Topic 4

Exercise 3
1. An Answer captive is a subsidiary insurer incorporated in a
foreign jurisdiction and operating from that foreign country. It can conduct local
business or business from abroad. offshore

2. A Answer is a wholly owned subsidiary of a parent company

for the purpose of providing insurance to finance the losses retained by the parent
company in a formal structure. captive insurer

3. A finite risk contract spreads risk across Answer . time

4. Which technique is best used to manage risks of high loss frequency? Loss
prevention
5. Which technique is best used to manage risks of high loss severity? Loss
reduction

6. A Answer captive is an insurer owned by several parent

companies. group
7. Which technique is best used to manage risks of low loss frequency and high
loss severity? Risk transfer

8. An Answer captive is a subsidiary insurer incorporated

domestically to conduct local business. onshore
9. Which technique is best used to manage risks of high loss frequency and high
loss severity? avoidance

10. A traditional insurance policy spreads risk across Answer .

Loss exposure unit

11. The premium for the coming period of an Answer policy is

based on the past loss experience of the policy. experience-rated
12. Insurance applies Answer technique to spread the losses of the
few over the entire group, so average loss is emphasized in insurance. pooling
13. Which technique is best used to manage risks of low loss severity? retention
14. By insuring many similar loss exposure units, insurance enables the application
of the Answer , so the future loss experience of the insurance
company can be predicted more accurately. Experience-rated policy

15. Generally pure risks can be transferred via Answer . insurance

16. An Answer captive is an insurer owned by several parent

companies. Insurer group

17. A Answer captive is an insurer owned by a one parent

company. Pure

18. The ultimate premium for the current period of a Answer

policy is dependent on the magnitude of losses during the policy
period. retrospectively-rated