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SECTION C
MULTIPLE-CHOICE QUESTIONS
Multiple Choice Questions Chapter 1
1. The term "hazard" refers to
(a) the same thing as the term peril.
(b) a condition that increases the chance of loss.
(c) uncertainty regarding loss.
(d) the same thing as probability of loss.
2. From the viewpoint of society and the economy, the most desirable means of dealing with risk is
(a) transfer.
(b) retention.
(c) loss prevention.
(d) sharing.
3. Hazards are usually classified into three categories. They are:

(a) perils, risks, and uncertainties.
(b) physical, mental, and moral.
(c) moral, morale, and physical.
(d) personal, property, and liability.
4. To be technically correct, we should define "fire" as

(a) a peril.
(b) a hazard.
(c) a risk.
(d) any of the above is equally correct.
5. Pure risk is characterized by

(a) a chance of loss and a chance of gain.
(b) a chance of loss or no loss only.
(c) the chance of gain or no loss only.
(d) none of the above.
6. The distinction between fundamental and particular risks is important because

(a) normally only particular risks are insurable.
(b) whether a risk is fundamental or particular may determine how society will deal with it.
(c) fundamental risks are a source of gain to society.
7. The possibility of loss resulting from a flood is an example of

(a) a static fundamental risk.
(b) a dynamic fundamental risk.
(c) a static particular risk.
(d) a dynamic particular risk.
8. Unemployment would generally be considered to be

(a) a static fundamental risk.
(b) a dynamic fundamental risk.
(c) a static particular risk.
(d) a dynamic particular risk.
Section C - 2
9. The definition of "risk" suggested in the text views risk as
(a) a condition of the real world.
(b) a state of mind.
(c) subjective uncertainty.
10. A peril, as distinguished from a hazard, is defined as

(a) a condition that increases the likelihood of loss.
(b) the cause of a loss.
(c) the same thing as risk.
11. A business firm with an inventory of obsolete stock and high notes payable might represent
(a) a moral hazard.
(b) a morale hazard.
(c) a legal hazard.
12. Pure risks are generally classified as

(a) physical risks, moral risks, and morale risks.
(b) fundamental risks, dynamic risks, and particular risks.
(c) speculative risks, enterprise risks, and financial risks.
(d) personal risks, property risks, liability risks, and risks arising out of the failure of others.
13. Because she knows she has insurance to cover losses from theft, Jones rarely locks the door to her
house. Her behavior is an example of
(a) moral hazard.
(b) morale hazard.
(c) physical hazard.
14. A fire caused $50,000 damage to Smith’s house, and the family was forced to spent $10,000 to live
in rented housing while it was being repaired. Which of the following best describes Smith’s loss?
(a) direct property loss of $60,000
(b) direct property loss of $50,000, uninsured loss of $10,000
(c) direct property loss of $50,000, indirect property loss of $10,000
(d) direct property loss of $50,000, liability loss of $10,000
Section C - 3
15. In property insurance terminology, all the following are considered hazards except:
(a) a fire which is started in a waste paper basket.
(b) a steam iron left on unattended.
(c) matches left within reach of small children.
(d) oily rags stored near a heater.
16. Pure risk is considered distasteful by most persons because

(a) it can be a source of worry and concern.
(b) there is nothing you can do about it.
(c) most pure risks result in losses.
17. The terrorist attack on the World Trade Center on September 11, 2001 led to a debate over whether
such risks are
(a) dynamic or static.
(b) pure or speculative.
(c) fundamental or particular.
18. The hazard that reflects the tendency in some jurisdictions for judges and juries to favor a plaintiff in
litigation is properly classified as
(a) a moral hazard.
(b) a morale hazard.
(c) a legal hazard.
19. Classify the following as pure or speculative risk:

(1) Change in market price for Farmer Smith’s crops
(2) Change in consumer demand for ABC’s products
(3) Collision damage to Jones’ care
(a) (1) speculative, (2) pure, (3) pure

(b) (1) speculative, (2) speculative, (3) pure
(c) (1) pure, (2) speculative, (3) pure
(d) none of the above
20. According to the FBI, the fastest growing form of white collar crime is.
(a) substance abuse.
(b) arson.
(c) identify theft.
(d) insurance fraud.
Section C - 4
1. Traditional risk management is concerned primarily with
(a) dynamic risks.
(b) pure risks.
(c) fundamental risks.
(d) speculative risks.
2. The evolution of risk management is traceable to

(a) the introduction of decision theory in business college curricula.
(b) systems safety in the aerospace program.
(c) the field of corporate insurance buying.
(d) all of the above.
3. Traditional risk management

(a) is synonymous with corporate insurance buying.
(b) draws on several other disciplines but is a distinct discipline and function.
(c) is somewhat narrower in scope than insurance management.
(d) more than one of the above.
4. The term enterprise risk management refers to

(a) management of risks related to derivatives and futures.
(b) management of financial risks
(c) integrated management of a firm’s pure and speculative risks.
(d) management of risks for profit-making organizations.
5. The risk that a firm’s IT systems will fail is an example of

(a) credit risk.
(b) operational risk.
(c) strategic risk.
(d) compliance risk.
6. Financial risk management encompasses management of

(a) operational risk, strategic risk, and credit risk
(b) credit risk, market risk, and liquidity risk
(c) compliance risk, credit risk, and strategic risk
(d) pure risk, speculative risk, and strategic risk
7. Henri Fayol’s place in the history of risk management arises from

(a) his introduction of the term “risk management.”
(b) his work in the field of systems safety.
(c) his work in the field of operations research.
(d) his recognition of risk management as one of six broad functions of business.
8. Which of the following techniques for dealing with risk may be said to represent a special variation of
other techniques?
(a) reduction.
(b) sharing.
(c) transfer.
(d) retention.
Section C - 5
9. Risk management contributes to organization profit
(a) by reducing the cost of losses.
(b) by allowing the organization to engage in certain speculative risks.
(c) by preserving the organization’s operating effectiveness.
10. Involuntary retention occurs when

(a) the risk is not recognized.
(b) insurance does not cover the intended exposure.
(c) loss control measures are improperly implemented.
11. Risk avoidance should be used in those instances in which

(a) no other alternative is available.
(b) the exposure has catastrophic potential and the risk cannot be reduced or transferred.
(c) when the frequency of loss is low.
(d) when the probability or frequency cannot be determined.
12. As it exists today, risk management represents the merging of the specialties
(a) insurance, actuarial science, and decision theory.
(b) loss prevention, loss control and loss financing.
(c) decision theory, risk financing, and risk control.
(d) Intuitive decisions, conventions, and instinctive reactions.
13. The type of retention that is always undesirable is

(a) unfunded retention.
(b) unintentional retention.
(c) voluntary retention.
(d) all forms of retention are undesirable.
14. The two broad approaches to dealing with risk are

(a) risk retention and risk transfer.
(b) risk avoidance and risk transfer.
(c) risk control and risk financing.
(d) insurance management and risk management.
15. Which of the following statements about risk management is correct?

(a) risk management has relevance for organizations of all sizes.
(b) risk management has an anti-insurance bias and seeks to minimize the use of insurance in
dealing with risk.
(c) risk management is concerned primarily with the risk problems of giant corporations.
(d) risk management is a function of business and as such has little relevance for the individual.
16. The two most important of the pre-loss and post-loss objectives are
(a) meeting social responsibility and meeting external obligations.
(b) continued growth and earning stability.
(c) survival and economy.
(d) earning stability and reduction in anxiety.
Section C - 6
17. The step in the risk management process that is most likely to be overlooked is
(a) determination of objectives.
(b) risk identification.
(c) evaluating risks.
(d) selection of the risk treatment device.
18. The most difficult step in the risk management process is likely to be
(a) determination of objectives.
(b) risk identification.
(c) evaluating risks.
(d) selection of the risk treatment device.
19. A risk management policy statement

(a) provides a framework within which the risk manager may make decisions.
(b) should permit the risk manager some latitude.
(c) should be a product of the board of directors with advice from the risk manager.
20. The ultimate goal of risk management is to

(a) minimize insurance expenditures.
(b) make certain that uninsured losses do not occur.
(c) minimize the adverse effects of losses and uncertainty connected with risks.
(d) eliminate financial loss.
Section C - 7
1. From the insured's perspective, the purchase of insurance is an example of
(a) avoidance.
(b) retention.
(c) transfer.
(d) combination.
2. From the insurer's perspective, the operation of the insurance mechanism is an example of
(a) avoidance.
(b) retention.
(c) transfer.
(d) combination.
3. Although insurance may be defined in various ways, the two fundamental characteristics of the
insurance mechanism are
(a) premiums and policies.
(b) transfer and sharing.
(c) combination and sharing.
(d) loss prevention and transfer.
4. Probability may be defined as

(a) a measure of the likelihood of an occurrence.
(b) a measure of the degree of uncertainty.
(d) the number of losses that occur annually.
(e) all of the above.
5. The four elements of an insurable risk

