ENT200 Chap 3

Insurance is an agreement whereby a group of individuals facing similar risk can share the fortuitous of the unlucky few by transferring such risks to the insurer who agrees to compensate the losses.

• TRUE

• FALSE

The operation of Common Pool in insurance are below except for:

• Premium

• Authentic

• Loss

• Common fund

Which one is the common pool mechanism ?

i) insurance uses a common pool concept

ii) an insurance company set itself up to operate the pool

iii) it takes contributions, in the form of insurance premium , from the many insured and pays for the losses of a few

iv) insurance uses a payback concepts

• I, II, III

• I, II, IV

• I, III, IV

• All above

Amount of a loss can be measured before it takes place by using :

• Premium

• Loss

• Authentic

• Common pool

This are concept of Common pool except for :

• Creation of the common pool

• Equitables premium

• Law of large numbers

• Refundable premium

Which one are characteristics of insurable risk ?

i. public policy

ii. pure risks

iii. particular risks

iv. financial need

• I, III, IV

• I, II, III

• I, II, IV

• II, III, IV

7. Insurance is concerned with pure risk because most of pure risks are easily predictable.

• TRUE

• FALSE

Functions of insurance are :

i. primary function

ii. secondary functions

iii. direct functions

iv. indect functions

• I, III, IV

• I, II, III

• II, III, IV

• I, II, IV

Insured are pooled together to ?

• Pay for losses suffered by a few.

• Pay for damages

• Pay for others mistakes

• Pay for future incidents

Under the creation of the common pool, when was the merchant knew his or her loss would be?

• He/she only know after a voyage

• He/she only know the day after

• He/she only know a week sfter been informed

• He/she only know a month after the loss