Insurance HW the book that the questions are found in is Principles of Risk Management and Insurance 12th edition by Rejda and Mcnamara

Unit 1 Insurance Chapter 1 1) Chapter 1 Case Application from textbook a. b. c. d. e. f. g. 2) Chapter 1 Case 2 Individuals who are in charge of handling loss exposures for corporations, municipalities, universities, etc. are called \"risk managers.\" Why are the identification of hazards and the preparation for perils important in risk management? What types of physical hazards confront the risk manager of our university? Chapter 2 3) Chapter 2 Short Answer What is the law of large numbers? Why is the law of large numbers important to private insurers? 4) Chapter 2 Web Exercise - Insurance Fraud In this chapter, you learned the definition of insurance and the requirements for a loss exposure to be privately insurable. You also learned about the costs and benefits of insurance to society. While insurance provides many benefits to insureds, the presence of an industry that has significant financial resources often brings out the \"worst\" in people. Indeed, insurance fraud continues to be a problem. You may believe that you are immune from the impact of insurance fraud. The cost, however, is significant and all insureds bear a portion of the cost through higher premiums. Fortunately, there are organizations that attempt to prevent insurance fraud and reduce the cost of insurance fraud. One such group is the Coalition Against Insurance Fraud. Visit their web site at: http://www.insurancefraud.org Use the information provided at the site to answer the following questions about insurance fraud. 1. When was the Coalition founded and what is its mission? (See the \"About Us\" link) 2. According the site, how much does insurance fraud cost Americans each year? (Click on the \"Fraud: Why worry\" link in the left margin, and then the \"Impact of Fraud\" link) How does insurance fraud impact individuals and businesses? 3a. The site lists several categories of scams. (see the \"Scam alerts\" link in the left margin to learn about different types of scams) Under \"Agents & insurers,\" what is meant by churning, sliding, and twisting? Unit 1 Insurance 3b.1. Next access the \"Staged crashes\" link under \"Scam Alerts.\" One type of staged auto accident is a \"swoop and squat.\" How does this type of staged accident work, and why is the \"swooping\" car likely to have several passengers in it? b.2. Another type of staged accident in called a \"Drive Down.\" How does this type of staged accident work? 3c. What are the common medical scams? See the links under \"Medical.\" 4. Each year the coalition selects some of the worst cases of insurance fraud for its \"Hall of Shame.\" Which cases made the list last year? See the \"Hall of Shame\" link in the left margin under \"Fraud: Why Worry?\" 5) Chapter 2 Short Answer Can individuals who have a higher-than-average probability of loss be insured without adverse selection occurring? 6) Chapter 2 Short Answer Last night Ken and Ann Johnson's home burned to the ground. They were not insured. Clearly this was a catastrophic loss for the Johnsons; yet one of the characteristics of a privately insurable risk is that losses must not be catastrophic. Explain this apparent contradiction. 7) Chapter 2 Case 2 The Feelings Mutual Insurance Company is considering insuring two risks the company has not previously insured: windstorm and war. Considering the requirements of privately insurable risks, will the Feelings Mutual Insurance Company be able to write insurance for windstorm and war? Explain your answer. Chapter 3 8) Chapter 3 Case Application from textbook a. b. c. d. e. 9) Chapter 3 Web Exercise - Captive Insurance Funding losses when they occur is an important concern for a risk manager. As you learned in Chapter 3, there are several funding alternatives. These alternatives range from pure retention of losses and paying for losses with self-funding, to purchasing insurance and transferring the loss exposure to an insurer that will pay the losses. Another interesting alternative discussed in Chapter 3 is a captive insurance company. A captive insurer is an insurance company established by a parent company for the purpose of insuring the parent company's loss exposures. While many captive insurers are based off-shore (e.g. in the Cayman Unit 1 Insurance Islands or Bermuda), captive insurers may also be formed domestically. As each state regulates insurance within its borders, a state wishing to attract captives can pass favorable legislation. Which state is the most \"captive friendly\"? It's Vermont, by a wide margin. At the end of 2012, Vermont had licensed over 900 captive insurance companies. To learn more about the benefits of captive insurers, types of captives, and why Vermont is a popular captive domicile, visit: http://www.vermontcaptive.com Use the information at this site to answer the following questions. 1. What are the benefits of forming a captive insurance company? (click on the \"Captive Basics\" link at the top of the page, and then \"Why form a Captive\" on the next screen) 2a. Why is Vermont a popular domicile for captives? (click on the \"Why Vermont\" link under \"About Us\") 2b. How many Fortune 100 and Dow 30 companies have a Vermont captive? (see the \"About Us\" link) 3. How has the number of Vermont captives and the premiums written by these captives grown over time? (see \"Captive Statistics\" link under \"Captive Basics\" to see some very interesting charts) 4a. What is the initial licensing fee for a Vermont captive, and what does it cost to renew the license each year? (under the \"Laws & Regulations\" link at the top of the page, click on \"Vermont Captive Fees\") b. What is the premium tax rate for business written by a Vermont captive insurer? 5a. How much surplus and capital are necessary to start a pure captive, an association captive, and a risk retention group in Vermont? (under \"Laws & Regulations,\" click on \"Vermont Laws,\" and then click on the \"Title 8 Vermont Statutes Annotated\" link. See page 3 and page 4 to answer this question and the following question.) 5b. Does the surplus and capital requirement have to be met through cash? Explain. (see Section 6004, part (c)) 10) Chapter 3 Case 2 John is a risk manager for Universal Megatronics (UM). At UM, the Personnel Department is responsible for employee benefits and the Risk Management Department is concerned with property and liability exposures only. Late last year, UM added a new employee benefit, off-site daycare, to UM employees who have children. No one bothered to tell John about this new benefit of its location. Why was John furious when he learned about the existence of the off-site day-care center?