(a) require that the probability of loss be known.
(b) include the requirement of economic feasibility.
(c) must be present or the exposure cannot be insured.
(d) are desirable, but some insurable risks do not possess them.
6. Property insurance policies typically exclude coverage for losses caused by war. This is because
a) the courts have defined the term war broadly.
(b) losses from war are potentially catastrophic.
(c) insuring war creates an adverse selection problem.
(d) none of the above
7. There are two basic approaches to the interpretation of probability. In insurance we are primarily
concerned with
(a) the subjective interpretation.
(b) the a priori interpretation.
(c) the relative frequency interpretation.
(d) the Bayesian interpretation.
8. According to the law of large numbers, as the number of exposure units is increased
(a) the chance of loss declines.
(b) the chance or probability of loss increases.
(c) the accuracy of predictions should be better.
(d) the accuracy of predictions should remain about the same.
Section C - 8
9. Adverse selection is a term used to describe
(a) the choice of the wrong insurance to fit a specific need.
(b) an underwriting error on the part of an insurance company.
(c) the tendency of the poorer than average risks to seek insurance to a greater extent than do the
better than average risks.
(d) a loss situation in which the chance of loss cannot be determined.
10. An insurer insures 1000 houses, with 10 expected losses and a standard deviation of 2. Other
things being equal, the insurer may be 99% certain that the number of losses will be
(a) 10.
(b) between 7 and 13.
(c) between 4 and 16.
(d) between 0 and 22.
11. Adverse selection

(a) is generally considered to be unavoidable.
(b) affects the accuracy of insurer's predictions.
(c) creates a random pattern of insured exposures.
(d) has little effect on the operation of the insurance mechanism.
12. The combination of a large number of exposure units by an insurer is important for the operation of
insurance because:
(a) it allows the insurer to make accurate predictions.
(b) it spreads losses among the members of the group.
(c) it makes the insurer's aggregate risk less than a summation of the risks of the individuals.
13. The term "self-insurance"

(a) semantically represents a definitional impossibility.
(b) has become a well-established part of insurance terminology.
(c) is a convenient way of distinguishing retention programs that utilize insurance techniques from
those that do not.
14. For the insurance company, a meaningful measure of risk is

(a) the probability that a loss will or will not occur.
(b) the possible deviation of actual from predicted results.
(c) the relationship of premium to average loss.
15. The surety company issuing a bond to a principal

(a) performs what is essentially an insurance function.
(b) promises to indemnify the principal against loss.
(c) is similar in many respects to the co-signer of a note.
16. The three broad general classes into which the types of insurance may be classified are
(a) social insurance, private insurance, and public welfare.
(b) social insurance, private insurance, and public guarantee programs.
(c) social insurance, life insurance, and property and liability insurance.
(d) life insurance, social insurance, and property and casualty insurance.
Section C - 9
17. The type of insurance that is characterized by individual equity and contractual arrangements is
generally referred to as
(a) social insurance.
(b) private insurance.
(c) public guarantee insurance programs.
(d) public welfare insurance.
18. Insurance which is required by law

(a) is classified as a social insurance coverage.
(b) is classified as a compulsory-private insurance coverage.
(c) may be social or private, depending on other characteristics.
(d) is usually classified as a public guarantee program.
19. Social insurance is distinguished from private or voluntary insurance primarily in that social insurance
(a) is provided by the government.
(b) is compulsory.
(c) attempts to redistribute income in favor of certain classes and is usually compulsory.
(d) is financed primarily out of the government's general revenues.
20. The insurance mechanism operated by the Federal Deposit Insurance Corporation
(a) is not really insurance in the true sense of the term.
(b) is a private insurance program sold by a government agency.
(c) is a public guarantee insurance program.
(d) is a social insurance program.
Section C - 10
1. Retention is the most appropriate treatment for a risk in which there is
(a) a low probability and a high potential severity of loss.
(b) a low probability and low potential severity of loss.
(c) a high probability and high potential loss severity.
2. The primary consideration in deciding how to deal with a particular risk is

(a) the potential loss severity and one's ability to bear it.
(b) the probability that the loss will occur.
(c) the expected value of the loss.
(d) the cost of insurance.
3. There are three basic rules of risk management proposed in the text. The first and most important of
these is
(a) insure bigger risks, prevent the smaller ones.
(b) don't risk more than you can afford to lose.
(c) consider the odds.
(d) don't risk a lot for a little.
4. The risks most suited to treatment by insurance are those in which there is
(a) a high probability and a low potential severity.
(b) a low probability and a high potential severity.
(c) a high probability and a high potential severity.
(d) a low probability and a low potential severity.
5. Those risks most suited to treatment by loss prevention are those in which
(a) the probability is low and the potential severity is high.
(b) the probability and severity are both low.
(c) the probability and severity are both high.
(d) the probability is low and the potential severity is moderate.
6. With respect to the purchase of insurance, the rule "consider the odds" suggests that one should
(a) preserve premium dollars for exposures with a high probability of loss.
(b) insure against losses that are most likely to occur.
(c) protect against losses in which the probability is high first.
(d) avoid trading dollars with insurers.
7. The decision to select risk reduction such as loss prevention and control techniques in preference to
some other technique
(a) is usually the cheapest way to deal with risk.
(b) follows the same principles as the choice of other techniques.
(c) is sometimes dictated by consideration other than benefits and costs.
(d) will always be cost-effective in the long run.
Section C - 11
8. A $250,000 building has a .10 probability of being destroyed completely, and there are no partial
losses. The premium to insure the building is $30,000. Complete the decision matrix below to
reflect the cost for each decision under each state. What are the values of X and Y?
State
Decision No Loss Loss
Insure X
Retain Y
(a) X = −$3,000, Y = −$25,000

(b) X = −$30,000, Y = −$250,000
(c) X = −$30,000, Y = −$25,000
(d) None of the above
9. A $250,000 building has a .10 probability of being destroyed completely, and there are no partial
losses. The premium to insure the building is $30,000. Which of the following is true?
(a) The expected cost of retention is $250,000, and the expected cost of insurance is $30,000.
(b) The expected cost of retention is $25,000, and the expected cost of insurance is $30,000.
(c) The expected cost of retention is $25,000, and the expected cost of insurance is $3,000.
(d) None of the above
10. One of the implications of Pascal’s Wager for risk management is that
(a) the probability of an event is the most important factor to be considered.
(b) decisions related to uncertainty require some notion of probability.
(c) the magnitude of the potential loss is an important consideration.
(d) the minimax regret strategy has little, if any, theoretical justification.
11. The expected value strategy is appropriate

(a) when the probability of loss is unknown.
(b) when the potential loss severity is unknown.
(c) when the potential loss is within an acceptable range.
(d) when the potential loss is catastrophic.
12. In selecting an insurer, the major consideration should be

(a) the company's attitude toward claims.
(b) the cost of the company's products.
(c) financial stability.
(d) competence of the company's agents.
13. Risk retention

(a) is often combined with risk transfer and risk control measures.
(b) is often combined with risk avoidance.
(c) is generally the lowest cost approach to dealing with risk.
(d) is generally the highest cost approach to dealing with risk.
Section C - 12
14. The cost of financing risk
(a) is the cost of retained losses.
(b) is the combined cost of retained losses and risk control measures.
(c) is not quantifiable.
(d) is often measured in terms of opportunity cost.
15. The most appealing feature of self-insurance is

(a) the favorable tax treatment of self-insurance reserves.
(b) the potential saving of insurer administrative costs and premium taxes.
(c) the elimination of insurer charges for handling claims.
(d) that fact that losses are decreasing.
16. The type of captive for which the deduction of payments by the parent is most likely to be disallowed
by the Internal Revenue Service is
(a) an association captive.
(b) a trade association insurance company (TAIC).
(c) a pure captive.
(d) a risk retention group.
17. Risk retention groups

(a) are regulated by the federal government.
(b) are subject to the same regulatory standards as other insurers.
(c) are exempt from state regulation.
(d) are not covered by state insolvency funds.
18. Insurance purchasing groups authorized by the Risk Retention Act of 1986
(a) are also referred to as risk retention groups.
(b) are prohibited from operating in states that prohibit group liability insurance.
(c) are risk bearing organizations that purchase insurance for members and also bear part of the
risk of the members.
19. Self-insurance may be cheaper for some organizations than commercial insurance in the long-run
because
(a) self-insurance avoids certain expenses associated with the traditional commercial insurance
market.
(b) the organization’s loss experience may be better than the average experience on which
commercial insurance rates are based.
(c) self-insurers can avoid the “social load” that results from statutory mandates.
20. The most important factors in selecting an insurance company, in order of importance are:
(a) financial stability, treatment of policyholders, and cost.
(b) cost, financial stability, and treatment of policyholders.
(c) agent, cost, and financial stability
(d) treatment of policyholders, cost, and agent.
Section C - 13
1. Lloyd's of London
(a) is the parent company of the so-called American Lloyds.
(b) is a mutual insurance company.
(c) is a capital stock insurance company.
(d) is similar in its operation to the New York Stock Exchange.
2. The type of insurance company in which insureds are also insurers, and in which the members of the
group assume liability for losses individually rather than collectively is
(a) a reciprocal.
(b) a pure assessment mutual.
(c) any mutual insurer.
(d) Lloyd's of London.
3. A major difference between stock and mutual insurers is:

