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4、2

　　Characteristics of an Ideally Insurable Risk
　　?Large number of exposure units
　　–to predict average loss（law of large numbers）； pooling
　　?Accidental and unintentional loss
　　–to control moral hazard（ unintentional 、unplanned）
　　–to assure randomness（unexpected）
　　?Determinable and measurable loss
　　–to facilitate loss adjustment
　　?insurer must be able to determine if the loss is covered and if so, how much should be paid.
　　?No catastrophic loss
　　–to allow the pooling technique to work
　　–exposures to catastrophic loss can be managed by:
　　?dispersing coverage over a large geographic area（group of policyholders？Adverse selection）
　　?using reinsurance
　　?catastrophe bonds
　　?Calculable chance of loss
　　–to establish an adequate premium
　　?Economically feasible（可行的） premium
　　–so people can afford to buy
　　Premium must be substantially less than the face value of the policy（life insurance for elder：a policy with a face value of 1,000 requires a premium of 980 ）
　　Private Insurance
　　?Life and Health
　　–Life insurance pays death benefits to beneficiaries when the insured dies
　　–Health insurance covers medical expenses because of sickness or injury
　　–Disability plans pay income benefits
　　?Property and Liability
　　–Property insurance indemnifies property owners against the loss or damage of real or personal property
　　–Liability insurance covers the insured’s legal liability arising out of property damage or bodily injury to others
　　–Casualty insurance（意外保险） refers to insurance that covers whatever is not covered by fire, marine, and life insurance（范围更广）
　　?Private insurance coverages can be grouped into two major categories
　　–Personal lines
　　?coverages that insure the real estate and personal property of individuals and families or provide protection against legal liability
　　–Commercial lines
　　?coverages for business firms, nonprofit organizations, and government agencies
　　Government Insurance
　　?Social Insurance Programs
　　–Financed entirely or in large part by contributions from employers and/or employees
　　–Benefits are heavily weighted in favor of low-income groups
　　–Eligibility and benefits are prescribed by statute
　　–Examples:
　　?Social Security, Unemployment, Workers Comp
　　?*Other Government Insurance Programs
　　–Found at both the federal and state level
　　–Examples:
　　?Federal flood insurance, state health insurance pools
　　Social Benefits of Insurance
　　?Indemnification for Loss
　　–Contributes to family and business stability
　　?Reduction of Worry and Fear
　　–Insureds are less worried about losses
　　?Source of Investment Funds
　　–Premiums may be invested, promoting economic growth
　　?Loss Prevention
　　–Insurers support loss-prevention activities that reduce direct and indirect losses
　　?Enhancement of Credit
　　–Insured individuals are better credit risks than individuals without insurance

　　Chapter03
　　?Risk management has objectives before（pre-loss） and after（post-loss） a loss occurs（for enterprises）
　　?Pre-loss objectives:
　　?Prepare for potential losses in the most economical way
　　?Reduce anxiety
　　?Meet any legal obligations（reduce risks）
　　?*Reduce the chance of risk accidents（more positive movements）
　　?Post-loss objectives:
　　?Ensure survival of the firm
　　?Continue operations
　　?Stabilize earnings
　　?Maintain growth
　　Minimize the effects that a loss will have on other persons and on society