Principles of Risk Management and Insurance, Global Editon

Cover
Half Title
The Pearson Series in Finance
Title Page
Copyright
Contents
Preface
About the Authors
Chapter 1: Risk and Its Treatment
	Definitions of Risk
	Chance of Loss
	Peril and Hazard
	Classification of Risk
	Major Personal Risks and Commercial Risks
	Burden of Risk on Society
	Techniques for Managing Risk
	Summary
	Key Concepts and Terms
	Review Questions
	Application Questions
	Internet Resources
	Selected References
	Notes
	Case Application
	Insight 1.1: What Are Your Chances of Not Being Able to Earn an Income? Calculate Your Personal Disability Quotient
	Insight 1.2: Careers in Risk Management and Insurance
Chapter 2: Insurance and Risk
	Definition of Insurance
	Basic Characteristics of Insurance
	Law of Large Numbers
	Characteristics of an Ideally Insurable Risk
	Two Applications: The Risks of Fire and Unemployment
	Adverse Selection and Insurance
	Insurance and Gambling Compared
	Insurance and Hedging Compared
	Types of Insurance
	Benefits of Insurance to Society
	Costs of Insurance to Society
	Summary
	Key Concepts and Terms
	Review Questions
	Application Questions
	Internet Resources
	Selected References
	Notes
	Case Application
	Insight 2.1: Insurance frauds: Myths versus reality
	Insight 2.2: Examples of Insurance Fraud—Hall of Shame
	Appendix: Basic Statistics and the Law of Large Numbers
	Probability and Statistics
	Law of Large Numbers
	Notes
Chapter 3: Introduction to Risk Management
	Meaning of Risk Management
	Objectives of Risk Management
	Steps in the Risk Management Process
	Benefits of Risk Management
	Personal Risk Management
	Summary
	Key Concepts and Terms
	Review Questions
	Application Questions
	Internet Resources
	Selected References
	Notes
	Case Application
	Insight 3.1: Bermuda Leads Global Captive Domiciles
	Insight 3.2: When You Should Self-Insure?
Chapter 4: Enterprise Risk Management
	Enterprise Risk Management
	Benefits of Enterprise Risk Management Programs
	Insurance Market Dynamics
	Loss Forecasting
	Financial Analysis in Risk Management Decision Making
	Other Risk Management Tools
	Summary
	Key Concepts and Terms
	Review Questions
	Application Questions
	Internet Resources
	Selected References
	Notes
	Case Application
	Insight 4.1: Weather Futures and Options: Financial Tools That Provide a Means of Transferring Risk Associated with Adverse Weather Events
Chapter 5: Types of Insurers and Marketing Systems
	Overview of Private Insurance in the Financial Services Industry
	Types of Private Insurers
	Agents and Brokers
	Types of Marketing Systems
	Summary
	Key Concepts and Terms
	Review Questions
	Application Questions
	Internet Resources
	Selected References
	Notes
	Case Application
	Insight 5.1: Show Me the Money—How Much Can I Earn as an Insurance Sales Agent?
Chapter 6: Insurance Company Operations
	Insurance Company Operations
	Rating and Rate Making
	Underwriting
	Production
	Claims Settlement
	Reinsurance
	Investments
	Other Insurance Company Functions
	Summary
	Key Concepts and Terms
	Review Questions
	Application Questions
	Internet Resources
	Selected References
	Notes
	Case Application
	Insight 6.1: Home Owner's Failure to Cooperate Yields Denied Claim
	Insight 6.2: Insurance 4.0—Digitalization of Insurance Operations
Chapter 7: Financial Operations of Insurers
	Property and Casualty Insurers
	Life Insurance Companies
	Rate Making In Property and Casualty Insurance
	Rate Making in Life Insurance
	Summary
	Key Concepts and Terms
	Review Questions
	Application Questions
	Internet Resources
	Selected References
	Notes
	Case Application
	Insight 7.1: How Profitable Is the Property and Casualty Insurance Industry?
Chapter 8: Government Regulation of Insurance
	Reasons for Insurance Regulation
	Historical Development of Insurance Regulation
	Methods For Regulating Insurers
	What Areas are Regulated?