(a) stock insurers are incorporated and mutual insurers are not.
(b) mutual insurers are not taxed, while stock insurers pay tax.
(c) stock insurers are owned by their stockholders, while mutual insurers are owned by their
policyholders.
(d) stock insurers pay dividends to policyholders and mutual insurers do not.
4. The oldest of the modern fields of insurance is probably

(a) fire insurance.
(b) life insurance.
(c) casualty insurance.
(d) marine insurance.
5. The distinguishing features of the reciprocal exchange include

(a) the fact that it is incorporated.
(b) unlimited liability of the members.
(c) the attorney-in-fact.
(d) a higher than average rate for the insurance it sells.
6. A fraternal insurer is
(a) a type of capital stock company.
(b) a type of reciprocal exchange.
(c) a type of mutual insurer.
(d) it may be any of the above.
7. Advisory organizations or rating bureaus

(a) are more common in life insurance than in property and liability insurance.
(b) establish rates to which all member companies must adhere.
(c) were made illegal by the McCarran Ferguson Act.
(d) collect loss statistics from member companies to use in the development of advisory loss costs
or advisory rates.
8. Brokers differ from insurance agents in that

(a) brokers are compensated by their clients on a fee basis, while agents receive a commission
from the company.
(b) brokers are not agents of the company, and therefore cannot bind the company.
(c) brokers operate primarily in the life insurance field, while agents operate in both the life
insurance field and the property and liability field.
(d) agents may bind a company orally, while brokers have the authority to bind only in writing.
Section C - 14
9. The traditional disadvantages of the mutual insurance structure that have become more apparent in
recent years include the fact that
(a) mutual insurers have limited mechanisms for accessing capital.
(b) the structure of mutual insurers is not particularly flexible.
(c) mutuals cannot use stock to acquire other companies.
10. Multiple line operation

(a) has been the dominant form of operation in the American insurance industry since about the
time of the civil war.
(b) involves the combination of property insurance, liability insurance, life insurance, and health
insurance by a single insurance company.
(c) was retarded primarily by the reluctance of insurance companies to engage in such operations.
(d) extends the concept of diversification to the insurance field, permitting the combination of
property and liability insurance by a single company.
11. The distribution system which places great emphasis on the "ownership of renewals" is referred to as
(a) the brokerage system.
(b) the direct writing system.
(c) the captive agent system.
(d) the American Agency or independent agency system.
12. Underwriting syndicates are formed by insurance companies

(a) to deal with large concentrations of value.
(b) to eliminate competition for better classes of business.
(c) to operate as cartels, dividing the market according to a plan.
(d) to provide subsidized insurance to groups of applicants who cannot afford the aggregate losses
of the group.
13. Insurance company “fleets” or groups

(a) collectively write an insignificant share of total premiums in this country.
(b) refer to the ocean marine segment of the insurance market.
(c) may include life insurers and property and liability insurers.
14. Which of the following is not true with respect to the property and liability insurance industry?
(a) there are few barriers to entry by new competitors.
(b) competition has produced changes in market share of competitors over time.
(c) the business is highly cyclical.
(d) profits have consistently been above those in other industries.
15. Price competition in the insurance industry

(a) occurs primarily at the insurer level where prices are set.
(b) occurs at the agency level through the selection of insurers.
(c) is sometimes based on the selectivity an insurer exercises.
(d) All of the above.
16. Except in the states of Illinois and Kentucky, Lloyds of London would be classified as
(a) an admitted foreign company.
(b) an admitted alien company.
(c) a nonadmitted foreign company.
(d) a nonadmitted alien company.
Section C - 15
17. The Illinois Insurance Exchange, now called INEX, operates in much the same manner as
(a) a capital stock insurance company.
(b) a mutual insurance holding company.
(c) a Lloyds association.
(d) a reciprocal exchange.
18. Current federal government insurance programs include all of the following except:
(a) post office insurance
(b) terrorism reinsurance.
(c) riot reinsurance.
(d) flood insurance.
19. The combination of banking and insurance

(a) is proceeding more slowly in other nations than in the U.S.
(b) will require repeal or modification of federal statutes.
(c) while previously prohibited, is now authorized by federal statute.
(d) is accelerating, and banks have acquired many insurance companies.
20. The cyclical nature of the U.S. property and liability insurance industry, in which insurance prices
and the availability of insurance fluctuate over time
(a) is evidence of a conspiracy on the part of insurers.
(b) reflects mismanagement on the part of insurance company executives.
(c) is gradually changing to a more stable market.
(d) is evidence that the industry is highly competitive.
Section C - 16
1. The primary purpose of government regulation of insurance is to
(a) force insurers to compete with one another.
(b) prevent artificially high premiums.
(c) protect the interest of those investing in insurance stocks.
(d) guarantee fair contracts at fair prices from sound insurers.
2. One reason that regulation of insurance is considered necessary is the fact that
(a) there is a lack of competition within the industry.
(b) the consumer cannot always evaluate the product.
(c) there are not enough insurance companies.
(d) the natural tendency of the industry is toward collusion.
3. The South Eastern Underwriters Association case established that

(a) insurance was not interstate commerce.
(b) insurance rates may not discriminate unfairly.
(c) insurance is interstate commerce, and is therefore subject to federal regulation.
(d) the federal anti-trust laws do not apply to insurance.
4. Virtually all states have enacted legislation providing that rates must be
(a) reasonable and adequate.
(b) reasonable, adequate, and not unfairly discriminatory.
(c) approved by the Commissioner before they may be used.
(d) substantiated by statistical data.
5. Which of the following is not a form of solvency regulation?

(a) risk-based capital requirements.
(b) financial reporting requirements.
(c) regulation of reserves.
(d) prohibition of rebating.
6. In most states, the Commissioner of Insurance directly regulates all of the following except
(a) the amount of capital or surplus an insurer must have to operate in the state.
(b) the insurance policy forms used in the state.
(c) the trade practices of any life insurer transacting business in the state.
(d) the rates for each life insurance company.
7. Changes to U.S. solvency regulation as a result of the NAIC’s Solvency Modernization Initiative
include which of the following?
(a) an increased focus on the supervision of insurance groups.
(b) heightened restrictions on non U.S. reinsurers operating in the U.S.
(c) the adoption of Solvency II capital requirements
(d) more than one of the above.
8. The insurance industry is subject to a greater degree of control than are most other industries
because
(a) the industry has been characterized by fraudulent practices in the past to a greater extent than
other industries.
(b) insurance is necessary for the functioning of the economy.
(c) insurance is vested in the public interest.
(d) the industry is oligopolistic.
Section C - 17
9. The NAIC state Financial Regulation Standards Accreditation Program
(a) is a system for interstate licensing of insurance agents.
(b) provides a system of federal standards for state regulation.
(c) requires a state to enact certain model laws developed by the NAIC to receive accreditation.
(d) has met with resistance from the states, and less than half the states have attempted to achieve
accreditation.
10. Public Law 15 (the McCarran-Ferguson Act)

(a) established a federal system of insurance rate regulation.
(b) was declared unconstitutional by Paul vs. Virginia.
(c) was designed to superimpose federal regulation on the state system following the Paul vs.
Virginia decision.
(d) exempted the insurance industry from certain federal anti-trust laws, provided the states do an
adequate job of regulation.
11. Although some states have since changed to other systems, the approach to the regulation of
property and liability insurance rates that was adopted by most states in the late 1940s is:
(a) open competition.
(b) prior approval laws.
(c) state made rates.
(d) file and use laws.
12. The NAIC risk-based capital standards

(a) are essentially identical for life insurance and property and liability insurers.
(b) judge the adequacy of an insurer’s capital based on the specific risks facing that insurer.
(c) provide a basis for determining when additional scrutiny or an insurer is required, but do not
indicate if regulatory intervention is required.
13. Splitting the commission with the buyer on a sale of insurance is known as:
(a) twisting.
(b) binding.
(c) soliciting.
(d) rebating.
14. The goal that insurance be available and affordable to all who need or want it
(a) is a recurring theme in insurer advertising.
(b) is a reasonable objective if the industry truly operates in a competitive market.
(c) is fully consistent with the concept of private enterprise.
15. Which of the following opposes a shift to a system of federal regulation for insurance include
(a) The U.S. Department of Justice.
(b) banks and certain large insurance companies.
(c) advocates of states’ rights.
(d) the American Council of Life Insurers.
Section C - 18
16. Which of the following is not a component of the solvency regulation of insurance companies?
(a) regulation of insurer investments.
(b) laws prohibiting twisting.
(c) periodic financial examinations.
(d) risk-based capital requirements.
17. When insurance is not available at affordable prices for some buyers, the situation may reflect
(a) an income distribution problem.
(b) an exposure with excessive hazards and costs.
(c) unwillingness of insurers to write insurance at a loss.
18. Cross subsidies in the insurance market occur in the case of

(a) shared markets, such as state Automobile Insurance Plans.
(b) government insurance programs.
(c) gender neutral rating.
19. The Dodd-Frank Act

(a) created the Federal Insurance Office to regulate nationally significant insurers.
(b) created the Financial Stability Oversight Council to identify systemically important financial
institutions.
(c) does not affect the insurance industry because it is state regulated.
20. U.S. insurance regulation is influenced by

(a) standards set by the International Association of Insurance Supervisors
(b) the need to cooperate with other regulators in the supervision of internationally active insurance
groups
(c) periodic assessments by the IMF under the Financial Sector Assessment Program.
(d) all of the above
Section C - 19
1. Advisory organizations or rating bureaus
(a) are more common in life insurance than in property and liability insurance.
(b) establish rates to which all member companies must adhere.
(c) were made illegal by the McCarran-Ferguson Act.
(d) collect loss statistics from member companies to use in the development of advisory loss costs
or advisory rates.
2. In those types of insurance in which ratemaking and underwriting are merged into a single process,
the underwriter is likely to use
(a) class rating.
(b) experience rating.
(c) merit rating.
(d) judgment rating.
3. All but which of the following are forms of merit rating?

