CRM Insurance and Financial Risk Flashcards
6 cards from real CRM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CRM Insurance and Financial Risk flashcards as text
What does 'loss frequency' refer to in insurance and risk management?
Answer: How often losses occur within a given period
Loss frequency measures how often loss events occur, which helps predict future losses and set appropriate premiums.
Large deductible programs in risk financing primarily benefit organizations by:
Answer: Allowing cash flow advantages by retaining smaller losses internally
Large deductible programs allow organizations to retain and internally fund smaller losses while gaining premium savings and cash flow benefits.
What is a 'captive insurance company'?
Answer: A company formed by an organization to insure its own risks
A captive is an insurance subsidiary created and owned by an organization to provide coverage for its parent company's risks.
What is 'loss development' in actuarial terms?
Answer: The change in claim reserves as losses mature over time
Loss development refers to how incurred losses change as claims are investigated and settled over time.
Which financial risk metric measures potential portfolio loss over a defined period at a given confidence interval?
Answer: Value at Risk (VaR)
Value at Risk (VaR) quantifies the maximum expected loss over a specific time period at a given confidence level such as 95% or 99%.
What is 'moral hazard' in insurance?
Answer: The tendency of insured parties to take greater risks because losses are covered
Moral hazard occurs when insurance coverage reduces an insured's incentive to prevent losses or act carefully.