Insurance and Risk management questionnaires

1) What is insurance? State nature of insurance?

2) What is insurance amount? Insurance value? Relation between A and
V/
3) What is double insurance? Example of double insurance?
4) What is co- insurance, reinsurance? Give examples?
5) What is insurance premium? What factors affect insurance premium?
6) What is insurer, insured, subject/matter insured?
7) Analyze the principle of utmost good faith? Give example?
8) Explain the following doctrines:
- Misrepresentation
- Concealment
- Warranty
9) Analyze the principle of subrogation? Why is subrogation used?
10) Analyze principle of indemnity? Give example?
11) How is actual cash value calculated? How does the concept of
actual cash value support the principle of indemnity?
12) Analyze the principle of insurable interest? Why is an insurable
interest required in every insurance policy?
13) Analyze the principle of “Insurance is a repayment of a random
loss”? Give example?
14) What is marine insurance? Different types of marine insurance?
15) State different types of risks in marine insurance?
16) State relatively excepted risks and absolutely excepted risks in
marine insurance?
17) Distinguish between particular average and general average?
18) What is partial loss, total loss? Give examples?
19) Distinguish between actual total loss and constructive total
loss? Give examples?
20) What is general average? Characteristics of general average?
21) State the legal system that adjusts general average?
22) State content of general average? What are responsibilities of
related parties in a general average case?
23) What is marine cargo insurance? What is the necessity of
marine cargo insurance?
24) State different types of marine cargo insurance policy?
25) Present legal issues related marine cargo insurance in England
and in Vietnam?
26) State content of insurance clause A, ICC 1982?
27) State content of insurance clause B, ICC 1982?
28) State content of insurance clause C, ICC 1982?
29) Analyze transit clause, ICC 1982? Give example?
30) What are auxiliary risks in marine insurance/
31) State scope of coverage of war risk and SRCC risk, ICC
1982?
32) Analyze “Such proportion of losses sustained by ship
owners as is to be reimbursed by the cargo owners under the
contract of affreightment “Both to blame Collision” clause”? Give
example?
33) What is marine hull insurance? Subject/matter insured in
marine hull insurance?
34) What is the scope of coverage of ITC 1995?
35) Explain responsibility of hull insurer in collision accident? Give
example?
36) Explain responsibility of marine cargo insurer in collision
accident? Give example?
37) What is P& I insurance? History of P&I insurance?
38) State the principle of mutuality in P&I insurance? Give
example?
39) What is scope of coverage of P&I insurance in collision
accident?
40) What is scope of coverage of P& I insurance?

41) Distinguish between objective risk and subjective risk, give

an example?
42) Distinguish between peril and hazard? What is a physical
hazard, a moral hazard, an attitudinal hazard, a legal hazard?
 • Peril: A peril is defined as the cause of the loss. (Examples: property
damage because of fire, windstorm, or lightening, or damage to your
car because of a collision with another vehicle)
• A hazard is a condition that creates or increases the frequency or
severity of loss
– A physical hazard is a physical condition that increases the
frequency or severity of loss (defective lock=> increase chance
of theft, defective wiring a building => increase chance of
fire…)
– Moral hazard is dishonesty or character defects in an
individual that increase the frequency or severity of loss (faking
an accident, submitting a fraudulent claim, murdering the
insured to collect insurance…)
– Attitudinal Hazard (Morale Hazard) is carelessness or
indifference to a loss, which increases the frequency or severity
of a loss
– Legal Hazard refers to characteristics of the legal system or
regulatory environment that increase the frequency or severity
of losses

43) Distinguish between a pure risk and a speculative risk?

Give an example?

A pure risk is a situation in which there are only the possibilities of loss or
no loss (earthquake)=> the only possible outcomes are adverse (loss) or
neutral (no loss).
Example: premature death, job-related accidents, catastrophic medical
expenses, and damage to property from fire, lightning, flood, or earthquake.

