General Insurance Assignment

Please remember that you must do your own work. Any plagiarism will result in a grade of zero for all students involved. Please use your own words even if you are using the textbook for answers. Always provide a citation when a reference is used.

1. a. What is the definition AND purpose of Risk Management?

b. Explain the steps in the risk management process. Which step is the most important?

2. You have just opened a children's day care that can care for up to 100 children per day. You are concerned about liability exposures as well as earning enough revenue to be profitable. For each of the following risk management techniques, describe a specific action using that technique that may be helpful in dealing with the day care's liability exposure. Be specific.

a. Avoidance:
b. Loss prevention
c. Loss reduction
d. Duplication
e. Separation
f. Diversification
g. Non Insurance Transfer

3. a. Describe the reasons a company may establish a captive insurer?
b. Explain the advantages of using a captive insurer in a risk management program.
c. Provide a real-life example of a large captive (include citation).

4. Avoidance is a risk-control technique that can be used effectively in a risk management program.

a. What is the major advantage of using the technique of avoidance in a risk management program?
b. Is it possible or practical for a firm to avoid all potential losses? Explain your answer.