for wrongful death
According to Malecki WC and EL, Who is covered and what is remedy for Longshore and Harbor Workers' Comp Act: Maritime workers with some exceptions (master of crew) - no fault benefits as defined by statue
According to Malecki WC and EL, Who is covered and what is remedy for Defense Base Act: Civilian employees at foreign US defense bases overseas. -no fault benefits as defined by statue
According to Malecki WC and EL, Who is covered and what is remedy for Outer Continental Shelf Lands Act: Workers on a fixed offshore drilling and production platforms -no fault benefits as defined by statue
According to Malecki WC and EL, Who is covered and what is remedy for Non-Appropriated Fund Instumentalities Act: Civilian employees on US military bases -no fault benefits as defined by statue
According to Malecki WC and EL, Who is covered and what is remedy for Death on the High Seas Act: member's of a vessel's crew -survivors may sue employer for death occurring beyond a marine league from the shore of any state - questionable
According to Malecki WC and EL, Who is covered and what is remedy for Migrant and seasonal Agriculturer Worker act: Migrant and seasonal worker -suit against employer

Start Studying!

Deck Info

Number of cards 249