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Exam 24: Managing Risk

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Question 1

True/False

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Insurance companies make predictions such as how recent health trends will affect the number of heart attacks that men in the United States over the age of 45 will suffer.

A) True
B) False

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Question 2

Multiple Choice

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A ________ insurance company is owned by stockholders,just like any other investor-owned company.A ________ insurance company is owned by its policyholders.

A) stock;mutual
B) corporate;stock
C) stock;corporate
D) mutual;limited liability

E) B) and C)
F) A) and D)

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Question 3

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The National Highway Traffic Safety Administration NHTSA) provides consumers with recall notices for all makes and models of cars,trucks,motorcycle,and even school buses.In terms of risk management,the purpose of the NHTSA service is:

One afternoon Waata was called to the café.One of Waata's staff had inadvertently spilled hot coffee on a customer's arm and the customer was left with a burn.Waata sent the customer off to the local hospital for treatment knowing that his __________ insurance would cover the claim.

There have been a series of large judgments in product liability cases against companies producing hairdryers.If this trend continues,insurance companies will respond by ________ the premiums charged for liability insurance for hairdryer manufacturers.

Workers' compensation insurance guarantees payment of wages,medical care,and rehabilitation services for employees who are injured on the job.

Demetrius was turned down when he attempted to buy a life insurance policy on his former Introduction to Business instructor.The most likely reason the insurance company turned down his attempt to insure the life of his former instructor was that:

Typically,the only option that firms have to deal with pure risk is to buy insurance.

A characteristic of a health savings account that distinguishes it from other types of health care coverage is that it:

Cary owns a life insurance policy on her husband Jay through Mutual of Cincinnati Life Insurance Company.As a policyholder,she also owns part of the company.

A managed care HMO system is more expensive than comprehensive health insurance providers.

A type of event that makes risk management more important is:

Preferred Provider Organizations PPOs)offer medical care that is usually more expensive than HMOs.

__________ insurance provides benefits to the survivors of workers who die as a result of work-related injuries.

The chances of dying when young are much higher than the chances of becoming disabled when young.

Insurance companies will provide coverage only for losses that are accidental.

The Best West Soccer Athletic Association was formed to administer youth soccer leagues and tournaments in a popular urban are A.All board members recently resigned stating that they could no longer assume the risk of participating on a board that did not insure its volunteer members against serious player injuries and other unanticipated problems.Collectively,these members are:

To save money,HMOs usually must approve treatment before it is given.

The management of risk is a small part of global business.

An insurance company can use the law of large numbers to predict the number of people in your community that will have a car accident in a given month.