Term
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Definition
| uncertainty concerning the occurrence of a loss |
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Term
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Definition
| any situation or circumstance where loss is possible |
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Term
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Definition
| The relative variation of actual loss from expected loss. For example, assume that a property insurer has 10,000 houses insured over a long period and, on average, 1 percent, or 100 houses, burn each year. If 90 houses burn one year, the objective risk is 10%. |
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Term
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Definition
| As the number of exposures increases, the more closely the actual loss experience will approach the expected loss experience. |
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Term
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Definition
| uncertainty based on a persons mental condition or state of mind. Example: I am drunk and driving home. The chance I might not make it home is subjective risk. |
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Term
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Definition
| Probability an event will occur. |
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Term
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Definition
| Long term relative frequency of an event based on assumptions of an infinite number of observations. |
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Term
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Definition
| Individual's personal estimate of the chance of loss. |
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Term
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Definition
| Cause of loss. Not to be confused with hazard; condition that creates or increases the frequency or severity of loss. |
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Term
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Definition
| Condition that creates or increases the frequency or severity of loss. |
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Term
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Definition
| Physical condition that condition that creates or increases the frequency or severity of loss. |
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Term
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Definition
| Dishonesty or character that creates or increases the frequency or severity of loss. |
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Term
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Definition
| Carelessness or indifference that creates or increases the frequency or severity of loss. |
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Term
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Definition
| that create or increase the frequency or severity of loss. |
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Term
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Definition
| A risk where there is only the chance of loss or no loss. |
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Term
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Definition
| A risk where there is a chance of loss or profit. |
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Term
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Definition
| Risk that affects only individuals or small groups and not the entire economy. |
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Term
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Definition
| A risk that affects the entire economy or a large group. |
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Term
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Definition
| Term that encompasses all risks faced by a business firm. |
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Term
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Definition
| Risk that refers to the uncertainty of loss because of adverse changes in commodity prices, interest rates, value of money, etc... |
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Term
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Definition
| Risks that directly affect an individual |
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Term
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Definition
| Death of a family head with unfulfilled financial obligations. |
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Term
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Definition
| Technique for managing risk. |
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Term
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Definition
| Reduces the probability of loss so that the frequency of loss is reduced. |
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Term
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Definition
| Reduce the severity of a loss after it occurs. Example: fire sprinklers. |
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Term
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Definition
| An individual is consciously aware of the risk and deliberately plans to retain all or part of it. |
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Term
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Definition
| The insured is restored to his or her approximate financial position prior to his or her occurrence of the loss. |
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Term
| Characteristics of an Insurable Risk |
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Definition
| Large number of exposures, accidental and unintentional loss, determinable and measurable loss, not a catastrophic loss, chance of loss must be calculable, economical feasible premium. |
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Term
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Definition
| tendency of persons with higher-than-average chance of loss to seek insurance at standard rates. |
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Term
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Definition
| Government programs financed by taxpayers. Example: social security, workers comp |
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