Author Question: XYZ Insurance Company writes coverage for most perils which can damage property. XYZ, however, does ... (Read 124 times)

swpotter12 · **on:** Jul 11, 2018

XYZ Insurance Company writes coverage for most perils which can damage property. XYZ, however, does not write flood insurance on property located in flood plains.

Which requirement of an ideally insurable risk might be violated if XYZ wrote flood insurance on property located in flood plains?
A) There must be a large number of similar exposure units.
B) The loss should not be catastrophic.
C) The chance of loss must be calculable.
D) The losses must be determinable and measurable.

Question 2

Insurance companies collect premiums in advance. Since the premiums collected are not needed to pay losses and expenses immediately, the funds can be loaned to business firms. Because of this fact, insurance benefits society by

A) enhancing credit.
B) providing a source of investment funds.
C) indemnifying losses.
D) providing an incentive for loss prevention.