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Fundamentals of Risk and Insurance, 11th Edition

Book Description

Fundamentals of Risk and Insurance, 11th Edition presents a thorough and comprehensive introduction to the field of insurance while emphasizing the consumer. It summarizes the nature of pure risk on the individual and on society, and illustrates the way in which insurance can be used to deal with the problems posed by such risk.

The 11th edition first examines the concept of risk, the nature of the insurance device, and the principles of risk management. It then discusses the traditional fields of life and health insurance as solutions to the risks connected with the loss of income. The final section deals with the risks associated with the ownership of property and legal liability.

Table of Contents

  1. Cover Page
  2. Title Page
  3. Copyright
  4. Dedication
  5. ABOUT THE AUTHORS
  6. PREFACE
    1. SCOPE OF THE SUBJECT
    2. WHY STUDY INSURANCE?
    3. ORGANIZATION OF THE BOOK
    4. CHANGES IN THE TENTH EDITION
    5. ACKNOWLEDGMENTS
  7. BRIEF CONTENTS
  8. CONTENTS
  9. Chapter 1: The problem of risk
    1. THE CONCEPT OF RISK
    2. THE BURDEN OF RISK
    3. THE GROWING NUMBER AND VARIETY OF PURE RISKS
    4. INCREASING SEVERITY OF LOSSES
    5. MANAGING RISK
    6. IMPORTANT CONCEPTS TO REMEMBER
    7. QUESTIONS FOR REVIEW
    8. QUESTIONS FOR DISCUSSION
    9. SUGGESTIONS FOR ADDITIONAL READING
  10. Chapter 2: Introduction to Risk Management
    1. THE HISTORY OF MODERN RISK MANAGEMENT
    2. ENTERPRISE RISK MANAGEMENT
    3. RISK MANAGEMENT DEFINED
    4. RISK MANAGEMENT TOOLS
    5. RISK MANAGEMENT AS A BUSINESS FUNCTION
    6. MISCONCEPTIONS ABOUT RISK MANAGEMENT
    7. RISK MANAGEMENT AND THE INDIVIDUAL
    8. THE RISK MANAGEMENT PROCESS
    9. IMPORTANT CONCEPTS TO REMEMBER
    10. QUESTIONS FOR REVIEW
    11. QUESTIONS FOR DISCUSSION
    12. SUGGESTIONS FOR ADDITIONAL READING
    13. WEB SITES TO EXPLORE
  11. Chapter 3: The Insurance Device
    1. THE NATURE AND FUNCTIONS OF INSURANCE
    2. THE ECONOMIC CONTRIBUTION OF INSURANCE
    3. ELEMENTS OF AN INSURABLE RISK
    4. SELF-INSURANCE
    5. THE FIELDS OF INSURANCE
    6. IMPORTANT CONCEPTS TO REMEMBER
    7. QUESTIONS FOR REVIEW
    8. QUESTIONS FOR DISCUSSION
    9. SUGGESTIONS FOR ADDITIONAL READING
    10. WEB SITES TO EXPLORE
  12. Chapter 4: Risk Management Applications
    1. RISK MANAGEMENT DECISIONS
    2. BUYING INSURANCE
    3. ALTERNATIVES TO COMMERCIAL INSURANCE
    4. IMPORTANT CONCEPTS TO REMEMBER
    5. QUESTIONS FOR REVIEW
    6. QUESTIONS FOR DISCUSSION
    7. SUGGESTIONS FOR ADDITIONAL READING
    8. WEB SITES TO EXPLORE
  13. Chapter 5: The Private Insurance Industry
    1. A BRIEF HISTORY OF PRIVATE INSURANCE
    2. CLASSIFICATION OF PRIVATE INSURERS
    3. MARKETING SYSTEMS
    4. COOPERATION IN THE INSURANCE INDUSTRY
    5. COMPETITION IN THE INSURANCE INDUSTRY
    6. IMPORTANT CONCEPTS TO REMEMBER
    7. QUESTIONS FOR REVIEW
    8. QUESTIONS FOR DISCUSSION