(a) schedule rating.
(b) class rating.
(c) retrospective rating.
(d) experience rating.
4. An insurer's underwriting policy is generally established by

(a) the desk underwriters.
(b) officers of the company.
(c) the insurance department.
(d) negotiation between the company and its agents.
5. The basic function of underwriting is to

(a) avoid insuring people who are likely to have losses.
(b) to make certain that only very good risks are insured..
(c) limit premiums written to an acceptable level.
(d) avoid adverse selection.
6. Basically, a retrospectively rated insurance program is a

(a) form of class rating.
(b) variation of schedule rating.
(c) cost-plus arrangement in which actual losses determine the final premium.
(d) a variation of experience rating, since past losses determine the current premium.
7. An insurance company might use all but which one of the following as its representative in loss
adjustment?
(a) a staff adjuster.
(b) an independent adjuster.
(c) a public adjuster.
(d) an independent agent.
8. Ratemaking in insurance
(a) is usually done on a cooperative basis in the field of life insurance.
(b) inevitably leads to price-fixing by property and liability insurers.
(c) differs from pricing in other businesses since prices are set before costs are known.
(d) is not subject to governmental control.
Section C - 20
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118.) Meteorism of the hypochondriac region is often mentioned
in the reports of the cases described in the Epidemics.
[474] The author evidently alluded to hepatitis ending in
abscess. This would seem to have been a very common
termination of inflammation of the liver in Greece, as it is often
described in the ancient medical works. See Paulus Ægineta, B.
III., 46, and the authorities quoted there in the Sydenham
Society’s edition.
[475] The paragraph on the prognostics relating to dropsies is
founded in a great measure on the Coacæ Prænotiones, 454.
The ancient writers who treat systematically of dropsy generally
describe four varieties of it, namely, dropsy from disease of the
liver, from disease of the spleen, from fever, and from a sudden
draught of cold water. See De Morbis, and Paulus Ægineta, B.
III., 48, Sydenham Society’s edition.
[476] On this variety I have remarked in the Comment. on
Paulus Ægineta: “Hippocrates refers one species of dropsy to
disease of the parts situated in the loins, by which Galen and
Stephanus agree that he means the jejunum, mesaraic veins, and
kidneys.” (Paulus Ægineta, l. c.) M. Littré accordingly holds it
probable that allusion is made to granular degeneration of the
kidneys, that is to say, to Bright’s disease. (Opera, etc., tom. ii.,
388.)
[477] Dr. Ermerins remarks that the species of dropsy here
described was most probably connected with organic disease of
the parts situated in the abdominal region, arising from
inflammation with which they had been previously attacked.
[478] This paragraph is pretty closely taken from the Coacæ
Prænotiones, 492. A good deal of stress is laid upon the state of
the temperature of the extremities in the reports of the febrile
cases contained in the Epidemics. He announces it as a general
truth that coldness of the extremities in acute diseases is bad.
(Aphor. vii., 1.) Sprengel considers that he has stated this fact in
too general terms, as there are many exceptions to it. (Hist. de la
Méd., tom. i., 317.)
[479] This is taken in part from the Coacæ Prænotiones, 493.
Sprengel finds great fault with Hippocrates for laying it down as a
rule, that in cases of gangrene a black color of the part is less
dangerous than a livid. Dr. Ermerins, however, espouses the side
of Hippocrates, and maintains that our author has acutely pointed
out the difference between gangrene proving critical, and
gangrene connected with weakness of the vital actions in the part.
In the former case the part becomes perfectly black, whereas in
the other it is livid. He mentions that he observed in an hospital at
the same time a case of mortification from cold, and another of
the same from want and congelation; that in the former the part
was black, and the patient recovered; whilst in the other the arms
were livid, and the patient soon died. (Specimen Hist. Med., p.
68.) Stephanus, by the way, gives nearly the same explanation of
this remark. (p. 142.) Perhaps our author had in view the plague
of Athens, in which the disease often terminated favorably in
mortification of the fingers or toes. (Thucyd., ii., 49.)
[480] A considerable portion of the Prognostics from Sleep are
taken from the Coacæ Prænotiones, 497. This part is elegantly
rendered by Celsus: “Ubi nocturna vigilia premitur, etiamsi interdiu
somnus accedit; ex quo tamen pejor est, qui inter quartam horum
et noctem est, quam qui matutino tempore ad quartam.
Pessimum tamen est, si somnus neque noctu, neque interdiu
accedit; id enim fere sine continuo dolore esse non potest.” (ii., 4.)
Stephanus gives a philosophical disquisition on the nature and
causes of sleep. (pp. 142–8.)
[481] This is pretty closely taken from the Coacæ
Prænotiones, 601.
[482] A small part of this is to be found in the Coacæ
Prænotiones, 609.
[483] Part of this is borrowed from the Coacæ Prænotiones,
601.
[484] Strigmentosa: that is to say, resembling the scrapings or
strippings of the bowels.
[485] This in part is borrowed from the Coacæ Prænotiones,
604, 631.
[486] This is pretty closely copied from the Coacæ
Prænotiones, 495.
[487] This is taken from the Coacæ Prænotiones, 281. Several
of the other ancient writers on medicine, both Greek and Arabian,
have treated fully on the characters of the alvine discharges; but,
upon the whole, have not added much to the information
contained in the Coacæ Prænotiones and Prognostics. See the
Commentary on Paulus Ægineta, B. II., 13. Stephanus has
many interesting observations on the prognostics from the urine.
He remarks that the urine is a good index of the condition which
the digestive process is in, and more especially the process of
sanguification. (p. 162.)
[488] This is closely copied from the Coacæ Prænotiones,
575.
[489] According to Stephanus, both the farinaceous and leafy
sediments are the products of a melting of the solid parts, as a
consequence of inflammatory heat. (p. 165.)
[490] A small portion of the above occurs in the Coacæ
Prænotiones, 578.
[491] For part of this our author is indebted to the Coacæ
Prænotiones, 580.
[492] See Coacæ Prænotiones, 582.
[493] This is partly taken from the Coacæ Prænotiones, 577.
[494] Galen, in his Commentary, justly praises Hippocrates for
the acuteness of the remark contained in this sentence, since
both with regard to the urinary and fecal discharges, it must be
highly important to determine whether their characters be
indicative of the condition of the general system, or of the viscus
by which they are secreted. (Opera, v., p. 142; ed. Basil.) The
ancients paid great attention to the characters of the urine in
disease, and their knowledge of the subject will be admitted, even
at the present day, to have been remarkable. The works of some
of the later authorities, particularly of Theophilus and Actuarius,
are well deserving of an attentive perusal. See Paulus Ægineta,
Vol. I., p. 225.
[495] This is partly taken from the Coacæ Prænotiones, 556.
[496] These characters of the sputa are partly borrowed from
the Coacæ Prænotiones, 390, 399.
[497] They are founded on the Coacæ Prænotiones, 390, 391.
[498] This is taken in part from the Coacæ Prænotiones, 302,
304. The succeeding paragraphs on empyema are also partly
derived from the Coacæ Prænotiones, 393, 402, 428. I may be
allowed to remark in this place that modern pathologists are
agreed that abscesses after pneumonia are of rare occurrence; at
the same time, however, purulent infiltration and its natural
consequence, expectoration of pus, are not so very uncommon
results of the disease. True pulmonary abscess or empyema is
commonly occasioned by chronic inflammation. I am inclined to
think that the ancients applied the term also to the cavities in the
lungs produced by the softening of tubercles. It is difficult
otherwise to account for the frequent mention of empyemata in
the works of the ancient authorities on medicine, especially in the
Hippocratic treatises. See De Locis in Homine, p. 415, ed. Foës;
and tom. i., p. 306, ed. Kühn, et alibi. M. Littré makes the
following remarks on the descriptions of empyema which occur in
the Hippocratic treatises: “On remarquera dans le Pronostic, et
cette remarque s’étend à plusieurs autres des écrits
Hippocratiques, qu’une très-large place est faite aux affections de
la poitrine, péripneumonies et pleurésies. Il paraîtrait que, sous le
climat de la Grèce, ces affections ont une grande fréquence, plus
peut-être qu’elles n’en ont même dans notre climat. La
description, fort abrégée il est vraie, qu’en donne Hippocrate, me
porte à penser que, si cette description est exacte, elles ne
suivent pas la même marche que parmi nous. En effet, que sont
ces empyèmes que, suivant Hippocrate, se font jour an dehors
sous forme d’expectoration purulente? On peut croire, que dans
les dénominations d’empyèmes sont compris les épanchements
pleurétiques; mais les épanchements pleurétiques ne se font pas
jour au dehors, ils se guérissent par résorption; alors, que sont
ces empyèmes signalés par Hippocrate, comme terminaison des
péripneumonies, et ces expectorations qui en procurent
l’evacuation? Il m’est impossible de répondre à ces questions:
peut-être des observations faites dans la Grèce même,
permettraient de résoudre la difficulté.” (Œuvres Complets
d’Hippocrate, tom. ii., p. 97.) Perhaps, as I have hinted above, the
most probable answer that could be returned to the questions put
by M. Littré would be, that many of the cases of pneumonia
terminating in empyema, which occur in the Hippocratic treatises,
were what are now described as cases of acute phthisis. See
Louis on Phthisis, ii., 2. In confirmation of my supposition that
many of the cases of empyema described by the ancients were,
in fact, cases of phthisis, I would refer to Paulus Ægineta, B. III.,
32, where it will be seen that the two diseases, phthisis and
empyema, are treated of under the same head. See also the
second book of the Prorrhetics, tom. i., pp. 198–201; ed. Kühn.
M. Littré reverts to this subject in the Argument to the Coacæ
Prænotiones, tom. v., p. 576, where he relates, from two recent
authorities, a case of empyema after pleurisy, and another after
pneumonia, in both of which the pus was evacuated by the
mouth. He also quotes the remark of an English writer, Dr.
Twining, that, in and about Bengal, abscess of the lungs after
pneumonia is by no means very rare. Still M. Littré admits that the
paucity of such cases in modern works must lead to the
conclusion either that Hippocrates had not observed correctly, or
that this termination is more rare now than formerly. I leave the
reader to judge whether my suggestion stated above does not
remove this difficulty.
[499] The observations of Andral have in some measure
confirmed the opinion of Hippocrates and other authors, ancient
and modern, that there are certain days in the duration of the
disease in which there is a greater tendency to amelioration. Of
ninety-three cases, he found twenty-three give way on the
seventh, thirteen on the eleventh, eleven on the fourteenth, and
nine on the twentieth days. The recoveries in the remaining cases
commenced on twelve out of forty-two non-critical days, as many
as eleven being ascribed to the tenth day. Thus the recoveries on
critical days averaged as high as fourteen, while those on non-
critical scarcely exceeded three. (Dr. C. J. B. Williams on
Pneumonia, Cyclop. of Pract. Med., vol. iii., p. 405.) See also
Andral, Clin. Med., c. ii., p. 365.
[500] Stephanus has a lengthened and most important
commentary on this passage, containing an elaborate disquisition
