Define adverse selection? How can the incorrect premium result in adverse selection?

Julia Pizza Company (KC) has 1,200 employees and the chance of an injury to
employees is 0.05. lasagna maker Sheryl (LA) has 950 employees and the chance
of an injury to employees is 0.09. The possible variation of losses for both is
30 and 35, respectively. Tell Gloria: What is the objective risk of both
companies, and which is more risky?

Degree of risk = Objective risk= Probable variation of actual from
expected losses

Expected losses

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In other words: Range of loss variation / Expected

3. When is risk avoidance,
risk transfer, or risk retention appropriate, (explain to Gabrielle in terms of
frequency and severity)? What are two examples of loss control methods?

4. Explain the principle of
indemnity. How does subrogation support the principle of indemnity?

5. What are five
conditions necessary for a firm, to consider successfully adopting
self-insurance as a strategy? How is self-insurance different from traditional
risk transfer?

6.Explain the
differences between enterprise risk management and traditional risk management.

7. What are pure and speculative risks? Provide two
examples of each.

Define risk. Why is risk management
important to corporations?

8. Give an example of asymmetric information. Define
adverse selection? How can the incorrect premium result in adverse selection?

Are correlated or uncorrelated losses
harder to insure against? Briefly explain your answer and provide one example
of a correlated loss.

9. List four
reasons that business owners would pay less for their small business insurance
policy premiums. How can insurance companies reduce moral hazard among
policyholders (name or explain at least two methods)?

Define risk management and identify
the six steps in the risk management process. As a risk manager how
would you briefly apply the six steps of the RMI process (come up with at least
three ideas in the first step and proceed)

ByJohn Aaron

is hosting a town hall on Ebola at the Newseum in D.C. on Oct. 20. Leading
physicians will be taking questions from the community. Register for tickets.
WASHINGTON — Some people in the
Washington, D.C. area may now be resistant to Ebola, if an experimental vaccine
can live up to some very high expectations.
Since a clinical trial began Monday,
seven people have been vaccinated, and the hope is to vaccinate six more on
Thursday, according to Dr. Shon Remich, director of Translational Medicine at
the Walter Reed Army Institute of Research in Silver Spring, Maryland.
If no serious side effects are
witnessed, others will be given stronger doses of the vaccine. The plan is for
a total of 39 people to be vaccinated and studied over the coming seven to eight
Some of those involved in the trial
will be getting a placebo.
This is the first time the vaccine has
been given to human test subjects, and plans for the trial came together
“Obviously the global crisis has
created a lot of momentum. We took about six weeks to do what we would normally
take six months to do,” Remich says.
He says they have not had any problem
finding volunteers in the community and stresses there is no risk of
contracting Ebola from the vaccine.
The vaccine, known as VSV-EBOV, is
based on a virus often found in horses and cattle. It was created by Canada’s
Public Health Agency.
“They have taken a very small
portion … out of that particular virus, and inserted a part of Ebola into that
virus,” says Remich.
“We’re fooling the body into
thinking that it’s infected, which would in turn lead to a strong immune system
The vaccine is seen as especially
promising following tests on primates. Not only did the vaccine help protect
them against Ebola infection, but it also led to increased survival rates if it
was administered after Ebola was contracted.
Remich says there is a team in place
charged with figuring out how to ramp up production of the vaccine, but there
is no way to predict when the vaccine could become more widely available.
“There are so many variables that
need to be addressed, safety being the first,” he says.
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