    9. SUGGESTIONS FOR ADDITIONAL READING
    10. WEB SITES TO EXPLORE
  14. Chapter 6: Regulation of the Insurance Industry
    1. THE WHY OF GOVERNMENT REGULATION OF INSURANCE
    2. REGULATION TODAY
    3. AREAS REGULATED
    4. STATE VERSUS FEDERAL REGULATION
    5. GLOBAL INFLUENCES ON INSURANCE REGULATION
    6. APPENDIX THE AVAILABILITY/AFFORDABILITY DEBATE
    7. THE ESSENCE OF THE DEBATE
    8. IMPORTANT CONCEPTS TO REMEMBER
    9. QUESTIONS FOR REVIEW
    10. QUESTIONS FOR DISCUSSION
    11. SUGGESTIONS FOR ADDITIONAL READING
    12. WEB SITES TO EXPLORE
  15. Chapter 7: Functions of Insurers
    1. FUNCTIONS OF INSURERS
    2. RATEMAKING
    3. PRODUCTION
    4. UNDERWRITING
    5. LOSS ADJUSTMENT
    6. THE INVESTMENT FUNCTION
    7. MISCELLANEOUS FUNCTIONS
    8. APPENDIX RETROSPECTIVE RATING PLANS
    9. THE RETROSPECTIVE FORMULA
    10. IMPORTANT CONCEPTS TO REMEMBER
    11. QUESTIONS FOR REVIEW
    12. QUESTIONS FOR DISCUSSION
    13. SUGGESTIONS FOR ADDITIONAL READING
    14. WEB SITES TO EXPLORE
  16. Chapter 8: Financial Aspects of Insurer Operations
    1. STATUTORY ACCOUNTING REQUIREMENTS
    2. PROPERTY AND LIABILITY INSURERS
    3. LIFE INSURANCE COMPANIES
    4. REINSURANCE
    5. TAXATION OF INSURANCE COMPANIES
    6. IMPORTANT TERMS AND CONCEPTS
    7. QUESTIONS FOR REVIEW
    8. QUESTIONS FOR DISCUSSION
    9. SUGGESTIONS FOR ADDITIONAL READING
    10. WEB SITES TO EXPLORE
  17. Chapter 9: The Legal Framework
    1. INSURANCE AND THE LAW OF CONTRACTS
    2. SPECIAL LEGAL CHARACTERISTICS OF INSURANCE CONTRACTS
    3. IMPORTANT CONCEPTS TO REMEMBER
    4. QUESTIONS FOR REVIEW
    5. QUESTIONS FOR DISCUSSION
    6. SUGGESTIONS FOR ADDITIONAL READING
    7. WEB SITES TO EXPLORE
  18. Chapter 10: Managing Personal Risks
    1. OBJECTIVES IN MANAGING PERSONAL RISKS
    2. OTHER STEPS IN MANAGING PERSONAL RISKS
    3. MANAGING RISKS ASSOCIATED WITH PREMATURE DEATH
    4. LONGEVITY RISK
    5. THE RISKS ASSOCIATED WITH DISABILITY
    6. EVALUATING THE MEDICAL EXPENSE EXPOSURE
    7. MANAGING THE RISK OF UNEMPLOYMENT
    8. IMPORTANT CONCEPTS TO REMEMBER
    9. QUESTIONS FOR REVIEW
    10. QUESTIONS FOR DISCUSSION
    11. SUGGESTIONS FOR ADDITIONAL READING
    12. WEB SITES TO EXPLORE
  19. Chapter 11: Social Insurance Programs
    1. OLD-AGE, SURVIVORS, DISABILITY, AND HEALTH INSURANCE
    2. WORKERS COMPENSATION
    3. IMPORTANT CONCEPTS TO REMEMBER
    4. QUESTIONS FOR REVIEW
    5. QUESTIONS FOR DISCUSSION
    6. SUGGESTIONS FOR ADDITIONAL READING
    7. WEB SITES TO EXPLORE
  20. Chapter 12: Introduction to Life Insurance
    1. SOME UNIQUE CHARACTERISTICS OF LIFE INSURANCE
    2. TYPES OF LIFE INSURANCE CONTRACTS
    3. TAX TREATMENT OF LIFE INSURANCE
    4. CURRENT LIFE INSURANCE PRODUCTS
    5. GENERAL CLASSIFICATIONS OF LIFE INSURANCE
    6. IMPORTANT CONCEPTS TO REMEMBER
    7. QUESTIONS FOR REVIEW
    8. QUESTIONS FOR DISCUSSION
    9. SUGGESTIONS FOR ADDITIONAL READING
    10. WEB SITES TO EXPLORE
  21. Chapter 13: The Actuarial Basis of Life Insurance
    1. LIFE INSURANCE PREMIUM COMPUTATION