on empyema. (pp. 184–91.)
[501] This is taken pretty closely from the Coacæ
Prænotiones, 395.
[502] A part of this is copied from the Coacæ Prænotiones,
396.
[503] It will be seen in our analysis of several of the
Hippocratic treatises, such as De Affect. Intern., De Morbis, etc.,
that it was the common practice in such cases to evacuate the
matter either by the cautery or the knife. See also Aphorism, vii.,
44.
[504] Part of this is borrowed from the Coacæ Prænotiones,
108.
[505] This is in part derived from the Coacæ Prænotiones,
471. Galen, in his commentary, is at pains to explain that by a
hard bladder Hippocrates means a bladder in a state of
inflammation.
[506] The subject of the critical days is not touched upon in the
Coacæ Prænotiones, so that the contents of this section are
either original or taken from some source with which we are
totally unacquainted. Galen, indeed, does not hesitate to declare
that Hippocrates himself was the first who treated of the critical
days; but whether he had any competent authority for
pronouncing this opinion cannot be satisfactorily determined. The
critical days are incidentally treated of in the Epidemics and
Aphorisms; but, as we have stated in our critique on the
Hippocratic treatises in the Preliminary Discourse, the work “On
Critical Days” is in all probability spurious. The system of the
critical days taught by Hippocrates was adopted by almost all the
ancient authorities, with the exception of Archigenes and his
followers, who, however, were not numerous nor of any great
name, with the exception of Celsus. See the Commentary on
Paulus Ægineta, B. II., 7, Syd. Soc. edition.
[507] The contents of this section are borrowed in a great
measure from the Coacæ Prænotiones, 160. Dr. Ermerins
remarks that the headache here described is probably of a
catarrhal or rheumatic nature. (Specimen Hist. Med. Inaug., etc.,
p. 84.)
[508] This is taken in great measure from the Coacæ
Prænotiones, 189. Galen in his commentary, remarks that
patients die of violent pains of the ear, owing to the brain
sympathizing, which brings on delirium, and sometimes occasions
sudden death. I may be allowed to remark that every experienced
physician must have met with such cases.
[509] A considerable part of this section on ulcerated sore-
throat is extracted from the Coacæ Prænotiones. The present
sentence is from § 276. The medical reader will not fail to remark
that Hippocrates displays a wonderfully accurate acquaintance
with these affections.
[510] This is founded on the contents of the Coacæ
Prænotiones, 363. The disease here described is evidently
angina laryngæa.
[511] This is taken in part from the Coacæ Prænotiones, 364.
As Dr. Ermerins remarks in his note on it, the disease here
described is evidently angina pharyngæa.
[512] This is closely copied from the Coacæ Prænotiones,
365. The danger of erythematous swelling being determined
inwards, is well understood nowadays.
[513] This is taken, with slight alterations, from the Coacæ
Prænotiones, 365, 367. The latter clause is more fully expressed
in the Coacæ Prænotiones than in the Prognostics. “In those
cases in which cynanche is determined to the lungs, some die in
seven days, and some escaping these get into a state of
empyema, unless they have a pituitous expectoration.” This is
evidently a correct description of the disease spreading to the
lungs.
[514] No part of this last clause is to be found in the Coacæ
Prænotiones. The operations of excising and burning the
diseased uvula are minutely described by Paulus Ægineta and
other of the ancient authorities. See Paulus Ægineta, B. VI., 31.
I need scarcely remark that both these operations have been
revived of late years.
[515] This is taken with little variation from the Coacæ
Prænotiones, 146.
[516] A part of what precedes is taken from the Coacæ
Prænotiones, 143; all that follows, with the exception of a short
sentence, is original.
[517] Our author here and elsewhere impresses it upon his
readers that it is from the tout ensemble of the symptoms that a
judgment is to be formed in every case. This is evidently a remark
of the most vital importance in forming a prognosis. Galen’s
observations in the succeeding commentary are very interesting,
and deserve an attentive perusal.
[518] That is to say, the physician ought to get speedily
acquainted with the nature of the epidemics which prevail at every
particular season. I need scarcely remark that this is a subject
which is largely treated of in the works of our English Hippocrates,
Sydenham. Hippocrates himself is very full on this head, more
especially in his Epidemics and Aphorisms, as we shall see
below.
[519] It has excited a great deal of discussion and difference of
opinion to determine what our author means by specifying these
three places; but the explanation given by Galen in his
Commentary seems to me quite satisfactory. According to him,
the meaning of our author is that good and bad symptoms tell the
same in all places, in the hot regions of Libya, the cold of Scythia,
and the temperate of Delos. It is further to be borne in mind that
Odessus in Scythia, and Cyrene in Libya, were the extremities of
the Grecian world, whilst Delos may be regarded as its centre. It
is proper to remark, however, that by the three places mentioned,
Erotian understands the three quarters of the earth—Africa, Asia,
and Europe. See under Λιβύη.
[520] The meaning of this last sentence has been supposed to
be somewhat ambiguous; but to me it appears evidently to be
this, that the rules of prognosis, as laid down above, apply to all
diseases of an acute character, whether their names happen to
be mentioned in the course of this work or not, so that it should
not be considered a defect in the work that any one is omitted.
[521] See Epidem., i., and iii.
[522] Empyema is treated of in the Prognostics, the first book
of Prorrhetics, the Coacæ Prænotiones, and the work De Morbis.
Which of these is here alluded to cannot be determined for
certain; it seems probable, however, that it is to the preceding
book of Prorrhetics.
[523] This important observation is thus rendered by Celsus:
“Quæ in latere linguæ ulcera nascuntur diutissimè durant.
Videndumque est, num contra dens aliquis acutior sit, qui
sanescere sæpe ulcus eo loco non sinit, ideoque limandus est.”
(vi., 12.)
[524] Allusion seems to be made to herpes exedens.
[525] See Paulus Ægineta, B. III., 25.
[526] Foës inclines to think that the proper reading in this
place is νοὔσος φοινικίη, and not φθινικὴ, and that Galen alludes
to this passage in his Exegesis under the former of these terms,
where he says that by φοινικίη νοῡσος was probably meant
elephantiasis. The other reading, however, would seem quite
applicable, for I have known phthisis and leprosy combined in the
same case.
[527] The phrenitis of Sydenham in like manner was an
epidemical fever, and not an idiopathic inflammation of the brain.
See Opera, p. 56; ed. Syd. Soc. That Hippocrates regarded
phrenitis as a variety of causus, attended with determination to
the brain, is obvious from Epidem. i. See Op. Galen., tom. v., p.
371; ed. Basil.
[528] Horace, Serm. i., 2.
[529] One mode of exercise, namely, gestation, is to be
excepted, which had at least one distinguished advocate in
ancient times. Celsus writing of it says, “Asclepiades etiam in
recenti vehementique, præcipueque ardente febre, ad
discutiendam eam, gestatione dixit utendum: sed id pericolose fit;
meliusque quiete ejusmodi impetus sustinetur.” (ii., 15.) A great
modern authority on fever, Dr. R. Jackson, speaks favorably of
this practice, although, as we see, it is so pointedly condemned
by Celsus. Celsus, however, admits of gestation in that species of
remittent fever which was called lethargus. (iii., 20.)
[530] Observ. Med., vi., 3, 4.
[531] The Cnidian Sentences in all probability were the results
of the observations and theories made in the Temple of Health at
Cnidos. We may reasonably conclude from what we know of
them, that, like the Coacæ Prænotiones at Cos, the Cnidian
Sentences at Cnidos were looked up to in the time of Hippocrates
as the great guides to medical practice. How much, then, it is to
be regretted that they have not come down to us like the other! It
is clear, however, from Galen’s Commentary, that the work was
extant in his time, and from it, as will be seen, we are enabled to
draw a few particulars respecting the theoretical and practical
views of the Cnidians. Le Clerc considers it likely that Euryphon
was the author of the Cnidian Sentences (Hist. Phys., i., 3, 30);
but it is evident, from the terms in which Hippocrates refers to
them, that they were not the work of a single author. He makes
mention, it will be remarked, of more than one person being
concerned in remodelling them.
[532] By this our author means that the Cnidians neglected
Prorrhetics and Prognostics. This must be obvious to every
person who had entered properly into the spirit of the Hippocratic
system of medicine.
[533] The text of this sentence is in a very unsatisfactory state,
and much difference of opinion has prevailed respecting the
meaning. See the annotations of Littré, and the remarks of Galen,
as quoted in the Argument.
[534] Galen, in his Commentary, mentions that the Cnidians
described seven species of diseased bile, and twelve diseases of
the bladder; and, again, four diseases of the kidneys; and,
moreover, four species of strangury, four species of tetanus, and
four of jaundice; and, again, three species of phthisis. Galen,
having made this statement, remarks that they looked to the
peculiarities of the body, instead of regarding the identity of the
diatheses, as was done by Hippocrates. In other words, they split
diseases into endless varieties, instead of attending to the
essence or general nature of each. The system of Hippocrates,
then, was founded on a rational prognosis, whereas that of the
Cnidians was founded on mistaken principles of diagnosis. The
principles of the Hippocratic system are admirably explained and
developed in Galen’s great work On the Method of Cure, or
Therapeutics.
[535] Galen, in his Commentary on this passage, states that
when a disease of a mild character prevailed generally, it was
called an epidemic; and when of a malignant nature, it was called
the plague. (See further Paulus Ægineta, Book II., 36, Syd. Soc.
edition.) It will be remarked that I have included the word (not) in
brackets. This I have done because not only the reading, as given
in the common editions of Galen, is in its favor, but because the
sense appears to me to require it. Surely when diseases are of an
epidemic character they are similar; but when they are sporadic,
they are not similar. M. Littré, however, rejects it altogether.
[536] The question here mooted is certainly one of the most
important that can well be entertained, namely, whether or not a
certain portion of nutriment ought to be given to persons laboring
under fever. It would appear, from what is stated by Galen upon
the authority of Erasistratus, that the most diametrically opposite
modes of practice had been followed by different individuals—that
some had starved their patients altogether for a considerable
time; whereas, on the other hand, a physician of the name of
Petronas allowed his patients flesh and wine. Our author, it will be
remarked, does not allude to these extreme modes of practice in
this place, but enters at great length into the question whether or
not unstrained ptisan (or barley gruel) should be administered in
fevers, and, if so, under what circumstances.
[537] Galen, in his Commentary, has some very interesting
remarks on the differences of opinion among the diviners. This, in
fact, may well be supposed, since, as will now be pretty generally
acknowledged, the whole art was founded upon conjecture and
deception. The comparison of medicine to divination is therefore
very discreditable to the former.
