Describe 4 advantages brokers realise when using a risk management in their sales process
i) Clients who are more knowledgeable about their insurance
ii) Clients will be more likely to renew coverages
iii) Clients will be more likely to refer others to brokerage
iv) Clients will be more satisfied with claims process
ii) Clients will be more likely to renew coverages
iii) Clients will be more likely to refer others to brokerage
iv) Clients will be more satisfied with claims process
Describe the process of 'identification of loss exposures'
this process recognizes losses that may occur
What are three things usd when classifying loss exposures?
i) identfying type of value exposed to losses
ii) Identifying perils causing losses
iii) Identfying financial impact of losses
ii) Identifying perils causing losses
iii) Identfying financial impact of losses
What are four values exposed to loss?
i) property values
ii) net income values
iii) liability loss
iv) personnel loss
ii) net income values
iii) liability loss
iv) personnel loss
What are two types of property values exposed to loss?
i) Tangible Property
ii) Intangible Property
ii) Intangible Property
Explain the follow property loss exposure:
DEBRIS REMOVAL
Expenses incurred removing debris after losses
Explain the follow property loss exposure:
DEMOLITION EXPENSE
Expenses incurred demolishing undamaged portion of building
Explain the follow property loss exposure:
INCREASED COST OF CONSTRUCTION
Expenses incurred bringing building up to code while repairing damages
Explain the follow property loss exposure:
PAIR OR SET VALUE
Decreased in value of remaining item in a pair or set after loss of one part of that set
Explain the follow property loss exposure:
GOING CONCERN VALUE
Difference in value of property that must be sold after losses & value of operating business
What are four intangible properties exposed to loss?
i) Securities
ii) Trademarks
iii) Right to collect accounts
iv) Copyrights
ii) Trademarks
iii) Right to collect accounts
iv) Copyrights
State five loss exposures that will result in decreases in revenues
i) Business operations
ii) Contingent business interruption
iii) loss of profits on finished goods
iv) reduced rental income
v) Decreased collection of accounts receivable
ii) Contingent business interruption
iii) loss of profits on finished goods
iv) reduced rental income
v) Decreased collection of accounts receivable
State three loss exposures that will result in increase in expenses
i) Increase in accounts receivable
ii) Increased in Rental expenses
iii) Expediting expenses
ii) Increased in Rental expenses
iii) Expediting expenses
When assessing liability loss exposures, what are two factors to consider?
i) Entity to whom duty is owed
ii) Source of legal duty
ii) Source of legal duty
What are three expenses court actions may cause?
i) Costs to investigate and defend
ii) Payments of an award for damages or costs of corrective actions
iii) Amounts of out of court settlements
ii) Payments of an award for damages or costs of corrective actions
iii) Amounts of out of court settlements
Identify three perils categories and provide three examples in each
i) Natural Perils (Cave in, Collapse, Drought)
ii) Human Perils (Arson, Chemical Leakage)
iii) Economic Perils (War, currency fluctuation, depression)
ii) Human Perils (Arson, Chemical Leakage)
iii) Economic Perils (War, currency fluctuation, depression)
When assessing financial impact of losses, what factors will impact this assessment?
