MS 2012 Introduction to Insurance Lesson-1 Quiz
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Questions and Answers

What is the primary business of the insurer according to one of the three schools of thought mentioned?

  • Risk assumption for a fee (correct)
  • Risk avoidance at any cost
  • Risk transfer to the insured
  • Risk multiplication for profit

    • Who is the party agreeing to pay for the losses in an insurance contract?

  • Premium payer
  • Insured
  • Risk bearer
  • Insurer (correct)

    • What is the role of the insured in an insurance policy?

  • To receive premiums
  • To transfer exposure to loss to the insurer (correct)
  • To calculate proximate causes
  • To assume all risks

    • How is insurance commonly described as a risk mitigating technique?

    <p>By compensating for losses</p> Signup and view all the answers

    What term refers to the insured's possibility of loss?

    <p>Exposure to loss</p> Signup and view all the answers

    According to one of the schools of thought, what is insurance defined as?

    <p>Transfer of pure risk from insured to insurer</p> Signup and view all the answers

    What is the main purpose of insurance according to Prof. Mehr and Cammack?

    <p>To combine exposure units to make their losses collectively predictable</p> Signup and view all the answers

    According to Prof. Alan H. Willett, what does insurance involve?

    <p>Combining risks from many individuals to meet uncertain losses</p> Signup and view all the answers

    How does the law of large numbers relate to insurance?

    <p>It helps in predicting future funds needed to cover losses accurately</p> Signup and view all the answers

    What is the essence of the insurance scheme described in the text?

    <p>Combining risks of individuals into a group to pay for losses</p> Signup and view all the answers

    In the Babylonian period, how did merchants protect themselves from robbers?

    <p>By joining caravans together for protection</p> Signup and view all the answers

    How does insurance work according to the text?

    <p>By combining the risks of individuals into a group using contributed funds</p> Signup and view all the answers

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