[538] Our author now enters upon the consideration of one of
his principal objects in the present work, namely, to describe the
modes of preparing ptisan (or the decoction of barley), and its
uses in acute diseases. He is so full on this subject that the
present treatise is quoted by Athenæus (Deipnos. ii., 16), by the
name of the work On the Ptisan. Galen states that, on the
principle that diseases are to be cured by their contraries, as the
essence of a febrile disease is combined of heat and dryness, the
indication of cure is to use means of a cooling and moistening
nature, and that the ptisan fulfils both these objects. I may be
allowed to remark in this place, that probably there is not a more
important rule in the whole practice of medicine than this, that
fevers are to be treated by things of a cooling and diluent nature. I
may mention further regarding the ptisan of the ancients, that it
would appear to have been very little different from the decoction
of barley, as now in use; that is to say, it was prepared from pearl-
barley roughly pounded and boiled for a time in water. As will be
seen by the text, it was given to the sick either strained or entire,
according to circumstances. A similar decoction was prepared
from wheat, and was called πτιαάνη πυρίνη. See Galen (De
Aliment., i.) The simple term ptisan, however, is always to be
understood as applying to the decoction of barley.
[539] Galen gives the following illustration of what is meant by
a disease of a peculiarly dry nature. In pneumonia, pleurisy, and
in all the affections about the lungs and trachea, the disease is
held to be of a dry nature when there is no expectoration from the
parts affected; and in any complaints about the liver, the
mesentery, the stomach, the small or great intestines, or spleen,
when the belly is either entirely constipated, or when the
discharges brought away by artificial means are dry and
scybalous; and diseases of the arteries and veins are known to
be dry by the dryness of the tongue, and the parched appearance
of the whole body. In the same manner external ulcers are
accounted dry when there is no discharge from them. And
ophthalmies are held to be dry when there is no discharge from
the eyes or nose. And, in short, all diseases are recognized as
being dry which are not attended with any discharge.
[540] It is curious to remark that a double charge was founded
against our author on the ground of his treatment of febrile cases,
as here laid down. The followers of Thessalus held that he gorged
his patients with too much food, whereas Erasistratus and his
followers held that he starved them. Galen, on the other hand,
contends that the practice of Hippocrates is the juste milieu
between these two extremes. (Opera, tom. v., p. 47; ed. Basil.)
[541] This sentence shows that Hippocrates understood
thoroughly the proper treatment of pleurisy. When the disease did
not yield to fomentations, but the pain continued, either a vein
was opened or the bowels moved; for without first using these
means, it was reckoned fatal practice to administer ptisan. Galen
relates that it was also considered an unsafe practice to give
opium, mandragora, or hyoscyamus for the purpose of alleviating
the pain, instead of having recourse to venesection or purging for
the removal of it. This is a practical remark well deserving of the
most serious consideration.
[542] How briefly, and yet how graphically, our author has
described the termination of pleurisy! It is singular that no
succeeding author has written so learnedly of râles in affections of
the breast as Hippocrates, down at least to the time of Laennec,
who repeatedly acknowledges his obligations to our author.
[543] I need scarcely remark that the seasonable
administration of drink, and especially of water, is one of the most
important points connected with the treatment of febrile diseases.
This is so much the case that, as Galen remarks in his
Commentary on this passage, fevers may often be extinguished
at once by a large quantity of water given in due season. This
subject is fully treated of by him in his Methodus Medendi.
[544] The professional reader will not fail to remark, what is
pointed out in strong language by Galen, how judiciously our
author commences with the most gentle means, and gradually
rises to the most powerful and dangerous; namely, bleeding and
the administration of drastic purgatives. One cannot help being
further struck with the rich supply of information which he has on
the simple subject of fomentations.
[545] By livid (πέλιον) is here meant the colour intermediate
between red and black. See Galen, h. 1.
[546] Probably the Helleborus niger. See Paulus Ægineta,
Vol. III., p. 108.
[547] The Euphorbia peplus. See Ibid., Vol. III., p. 294.
[548] Probably the Seseli tortuosum. See Ibid., Vol. III., p. 330;
and Dierbach, Arzn. der Hipp. p. 186.
[549] A species of asafœtida, probably the Laserpetium
derias. Paulus Ægineta, Vol. III., p. 339.
[550] It is worthy of remark, that our author directs aromatics
to be mixed with the purgatives. The reason for prescribing them,
as Galen states, was to counteract the bad effects of the
purgatives upon the stomach. The ancients, in my opinion, acted
much more wisely in this respect than the moderns generally do,
for the latter are constantly administering the most nauseous
cathartics to their patients without taking any pains to obviate their
bad effects upon the stomach. On the ancient modes of
administering purgatives, see Paulus Ægineta, B. VII., 4.
[551] Galen, in his Commentary, remarks that the common
herd of physicians followed the very opposite rule to that here laid
down by Hippocrates, that is to say, they administered food
copiously after evacuations. According to Galen, the object of
Hippocrates in proscribing food of all descriptions at that season
is, because the powers of the system, being then weakened, are
unable either to bear food or to digest it.
[552] See Celsus, I., 3.
[553] The cyceon was a mixture of various articles of food, but
generally contained cheese, honey, and wine. See Athenæus
(Deipnos, ii.). It is described by Homer as the potion which Circe
administered to the followers of Ulysses. (Odyss. x., 235). There
is frequent mention of it in the Hippocratic treatises, as at De
Diæta, ii.; de Muliebribus, ii.; and in the works of the other medical
authors.
[554] The meaning here is somewhat obscure, but appears to
be this: that if a patient fast for the first two or three days, and
take food of a heavy nature on the fourth or fifth, he will be much
injured, but that the mistake will be still more fatal if the fast be
continued for the first four or five days, and if he then indulge
freely in food at the end of these.
[555] There is considerable difficulty as to the text at this
place. See Foës in his Annotations and Œconomica, and a very
lengthy note by Littré.
[556] The preternatural mode of respiration here described is
several times adverted to by Galen, as at De Dyspnœa, iii.;
Comment. in Aphor., iv., 68; and Comment. in h. 1. Galen seems
to understand the meaning to be, that the breathing is intercepted
in the inspiration. I should have rather been disposed to think that
it is the expiration which is said to be interrupted. But I suppose
we must bow to so great an authority as Galen! I may mention, by
the way, that his Commentary on this and the collateral passages
of our author is most interesting; but, as usual, too diffuse for my
narrow limits. It relates to a most important point in medical
practice, on which great ignorance and uncertainty prevail among
us, even at the present day.
[557] Galen finds the language in this last sentence so
confused, that he does not hesitate to declare that he is
convinced the work must have been left by Hippocrates in an
unfinished state, and not published until after his death. He
decides that ἐφθότης signifies a heated state connected with
humors, and not with dryness; that is to say, a condition
analogous to boiling, and not to roasting.
[558] Galen, in his elaborate Commentary on this section,
complains that our author’s account of wines is imperfect,
inasmuch as several varieties are omitted; at the same time it
must be admitted that his observations on this head are very
much to the purpose, and highly judicious. For the other ancient
authorities on this subject, see Paulus Ægineta, Book I., 95,
Syd. Soc. edit.
[559] I need scarcely mention that hydromel was a drink
prepared by boiling honey in a large proportion of water. It was of
different degrees of strength; sometimes there were only two
parts of water to one of honey, and at other times from seven to
eight parts were used See Paulus Ægineta, Book I., 96, Syd.
Soc. edit.
[560] Galen, in explanation, mentions that hydromel is of a
detergent nature; and hence it clears out the air-passages, and
thus promotes expectoration. When the sputa are thick and
viscid, it cuts and attenuates them. (Opera, tom. v., pp. 75, 76; ed.
Basil.)
[561] Although, as we have shown in our analysis of the
treatise on the Use of Liquids, Hippocrates and his followers were
sufficiently liberal in the administration of water on proper
occasions, it will be seen from the contents of this section that our
author was by no means disposed to give water freely in febrile
diseases, nor in affections of the chest. Whatever may now be
thought of his observations on this point of practice, all must
admit that they are deserving of high attention. Galen’s
Commentary is also very interesting. It appears from it that he
disapproved of giving water alone, but always added a small
proportion of wine to it in order to give it a flavour. That the
quantity of wine which was added to the water must have been
small, is obvious from an anecdote which he relates in this place.
He says that a certain physician, who saw the insignificant
amount of the wine which was put into the water, said, bantering
him, “Your patient will have the pleasure of seeing the wine
indeed, but will not be able to taste it.” Galen, however, contends
that, although the quantity thus added be small, it is sufficient to
act as a stomachic, and to obviate the bad effects which the water
would otherwise produce. (Opera, tom. v., p. 83; ed. Basil.) It will
be perceived from the context, that Hippocrates intended to give a
separate treatise on each particular disease, not considering the
present work on general therapeutics sufficiently explicit, as
Galen remarks.
[562] The smegma was an abstergent composition used by
the ancients in bathing for the purpose of cleansing the skin. For
a full account of the smegmata, see Paulus Ægineta, Vol. III.,
pp. 536–41.
[563] Galen, in his Commentary, remarks that the physicians
usually did not put their patients into the baths, but made use of
the douche, or affusion of hot water. He adds, that persons in
good health may leave the hot bath and plunge into the cold, but
that this practice is not safe in the case of invalids. He
recommends, then, that there should be at hand a good supply of
baths of various temperatures, so that the patient may gradually
pass from one of a high to others of a low temperature. By the
way, I have often wondered that Dr. Currie, who certainly had no
inconsiderable pretensions to classical scholarship, should have
been so profoundly ignorant as he appears to have been of the
use of the warm affusion by Hippocrates and Galen in the
treatment of febrile diseases. His rival, Dr. Jackson, had a much
more respectable acquaintance with the ancient authorities on
medicine; and I have often thought it was to be regretted that the
profession at that period, in giving a trial to the affusion of cold
and hot water in fever, put itself under the leadership of Currie
instead of Jackson.
[564] Dr. Tweedie’s observations agree so well with those of
Hippocrates, that I will give the reader an opportunity of