	State Versus Federal Regulation
	Current Issues in Insurance Regulation
	Insolvency of Insurers
	Market Conduct Regulation
	Summary
	Key Concepts and Terms
	Review Questions
	Application Questions
	Internet Resources
	Selected References
	Notes
	Case Application
	Insight 8.1: The Pros and Cons of Credit-Based Insurance Scores
Chapter 9: Fundamental Legal Principles
	Principle of Indemnity
	Principle of Insurable Interest
	Principle of Subrogation
	Principle of Utmost Good Faith
	Requirements of an Insurance Contract
	Distinct Legal Characteristics of Insurance Contracts
	Law and the Insurance Agent
	Summary
	Key Concepts and Terms
	Review Questions
	Application Questions
	Internet Resources
	Selected References
	Notes
	Case Application
	Insight 9.1: Corporation Lacking Insurable Interest at Time of Death Can Receive Life Insurance Proceeds
	Insight 9.2: Auto Insurer Denies Coverage Because of Material Misrepresentation
	Insight 9.3: Insurer Voids Coverage Because of Misrepresentations in Proof of Loss
Chapter 10: Analysis of Insurance Contracts
	Basic Parts of an Insurance Contract
	Definition of "Insured"
	Endorsements and Riders
	Deductibles
	Coinsurance
	Coinsurance in Health Insurance
	Other-Insurance Provisions
	Summary
	Key Concepts and Terms
	Review Questions
	Application Questions
	Internet Resources
	Selected References
	Note
	Case Application
	Insight 10.1: Will Your Auto Insurance Cover You When You Drive Another Person's Car?
Chapter 11: Life Insurance
	Premature Death
	Financial Impact of Premature Death on Different Types of Families
	Amount of Life Insurance to Own
	Types of Life Insurance
	Variations of Whole Life Insurance
	Other Types of Life Insurance
	Summary
	Key Concepts and Terms
	Review Questions
	Application Questions
	Internet Resources
	Selected References
	Notes
	Case Application
	Insight 11.1: Cash-Value Life Insurance as an Investment—Don't Ignore Two Points
	Insight 11.2: Be a Savvy Consumer—Four Life Insurance Policies to Avoid
Chapter 12: Life Insurance Contractual Provisions
	Life Insurance Contractual Provisions
	Dividend Options
	Nonforfeiture Options
	Settlement Options
	Additional Life Insurance Benefits
	Summary
	Key Concepts and Terms
	Review Questions
	Application Questions
	Internet Resources
	Selected References
	Notes
	Case Application
	Insight 12.1: Is This Death a Suicide?
	Insight 12.2: Selection of the Best Dividend Option in a Participating Whole Life Policy
	Insight 12.3: Accelerated Death Benefits: A Real-Life Example
	Insight 12.4: What Is a Life Settlement? Examples of Actual Cases
Chapter 13: Buying Life Insurance
	Determining the Cost of Life Insurance
	Rate of Return on Saving Component
	Taxation of Life Insurance
	Shopping for Life Insurance
	Summary
	Key Concepts and Terms
	Review Questions
	Application Questions
	Internet Resources
	Selected References
	Notes
	Case Application
	Insight 13.1: Be Careful in Replacing an Existing Life Insurance Policy
	Appendix: Calculation of Life Insurance Premiums
	Net Single Premium
	Net Annual Level Premium
	Gross Premium
	Policy Reserves
	Case Application
	Key Concepts and Terms
	Notes
Chapter 14: Annuities and Individual Retirement Accounts
	Individual Annuities
	Types of Annuities
	Taxation of Individual Annuities
	Individual Retirement Accounts
	Summary
	Key Concepts and Terms
	Review Questions
	Application Questions
	Internet Resources
	Selected References
	Notes
	Case Application 1
	Case Application 2
	Insight 14.1: Advantages of an Immediate Annuity to Retired Workers
	Insight 14.2: Optional Variable Annuity Benefits To Meet Specific Needs
	Insight 14.3: Ten Questions to Answer Before You Buy a Variable Annuity
Chapter 15: Individual Health Insurance Coverages
	Defects in the Healthcare System in the United States
