6. Which of the following companies would be best suited for participating in an insurance pool?

Select one:

A. A large book seller with hundreds of local retail stores interested in insurance for their fleet of vehicles.

B. A construction company has had good results in a group captive but would like more control over their insurance program.

C. A multi-state Fortune 500 home supply company with adequate liquidity that is seeking workers compensation coverage for its 5,000 employees.

D. A local school district that is purchasing new buses and looking to reduce its insurance expense by joining a workers compensation pool.

7. If a captive insurer is established to provide coverage for loss exposures that the parent company has difficulty insuring privately, how does the captive insurer typically deal with such risks?

Select one:

A. By insuring difficult-to-insure loss exposures of other companies, effectively pooling the exposure

B. By capping the liability on a per-loss basis, with the parent company assuming losses above the liability cap

C. Through purchasing excess of loss reinsurance

D. Through purchasing proportional reinsurance

8. Why would you self-insure a risk? What risks are typically self-insured? What are the disadvantages of self-insurance?