    2. RESERVES ON LIFE INSURANCE POLICIES
    3. BENEFIT-CERTAIN AND BENEFIT-UNCERTAIN CONTRACTS
    4. IMPORTANT CONCEPTS TO REMEMBER
    5. QUESTIONS FOR REVIEW
    6. QUESTIONS FOR DISCUSSION
    7. SUGGESTIONS FOR ADDITIONAL READING
    8. WEB SITES TO EXPLORE
  22. Chapter 14: The Life Insurance Contract—General Provisions
    1. INCEPTION OF THE LIFE INSURANCE CONTRACT
    2. GENERAL PROVISIONS OF LIFE INSURANCE CONTRACTS
    3. SETTLEMENT OPTIONS
    4. IMPORTANT CONCEPTS TO REMEMBER
    5. QUESTIONS FOR REVIEW
    6. QUESTIONS FOR DISCUSSION
    7. SUGGESTIONS FOR ADDITIONAL READING
    8. WEB SITES TO EXPLORE
  23. Chapter 15: The Life Insurance Contract—Other Provisions
    1. NONFORFEITURE VALUES
    2. DIVIDEND PROVISIONS
    3. IMPORTANT OPTIONAL PROVISIONS
    4. UNIVERSAL LIFE POLICY PROVISIONS
    5. IMPORTANT CONCEPTS TO REMEMBER
    6. QUESTIONS FOR REVIEW
    7. QUESTIONS FOR DISCUSSION
    8. SUGGESTIONS FOR ADDITIONAL READING
    9. WEB SITES TO EXPLORE
  24. Chapter 16: Special Life Insurance Forms
    1. SPECIALIZED LIFE CONTRACTS
    2. ADVANTAGES AND DISADVANTAGES OF SPECIAL FORMS
    3. IMPORTANT CONCEPTS TO REMEMBER
    4. QUESTIONS FOR REVIEW
    5. QUESTIONS FOR DISCUSSION
    6. SUGGESTIONS FOR ADDITIONAL READING
    7. WEB SITES TO EXPLORE
  25. Chapter 17: Buying Life Insurance
    1. DECISIONS IN BUYING LIFE INSURANCE
    2. SOME ADDITIONAL TAX CONSIDERATIONS
    3. IMPORTANT CONCEPTS TO REMEMBER
    4. QUESTIONS FOR REVIEW
    5. QUESTIONS FOR DISCUSSION
    6. SUGGESTIONS FOR ADDITIONAL READING
    7. WEB SITES TO EXPLORE
  26. Chapter 18: Annuities and Pension Benefits
    1. ANNUITIES
    2. QUALIFIED RETIREMENT PLANS
    3. INDIVIDUAL RETIREMENT ACCOUNTS
    4. A CONCLUDING NOTE
    5. IMPORTANT CONCEPTS TO REMEMBER
    6. QUESTIONS FOR REVIEW
    7. QUESTIONS FOR DISCUSSION
    8. SUGGESTIONS FOR ADDITIONAL READING
    9. WEB SITES TO EXPLORE
  27. Chapter 19: Managing the Retirement Risk
    1. AN OVERVIEW OF THE RETIREMENT RISK
    2. CONSTRUCTING A RETIREMENT PLAN
    3. IMPORTANT CONCEPTS TO REMEMBER
    4. QUESTIONS FOR REVIEW
    5. QUESTIONS FOR DISCUSSION
    6. SUGGESTIONS FOR ADDITIONAL READING
    7. WEB SITES TO EXPLORE
  28. Chapter 20: Health Insurance: Disability Income Insurance
    1. GENERAL NATURE OF DISABILITY INCOME INSURANCE
    2. DISABILITY INCOME CONTRACTS
    3. INDIVIDUAL HEALTH INSURANCE POLICY PROVISIONS
    4. PROGRAMMING AND BUYING DISABILITY INCOME INSURANCE
    5. IMPORTANT CONCEPTS TO REMEMBER
    6. QUESTIONS FOR REVIEW
    7. QUESTIONS FOR DISCUSSION
    8. SUGGESTIONS FOR ADDITIONAL READING
    9. WEB SITES TO EXPLORE
  29. Chapter 21: Health Insurance: Coverage for Medical Expenses
    1. BACKGROUND ON THE CURRENT HEALTH INSURANCE MARKET
    2. THE HEALTH INSURANCE MARKET
    3. THE INSURANCE PRODUCT
    4. OTHER MEDICAL EXPENSE COVERAGES
    5. HEALTH INSURANCE
    6. DEFICIENCIES IN THE SYSTEM AND PRIOR REFORM EFFORTS
    7. THE PATIENT PROTECTION AND AFFORDABLE CARE ACT OF 2010 (THE ACA)