	Basic Provisions of the Affordable Care Act
	Individual Medical Expense Insurance
	Managed Care Plans
	Health Savings Accounts
	Long-Term Care Insurance
	Disability-Income Insurance
	Individual Health Insurance Contractual Provisions
	Summary
	Key Concepts and Terms
	Review Questions
	Application Questions
	Internet Resources
	Selected References
	Notes
	Case Application
	Insight 15.1: Health Insurance Options for College Students under the Affordable Care Act
Chapter 16: Employee Benefits: Group Life and Health Insurance
	Meaning of Employee Benefits
	Fundamentals of Group Insurance
	Group Life Insurance
	Group Medical Expense Insurance
	Managed Care Plans
	Affordable Care Act and Group Medical Expense Insurance
	Key Features of Group Medical Expense Insurance
	High-Deductible Health Plan With Savings Option
	Recent Developments in Employer-Sponsored Health Plans
	Group Medical Expense Contractual Provisions
	Group Dental Insurance
	Group Disability-Income Insurance
	Cafeteria Plans
	Summary
	Key Concepts and Terms
	Review Questions
	Application Questions
	Internet Resources
	Selected References
	Notes
	Case Application
	Insight 16.1: History of Health Maintenance Organization
	Insight 16.2: Basic Characteristics of the Small Business Health Options Program (SHOP)
Chapter 17: Employee Benefits: Retirement Plans
	Fundamentals of Private Retirement Plans
	Types of Qualified Retirement Plans
	Defined-Benefit Plans
	Defined-Contribution Plans
	Section 401(K) Plan
	Section 403(B) Plan
	Simplified Employee Pension (SEP)
	Simple Ira Plan
	Profit-Sharing Plans
	Saver's Credit
	Retirement Plan Security
	Funding Agency and Funding Instruments
	Problems and Issues In Qualified Retirement Plans
	Summary
	Key Concepts and Terms
	Review Questions
	Application Questions
	Internet Resources
	Selected References
	Notes
	Case Application
	Insight 17.1: Six Common 401(k) Mistakes
Chapter 18: Social Insurance
	Social Insurance Programs
	Old-Age, Survivors, and Disability Insurance (OASDI)
	Types of Benefits
	Medicare
	Problems and Issues
	Unemployment Insurance
	Workers' Compensation
	Summary
	Key Concepts and Terms
	Review Questions
	Application Questions
	Internet Resources
	Selected References
	Notes
	Case Application
	Insight 18.1: Postponing Social Security Benefits—Key Factors to Consider
	Insight 18.2: Try Your Hand at Social Security Reform
Chapter 19: The Liability Risk
	Basis of Legal Liability
	The Law of Negligence
	Imputed Negligence
	Res Ipsa Loquitur
	Specific Applications of the Law of Negligence
	Current Tort Liability Problems
	Summary
	Key Concepts and Terms
	Review Questions
	Application Questions
	Internet Resources
	Selected References
	Notes
	Case Application
	Insight 19.1: Judicial Hellholes 2017–2018
Chapter 20: Auto Insurance
	Overview of Personal Auto Policy
	Part A: Liability Coverage
	Part B: Medical Payments Coverage
	Part C: Uninsured Motorists Coverage
	Part D: Coverage For Damage to Your Auto
	Part E: Duties After an Accident or Loss
	Part F: General Provisions
	Insuring Motorcycles and Other Vehicles
	Summary
	Key Concepts and Terms
	Review Questions
	Application Questions
	Internet Resources
	Selected References
	Notes
	Case Application
	Insight 20.1: Private Passenger Auto Insurance Remains Unprofitable for Many Insurers
	Insight 20.2: In 5 States, 20% or More of Drivers Have No Insurance; Countrywide Average Increases
	Insight 20.3: The Four Types of Rental Car Insurance, Explained
Chapter 21: Auto Insurance (Continued)
	Approaches for Compensating Auto Accident Victims
	Auto Insurance for High-Risk Drivers
	Cost of Auto Insurance
	Shopping for Auto Insurance
	Auto Insurance Emerging Issues
	Summary
	Key Concepts and Terms
	Review Questions
	Application Questions
	Internet Resources