comparing them together. “This organ (the stomach), in
convalescence, partakes of the external or muscular debility, and
the convalescent may as well expect to be able to carry a heavy
load on his shoulders as to digest an undue quantity of food, even
of a suitable kind.” (p. 215.)
[565] The directions given by that excellent authority
Alexander Trallian, for the regulation of the regimen in phrenitis,
are to the same effect. Wine is to be given when there is much
insomnolency, when the strength is reduced, when the fever is no
longer strong and ardent, and when concoction appears already
in the urine. The author makes the acute remark, that the remedy
is attended with certain evil consequences, but that it is the part of
a prudent physician to balance the good and bad effects, and
administer the article in question when the good preponderate. (i.,
13.)
[566] This can scarcely be supposed anything else than a
wilful misrepresentation of our author’s rule of practice in this
case. See the fourth section of the preceding part.
[567] The causes of ardent fever of the ancients was
decidedly the same as the bilious remittent fever of modern
authors. See Paulus Ægineta, Vol. I., p. 262. We shall find many
cases of it related in the Epidemics. In fact the causus is the
ordinary fever of Greece and other countries bordering upon the
Mediterranean. Galen, in his Commentary on this section,
mentions that he had known it generally superinduced by drinking
wine after great fatigue in summer. There can be no doubt that
this was the fever of which Alexander the Great died. The
description of the disease in his case, as given by Arrian from the
Royal Journals (βασίλειοι ἑφημερίδες), has so much the air of
truth, and withal appears to me so interesting, that I shall be
excused introducing it in this place. “And the Royal Journals ran
thus: that he drank at a jollification in the house of Medius; then
rising up and being bathed, slept, and again supped with Medius,
and again drank until the night was far advanced; that giving over
drinking he bathed; and having bathed, ate a little, and slept
there, because he was already feverish; that being carried on a
little to the sacrifices, he performed them according to his daily
practice; that the sacrifices being performed, he reclined in the
dining-room (ἀνδρὼν) until the dusk of evening, and there gave
orders to the commander respecting the march and voyage, that
those who had to proceed on foot should be prepared for
marching on the fourth day, and those who were to sail on the
fifth; that he was carried hence upon a couch to the river, and
being placed in a boat was taken across the river to the garden,
and then being again bathed, that he rested. Next day, that he
again was bathed and performed the appointed sacrifices; and
going into a chamber, that he reclined and conversed with
Medius, and gave orders to the commanders to meet him in the
morning. That having done these things, he took a little supper;
and having been carried back to the chamber, that he was in a
continued state of fever during the whole night; that next day he
bathed, and after the bath performed the sacrifices; that he gave
orders to Nearchus and the other commanders respecting the
voyage, that it should take place on the third day; that next day he
bathed again, and performed the appointed sacrifices; that the
religious rites being over, he did not cease to be feverish, but that
calling the commanders he gave orders for having every thing in
readiness for the voyage; that he was bathed next day, and being
bathed was already in a bad state. That next day being carried to
the house adjoining the bath, he performed the appointed
sacrifices; that he was in a bad state, but yet that he called to him
the chiefs of his commanders, and again gave orders respecting
the voyage; that the following day he was carried with difficulty to
the religious rites and sacrificed, and that notwithstanding he
gave orders to the commanders respecting the voyage. That next
day, although already in a bad state, he performed the appointed
sacrifices; that he gave orders that the commanders should watch
in the saloon, and the chiliarchs and pentacosiarchs before the
doors; and that being altogether now in a bad state, he was
carried from the garden to the palace. That when the
commanders came in he recognized them, but did not speak,
being now speechless; that he was in a bad state of fever during
that night and day, and during another night and day. Thus it is
written in the Royal Journals.” Thus far the report is no doubt to
be strictly depended upon; the historical embellishments added to
it from other sources can have no interest to the professional
reader. (Appiani Exped. Alexandr., vii., 37.) It deserves to be
remarked, as a remarkable feature in this case, that the mind
appears to have been pretty entire during the whole course of the
fever. Now, this is one of the characteristics of causus as
described by Aretæus (Morb. Acut., ii., 4). It is further one of the
most marked features of the yellow fever, which, from all I can
learn of it, would appear decidedly to be an aggravated form of
causus.
[568] Galen admits that he did not understand the exact import
of this term.
[569] This is a general rule of such importance that Galen
wonders our author did not embody it in one of his Aphorisms.
Galen’s observations on venesection in this commentary, and in
his two treatises on this subject, are highly important. It will be
remarked that three circumstances are held to form indications of
the necessity for bleeding: first, if the disease be of a strong
nature; second, if the patient be in the vigor of life; and, third, if his
strength be entire.
[570] This section, as Galen remarks, contains a list of the
principal cases in which venesection is to be had recourse to.
[571] I need scarcely point out to the professional reader that
these symptoms are very descriptive of congestion in the brain,
threatening an attack either of apoplexy or epilepsy. See the
treatise on the Sacred Disease.
[572] Meaning apparently the great vessels. See Galen’s
Commentary.
[573] The description here given of cynanche, more especially
of the variety in which the ulceration spreads down to the trachea
and produces engorgement of the lungs, is most characteristic,
and bespeaks a great practical acquaintance with the disease.
Judged of in a becoming spirit of candor, it must be admitted that
even at the present day we have scarcely made any
advancement in our knowledge of this subject. What are our
descriptions of ulcerous sore-throat, diptherite, œdema glottidis,
croup, and laryngismus stridulus, but reproductions in a divided
and (may I be allowed to suggest?) a less accurate form, of the
general views here presented by our author? For an abstract of
the views of the other ancient authorities in medicine, see Paulus
Ægineta, Book III., 27. Aretæus deserves particularly to be
consulted (Morb. Acut., i., 7). It will be remarked that our author
speaks of a spontaneous determination to the skin, as being
calculated to remove the urgent symptoms within. Galen, in
commenting upon this clause, states that some physicians were
in the practice of applying to the skin certain medicines
possessed of ulcerative powers, in order to determine to the
surface, and thus imitate Nature’s mode of cure.
[574] Though the contents of this section are by no means
devoid of interest, it must be obvious to the reader that the
observations on causus are out of place here. See the
Commentary of Galen.
[575] I would beg leave to direct the attention of the medical
reader to the observations of our author in this and many other
places on the characters of the urine in fevers. That in febrile
diseases the sediment is wanting previous to the crisis, and that
at and after the crisis, when favorable, the sediment becomes
remarkably copious, I believe to be certain facts; and yet I
question if, with all our boasted improvements in urology, they be
generally known and attended to. I have called attention in the
Argument to the important rule of practice which our author
founds on the state of the urine at the crisis.
[576] He means by this, that the disease is not of an
intermittent type.
[577] This seems the most appropriate meaning in this place,
but the passage may also signify “a state of great emphysema or
meteorism.” See Galen.
[578] It is impossible not to recognize here a brief sketch of
delirium tremens. The trembling hands from drinking, with the
subsequent delirium, can leave no doubts on the subject. See
further Littré, tom. ii., p. 382.
[579] The fruit of the pinus pinaster. See Paulus Ægineta,
Vol. III., p. 301.
[580] It will be remarked, that in this place the author directs
that the bleeding should be carried to a greater extent than in the
former part of this treatise. In general, the ancient authorities
forbade the abstraction of blood until it induced lipothymia. This is
decidedly the rule of practice laid down by Aretæus (De Curat.
Morb. Acut., ii., 1).
[581] Galen, in his Commentary, remarks that this account of
dysentery is vague, the species of dysentery here alluded to not
being properly defined.
[582] This case is vague and undefined. I suppose the author
alludes to opisthotonos in this sentence, and to emprosthotonos
in the succeeding part of this section.
[583] Bryonia dioica. See Dierbach, etc., p. 131.
[584] Galen, in his Commentary, remarks that the modes of
solution in fevers are not completely given in this place; for
example, our author omits those by the uterus and the nose.
[585] The text is in a very unsettled state.
[586] The substance of this section occurs in the preceding
part of this work, which certainly amounts to a strong presumption
that the present treatise is not genuine. Very similar views are
also laid down in the treatise On Ancient Medicine.
[587] On the Dietetics of the ancients, see the Commentary on
Paulus Æginata, Vol. I., pp. 106–86.
[588] By dry cholera would seem to be meant flatulent colic.
See Galen’s Commentary. It is also described below, and further
with great accuracy by Alexander Trallian (vii., 16).
[589] Galen, in his Commentary on this section, finds many
things imperfectly stated, and therefore unworthy of his great
author. For example, he remarks, only two varieties of dropsy are
mentioned, namely, anasarca and tympanites; whereas there are
three at least, and some even describe four varieties. By the three
kinds of dropsy, Galen and the other ancient authorities meant
anasarca, ascites, and tympanitis. (See Paulus Ægineta, Book
III., 48). That tympanites should have been ranked with dropsy
need excite no wonder, when we consider the resemblance of this
affection to ascites. In fact I have known cases of tympanites in
which paracentesis was performed by inexperienced surgeons
under the impression that they were cases of ascites. See some
elaborate annotations on this head by Ermerins (Specimen Hist.
Med., p. 125), and by Littré (Op. Hippocrat., tom. iv., p. 415). With
regard to venesection in dropsy, Galen remarks that the rule of
practice is not laid down here with sufficient precision; it is only
when the dropsy is connected with the suppression of the
hemorrhoidal or menstrual discharge, or when the patient is in a
plethoric state, that blood can be abstracted with advantage. He
also finds fault with the directions for the subsequent treatment,
as not being accurately given. He justly remarks, that none but
persons in the vigor of life and in good health would be able to
digest dark-colored wine and pork after venesection. I may
mention further that the text is faulty, that the words ἐγχειρέων
γίνεσθαι ἄφυκτος should have been written ἀποκτέινει δ’ ἐυθὺς ὁ
ὔδερος ἐφὴν γένηται. He attributes the mistake to the first
amanuensis who wrote the words in question.
[590] In reference to this practice Horace says:
“Si noles sanus curres hydropicus.” (Serm. I., 1.)