A speculative risk is a situation in which either profit or loss is possible

(gambling)
Example: you purchase 100 shares of common stock, you would profit if the
price of the stock increases but would lose if the price declines.

Distinguish:
• Private insurers generally concentrate on insuring certain pure risks.
With certain exceptions (some insurers insure institutional portfolio
investment against loss), private insurers generally do not insure
speculative risks.
• The law of large numbers, which enable insurers to predict future loss
experience, can be applied more easily to pure risks than to
speculative risks
• Society may still benefit from a speculative risk even though a loss
occurs, but it is harmed if a pure risk is present and a loss occurs

44) Distinguish between diversifiable risk and non- diversifiable

risk? Give an example?
• A diversifiable risk (nonsystematic risk or particular risk): affects
only individuals or small groups (car theft) . It can be reduced or
eliminated by diversification.
Example: a diversified portfolio of stocks, bonds, and certificates of
deposit (CDs) is less risky than a portfolio that is 100 percent invested in
stocks => Losses on one type of investment, say stocks, may be offset by
gains from bonds and CDs

• A nondiversifiable risk (fundamental risk) affects the entire

economy or large numbers of persons or groups within the economy
(rapid inflation, cyclical unemployment, war, hurricanes, floods, and
earthquakes). It is a risk that cannot be eliminated or reduced by
diversification. Government assistance may be necessary to insure
nondiversifiable risks (insurance program, government guarantees or
subsidies)

45) What is meaning of risk management?

46) Explain the objectives of risk management both before and after
a loss occurs.
47) Describe the steps in the risk management process.
48) Identify the sources of information that a risk manager can use
to identify loss exposures?
49) What is the difference between the maximum possible loss and
maximum probable loss? Give examples?
50) Explain meaning of risk control?
51) Explain the following risk- control techniques and give
examples:
a. Avoidance
b. Loss prevention
c. Loss reduction
52) Explain the following risk- control techniques and give
examples:
 - Duplication
- Separation
- Diversification
53) Explain the meaning of risk financing?
54) Explain the risk financing techniques and give examples:
- Retention
- Noninsurance transfers
- Insurance
55) What conditions should be fulfilled before retention in used in a
risk management program? Explain?
56) Explain the advantages and disadvantages of using insurance in
a risk management program?
57) Explain the advantages and disadvantages of using retention in
a risk management program?
58) Explain the advantages and disadvantages of using
noninsurance transfer in a risk management program?
59) What are benefits of risk management?
60) What are major advantage and disadvantage of using the
technique of avoidance in a risk management program?
61) Describe different types of pure risk/loss exposures? Give
examples?

Loss Exposure: Any situation or circumstance in which a loss is possible,

regardless of whether a loss occurs
Property loss exposures (bên dưới)
Liability loss exposures (bên dưới)
Business income loss exposures - shut down for some time after a
physical damage loss
Human resources loss exposures – job related injuries
Crime loss exposures - thieves breaking into a firm’s computer system
Employee benefits loss exposures
Foreign loss exposures – act of terrorisms
Market reputation and public image of the company
Failure to comply with government laws and regulations – violation of
safety standards

Pure risk: a situation in which there are only the possibilities of loss or no
loss (earthquake)=> the only possible outcomes are adverse (loss) or neutral
(no loss)
• Personal risks are risks that directly affect an individual or family.
They involve the possibility of a loss or reduction in income, extra
expenses or depletion of financial assets, due to:
– Premature death
– Inadequate retirement income
– Poor health
– Unemployment
• Property risks involve the possibility of losses associated with the
destruction or theft of property (such as damage to buildings, furniture
and office equipment).
The losses may be direct or indirect/consequential. A direct loss is a
financial loss that results from the physical damage, destruction, or theft
of the property, such as fire damage to a home. Whereas, the indirect
ones result indirectly from the occurrence of a direct physical damage or
theft loss (e.g., the additional living expenses after a fire).
• Liability risks involve the possibility of being held legally liable for
bodily injury or property damage to someone else (such as suits for
defective products, pollution, and sexual harassment)