Insurance Market Dynamics Quiz

Insurance serves to offer financial protection by covering potential risks and losses.

Auto insurance provides coverage for damages to the policyholder's vehicle in the event of an accident.

Reinsurance is a form of insurance that insurers purchase to protect themselves against large financial losses.

Underwriting involves evaluating risks and determining appropriate premium rates for insurance policies.

Moral hazard refers to the increased risk of loss due to unethical or irresponsible behavior by the insured party.

Term life insurance offers coverage for a specific duration and pays a death benefit if the policyholder passes away during that period.

A captive insurance company is one that is owned and controlled by the entities it insures, providing customized coverage for specific risks.

A rider is an extra provision or coverage added to an insurance policy beyond the standard terms.

A deductible is the initial amount the policyholder must pay out of pocket before the insurance coverage kicks in.

Adverse selection occurs when individuals with higher risks are more likely to seek insurance coverage, leading to imbalances in the risk pool.

The NAIC is the regulatory authority responsible for overseeing and regulating the insurance industry in the United States.

Indemnity in insurance refers to the compensation provided to the insured party to cover financial losses or damages.