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Auditing A Risk Based Approach 11th Edition Johnstone

3. Hazards are usually classified into three categories. They are:

4. To be technically correct, we should define "fire" as

5. Pure risk is characterized by

6. The distinction between fundamental and particular risks is important because

7. The possibility of loss resulting from a flood is an example of

8. Unemployment would generally be considered to be

10. A peril, as distinguished from a hazard, is defined as

12. Pure risks are generally classified as

16. Pure risk is considered distasteful by most persons because

19. Classify the following as pure or speculative risk:

(2) Change in consumer demand for ABC’s products

(3) Collision damage to Jones’ care

(a) (1) speculative, (2) pure, (3) pure

2. The evolution of risk management is traceable to

3. Traditional risk management

4. The term enterprise risk management refers to

5. The risk that a firm’s IT systems will fail is an example of

6. Financial risk management encompasses management of

7. Henri Fayol’s place in the history of risk management arises from

10. Involuntary retention occurs when

11. Risk avoidance should be used in those instances in which

13. The type of retention that is always undesirable is

14. The two broad approaches to dealing with risk are

15. Which of the following statements about risk management is correct?

19. A risk management policy statement

20. The ultimate goal of risk management is to

4. Probability may be defined as

5. The four elements of an insurable risk

11. Adverse selection

13. The term "self-insurance"

14. For the insurance company, a meaningful measure of risk is

15. The surety company issuing a bond to a principal

18. Insurance which is required by law

2. The primary consideration in deciding how to deal with a particular risk is

Decision No Loss Loss

(a) X = −$3,000, Y = −$25,000

11. The expected value strategy is appropriate

12. In selecting an insurer, the major consideration should be

13. Risk retention

15. The most appealing feature of self-insurance is

17. Risk retention groups

3. A major difference between stock and mutual insurers is:

4. The oldest of the modern fields of insurance is probably

5. The distinguishing features of the reciprocal exchange include

7. Advisory organizations or rating bureaus

8. Brokers differ from insurance agents in that

10. Multiple line operation

12. Underwriting syndicates are formed by insurance companies

13. Insurance company “fleets” or groups

15. Price competition in the insurance industry

19. The combination of banking and insurance

3. The South Eastern Underwriters Association case established that

5. Which of the following is not a form of solvency regulation?

10. Public Law 15 (the McCarran-Ferguson Act)