	Selected References
	Notes
	Case Application
	Insight 21.1: Filing an Auto Claim with the Other Party's Insurance Company
	Insight 21.2: Protect Yourself: Insuring Your Teen Driver
	Insight 21.3: Distracted Driving
Chapter 22: Homeowners Insurance, Section I
	Overview of Homeowners Insurance
	The Homeowners 3 Policy: Persons Insured
	The Homeowner 3 Policy: Section I Coverages
	The Homeowners 3 Policy: Section I Perils Insured Against
	The Homeowners 3 Policy: Section I Exclusions
	The Homeowners 3 Policy: Section I Conditions
	The Homeowners 3 Policy: Section I and II Conditions
	Summary
	Key Concepts and Terms
	Review Questions
	Application Questions
	Internet Resources
	Selected References
	Notes
	Case Application
	Insight 22.1: Your Renters Insurance Guide: What to Look for When Shopping for Renters Insurance
	Insight 22.2: How to Create a Home Inventory
	Insight 22.3: The Big Gap between Replacement Cost and Actual Cash Value Can Empty Your Wallet
Chapter 23: Homeowners Insurance, Section II
	Personal Liability Insurance and Medical Payments to Others Coverage
	Section II Exclusions
	Section II Additional Coverages
	Section II Conditions
	Endorsements to a Homeowners Policy
	Cost of Homeowners Insurance
	Suggestions for Buying a Homeowners Policy
	Summary
	Key Concepts and Terms
	Review Questions
	Application Questions
	Internet Resources
	Selected References
	Notes
	Case Application
	Insight 23.1: Dog Bites Hurt, So Do Lawsuits
	Insight 23.2: Five Insurance Mistakes to Avoid . . . (and Still Save Money)
Chapter 24: Other Property and Liability Insurance Coverages
	ISO Dwelling Program
	Mobile Home Insurance
	Inland Marine Floaters
	Watercraft Insurance
	Government Property Insurance Programs
	Title Insurance
	Personal Umbrella Policy
	Summary
	Key Concepts and Terms
	Review Questions
	Application Questions
	Internet Resources
	Selected References
	Notes
	Case Application
	Insight 24.1: Dispelling Myths about Flood Insurance
	Insight 24.2: The Vitals on Title Insurance
	Insight 24.3: 10 Real Examples of Umbrella Insurance Claims
Chapter 25: Commercial Property Insurance
	Commercial Package Policy
	Building and Personal Property Coverage Form
	Reporting Forms
	Business Income Insurance
	Other Commercial Property Coverages
	Transportation Insurance
	Businessowners Policy (BOP)
	Summary
	Key Concepts and Terms
	Review Questions
	Application Questions
	Internet Resources
	Selected References
	Notes
	Case Application
	Insight 25.1: Examples of Equipment Breakdown Claims: Recent Paid Claims
Chapter 26: Commercial Liability Insurance
	General Liability Loss Exposures
	Commercial General Liability Policy
	Employment Practices Liability Insurance
	Workers Compensation Insurance
	Commercial Auto Insurance
	Aircraft Insurance
	Commercial Umbrella Policy
	Cyber Liability Insurance
	Businessowners Policy
	Professional Liability Insurance
	Directors and Officers Liability Insurance
	Summary
	Key Concepts and Terms
	Review Questions
	Application Questions
	Internet Resources
	Selected References
	Notes
	Case Application
	Insight 26.1: General Liability Lawsuit Examples
	Insight 26.2: Beyond Prevention: Workers Compensation Insurance
	Insight 26.3: 10 Most Common and Costliest Small Business Claims
Chapter 27: Crime Insurance and Surety Bonds
	The ISO Commercial Crime Insurance Program
	Commercial Crime Coverage Form (Loss-Sustained Form)
	Financial Institution Bonds
	Surety Bonds
	Summary
	Key Concepts and Terms
	Review Questions
	Application Questions
	Internet Resources
	Selected References
	Notes
	Case Application
	Insight 27.1: Crime Prevention Tips for Small Businesses
	Insight 27.2: ISO's Crime Changes: Keeping Pace with our Digital World
Appendix A: Personal Auto Policy
Appendix B: Homeowners 3 (Special Form)
Glossary
Index