Principles and Structures of Insurance Companies Quiz

Insurance companies function primarily to mitigate financial losses through policies.

Real estate insurance is not commonly offered by insurance companies compared to other types.

Risk pooling involves combining premiums from many policyholders to cover potential losses.

Peril in insurance refers to the potential cause of loss or damage.

The contract between an insurance company and an individual/entity is termed as a policy.

Underwriting involves assessing risk and determining eligibility for insurance coverage.

A deductible is the amount the insured must pay before the insurance company covers the remaining claim.

Peril refers to the potential cause of loss, like fire or theft, in insurance terms.

Actuaries analyze risk and determine premium rates for insurance policies.

Reinsurance is purchased by insurance companies to reduce their own risk exposure.

Moral hazard is the tendency for individuals to take increased risks when insured.

Subrogation is when insurers take on the legal rights of the insured to seek reimbursement from a third party.

Fiduciary duty in insurance requires agents to prioritize the interests of policyholders.

Loss ratio is utilized to assess the profitability of an insurance company.