CRIS Risk Financing & Insurance Programs Flashcards
6 cards from real CRIS practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CRIS Risk Financing & Insurance Programs flashcards as text
What is the primary purpose of a construction wrap-up insurance program?
Answer: To consolidate coverage for all project participants under a single program, reducing gaps and overlaps
Wrap-up programs centralize insurance purchasing for a project, eliminating coverage gaps, reducing duplicate premiums, and improving claims coordination.
Which coverage is commonly EXCLUDED from most OCIP/CCIP wrap-up programs?
Answer: Professional liability (errors & omissions)
Professional liability is typically excluded from wrap-up programs because design errors are project-specific and require separate, firm-specific E&O policies.
A self-insured retention (SIR) differs from a deductible primarily in that:
Answer: With an SIR the insured defends and pays claims up to the retention amount before insurer involvement; a deductible is reimbursed to the insurer after payment
Under an SIR, the insured handles claims and legal defense within the retained amount independently; the insurer's duty to defend only triggers above the SIR.
Which metric is most commonly used to evaluate the financial performance of a captive insurance company?
Answer: Combined ratio (loss ratio + expense ratio)
The combined ratio measures underwriting profitability; a combined ratio below 100% indicates the captive is paying out less in losses and expenses than it collects in premiums.
Fronting arrangements in captive programs are used primarily to:
Answer: Allow the captive to issue policies through a licensed admitted carrier while retaining the risk
A fronting insurer issues the policy on behalf of the captive in states requiring admitted paper, while the captive assumes the risk through a reinsurance agreement.
In construction risk financing, 'funded reserves' refer to:
Answer: Money set aside in a restricted account to pay anticipated self-insured losses
Funded reserves are liquid assets segregated to cover expected losses under a self-insurance or large-deductible program, ensuring cash is available when claims are paid.