i) Loss Frequency
ii) Loss Severity
ii) Loss Severity
When reviewing loss frequency, what categories are assessed:
i) Almost Nill (almost no possibility) Meteorite
ii) Slight (it may happen) loss from uncontrolled wildfire
iii) Moderate (occurs from time to time) windstorms
iv) Definite (occurs regularily) shoplifting
ii) Slight (it may happen) loss from uncontrolled wildfire
iii) Moderate (occurs from time to time) windstorms
iv) Definite (occurs regularily) shoplifting
When reviewing loss severity, what categories are assessed:
i) SLIGHT (organization can easily pay for loss) Paper damaged during printer jam
ii) SIGNIFICANT ( organization cannot pay for entire loss, part must be transferred) damage caused by summer hailstorm
iii) SEVERE (organization must transfer loss or risk failure) Major loss due to fire
ii) SIGNIFICANT ( organization cannot pay for entire loss, part must be transferred) damage caused by summer hailstorm
iii) SEVERE (organization must transfer loss or risk failure) Major loss due to fire
Describe the inverse relationship between loss frequency and severity
When loss severity goes down frequency goes up when loss frequency goes down severity goes up
State five tools used by risk managers to identify and analyze loss exposures
i) Standardized surverys and questionnaires
ii) Financial statements and underlying records
iii) Other records and documents
iv) Flowcharts
v) Personal inspections
ii) Financial statements and underlying records
iii) Other records and documents
iv) Flowcharts
v) Personal inspections
Identify an advantage and disadvantages of each of the following:
STANDARDIZED SURVERYS
Advantage: Easy to complete
Disadvantage: No requirement to go beyond questions asked
Disadvantage: No requirement to go beyond questions asked
Identify an advantage and disadvantages of each of the following:
BALANCE SHEETS
Advantage:Helps identify existence of assets
Disadvantage: values will be inaccurate
Disadvantage: values will be inaccurate
Identify an advantage and disadvantages of each of the following:
OTHER RECORDS & DOCUMENTS
Advantage: helps in identifying future changes in organizations
Disadvantage: All documents not available
Disadvantage: All documents not available
Identify an advantage and disadvantages of each of the following:
FLOWCHARTS
Advantage: Identifying bottlenecks in production
Disadvantage:Does not indicate probability of losses
Disadvantage:Does not indicate probability of losses
What is the best method to identify and analyze loss exposures?
Personal Inspections cannot be replaced with other methods
What are two ways to avoid loss exposures and provide a weakness of this method?
i) Completely avoiding exposures
ii) Eliminating exposures
weakness: avoiding one exposure usually creates another exposure
ii) Eliminating exposures
weakness: avoiding one exposure usually creates another exposure
Describe pre-loss, loss reduction measures, and provide an example when reviewing property loss exposures
Pre-loss loss reduction measures attempt to reduce amount of loss prior to losses occuring. These measures would include placing all flammable liquids in flammable liquid storage cabinets
Describe post loss, loss reduction measures, and provide an example when reviewing property loss exposures
Post-loss loss reduction measures attempt to reduce amount of loss by halting its progress. These measures would include installation of sprinkler system
What type methods may be used when using segregation of exposure units?
i) Separation
ii) Duplication
ii) Duplication
Describe separation and provide an example when reviewing property loss exposures
occurs when organizations split a single asset or function into two or more locations. Occurs when organizations store merchandise in one or more locations
Describe duplication and provide an example when reviewing property loss exposures
occurs when complete asset or structure is held in reserve to replace damaged assets or structures
Describe contractual transfer and provide an example when reviewing property loss exposures
Contractual transfer occurs when business transfer liability for losses to someone other than an organization or person
Describe two risk financing techniques available to risk managers
i) retention using money from w/in organizations to pay for losses
ii) contractual transfer using money from outside organizations to pay for losses
ii) contractual transfer using money from outside organizations to pay for losses
State two examples when forced retention may be imposed upon organizations
i) losses from occurrences that cannot be insured (WAR)
ii) Money required to pay required deductibles
ii) Money required to pay required deductibles
State two examples when optional retention may be used by organizations
i) When losses are small and are w/in business financial liability (broken windows)
ii) When losses are small & expected, therefore budgeted
(shoplifting)
ii) When losses are small & expected, therefore budgeted
(shoplifting)
What are two ways businesses may transfer losses in contract?
i) Non-insurance transfer
ii) Commercial insurance
ii) Commercial insurance
Describe one type of non-insurance contractual transfer
Hold harmless agreements are contracts when one organization agrees to hold harmless another organization
When should insurance be recommended?
When no other risk financing technique or loss control technique is sufficient
What are three problems that could still occur when using insurance as the transfer technique?
i) Insurer may declare bankruptcy
ii) Amount of coverage may be insufficient for losses incurred
iii) loss may not be insured when client expected coverage or amount of settlement is less than client expected
ii) Amount of coverage may be insufficient for losses incurred
iii) loss may not be insured when client expected coverage or amount of settlement is less than client expected
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