Question II: II. When an insurer is successful in its efforts to select insureds from the better than average class of business it writes, the gain in its competitive position is magnified by this success on its competitors. What is meant by this statement? (10 points) III. A business inadvertently obtains 2 commercial general liability policies from different carriers each in a per occurrence amount of $1,000,000 and an aggregate limit of $2,000,000. The business subsequently suffers a property damage liability claim of $1,500,000 while both policies are in force. Explain how this loss will be adjusted by each carrier. What legal characteristic of an insurance policy requires this result? (15 points) IV. A. Jeff Severino in his presentation discussing the operation of a Lloyds of London syndicate in the cyber liability insurance market essentially stated: "The syndicates involved in a Lloyds of London operation are closely akin to gambling." Viewed from the position of an insured a cyber liability loss would be a pure risk for it but a speculative risk for Lloyds. Is this a logical deduction to make? Why or why not? (10 points) B. Given the relative absence of quantitative loss history in the cyber liability insurance market it nonetheless is thriving and economically viable. Explain to the best of your ability why this is happening noting the essential elements of risk transfer from the insured to the carrier. (10 points) V. As noted in class, workers compensation insurance statutes mandate that employers provide workers compensation benefits to employees. Notwithstanding this mandate, all States have exemptions to the statutory framework as to employees and types of employment that are excluded from workers compensation coverage. If the stated social policy is to provide a source of recovery to individuals for injuries or occupational disease arising in and out of the course of employment what purposes do the exemptions have for employment-based injuries? In your opinion should these exemptions exist? (15 points) VI. Employment Practices Liability Insurance is available to businesses and organizations to provide coverage for claims alleging wrongful employment acts. It is a core business risk that requires loss control measures and, preferably, risk transfer (insurance) as well. Regrettably, many businesses do not purchase Employment Practices Liability Insurance (EPLI). The Commercial General Liability Policy (CGL) excludes employment related activities. What economic justification exists for excluding employment practices liability from the CGL? (15 points) Hint: Focus on the differences in the perils transferred and the insurance industry response created to transfer the risks