    8. IMPORTANT CONCEPTS TO REMEMBER
    9. QUESTIONS FOR REVIEW
    10. QUESTIONS FOR DISCUSSION
    11. SUGGESTIONS FOR ADDITIONAL READING
    12. WEB SITES TO EXPLORE
  30. Chapter 22: Health Insurance for the Elderly
    1. MEDICARE
    2. LONG-TERM CARE INSURANCE
    3. MEDICAID PLANNING
    4. IMPORTANT CONCEPTS TO REMEMBER
    5. QUESTIONS FOR REVIEW
    6. QUESTIONS FOR DISCUSSION
    7. SUGGESTIONS FOR ADDITIONAL READING
    8. WEB SITES TO EXPLORE
  31. Chapter 23: Employee Benefits and Other Business Uses of Life and Health Insurance
    1. EMPLOYEE BENEFITS GENERALLY
    2. GROUP LIFE AND HEALTH INSURANCE AS EMPLOYEE BENEFITS
    3. FUNDING ISSUES
    4. PENSIONS
    5. ERISA PENSION PLAN TERMINATION INSURANCE
    6. ACCOUNTING FOR DEFINED BENEFIT PLANS
    7. PLAN DE-RISKING AND LONGEVITY RISK TRANSFER
    8. CAFETERIA EMPLOYEE BENEFIT PLANS
    9. SOME SPECIALIZED USES OF LIFE INSURANCE IN BUSINESS
    10. SUMMARY
    11. IMPORTANT CONCEPTS TO REMEMBER
    12. QUESTIONS FOR REVIEW
    13. QUESTIONS FOR DISCUSSION
    14. SUGGESTIONS FOR ADDITIONAL READING
    15. WEB SITES TO EXPLORE
  32. Chapter 24: The Homeowners Policy—General Provisions
    1. THE HOMEOWNERS POLICY PROGRAM
    2. HOMEOWNERS SECTION I COVERAGE
    3. OTHER PROVISIONS
    4. IMPORTANT CONCEPTS TO REMEMBER
    5. QUESTIONS FOR REVIEW
    6. QUESTIONS FOR DISCUSSION
    7. SUGGESTIONS FOR ADDITIONAL READING
    8. WEB SITES TO EXPLORE
  33. Chapter 25: The Homeowners Policy Forms
    1. DIFFERENCES AMONG HOMEOWNERS FORMS
    2. HOMEOWNERS SECTION I OPTIONAL COVERAGES
    3. IMPORTANT CONCEPTS TO REMEMBER
    4. QUESTIONS FOR REVIEW
    5. QUESTIONS FOR DISCUSSION
    6. SUGGESTIONS FOR ADDITIONAL READING
    7. WEB SITES TO EXPLORE
  34. Chapter 26: Other Personal Forms of Property Insurance
    1. MONOLINE FIRE DWELLING PROGRAM
    2. Coverages under the Dwelling Program
    3. MOBILEHOME PROGRAM
    4. FLOOD INSURANCE
    5. INLAND MARINE COVERAGE FOR THE INDIVIDUAL
    6. BUYING PROPERTY INSURANCE FOR THE INDIVIDUAL
    7. TITLE INSURANCE
    8. IMPORTANT CONCEPTS TO REMEMBER
    9. QUESTIONS FOR REVIEW
    10. QUESTIONS FOR DISCUSSION
    11. SUGGESTIONS FOR ADDITIONAL READING
    12. WEB SITES TO EXPLORE
  35. Chapter 27: Negligence and Legal Liability
    1. CRIMINAL AND TORTIOUS BEHAVIOR
    2. POSSIBLE CHANGES IN THE TORT SYSTEM
    3. SUMMARY
    4. IMPORTANT CONCEPTS TO REMEMBER
    5. QUESTIONS FOR REVIEW
    6. QUESTIONS FOR DISCUSSION
    7. SUGGESTIONS FOR ADDITIONAL READING
    8. WEB SITES TO EXPLORE
  36. Chapter 28: General Liability Insurance for the Individual
    1. LIABILITY INSURANCE IN GENERAL
    2. TYPES OF LIABILITY INSURANCE
    3. COMPREHENSIVE PERSONAL LIABILITY COVERAGE
    4. PROFESSIONAL LIABILITY INSURANCE
    5. UMBRELLA LIABILITY POLICY
    6. IMPORTANT CONCEPTS TO REMEMBER
    7. QUESTIONS FOR REVIEW
    8. QUESTIONS FOR DISCUSSION
    9. SUGGESTIONS FOR ADDITIONAL READING
    10. WEB SITES TO EXPLORE
  37. Chapter 29: The Automobile and its Legal Environment
    1. A BRIEF OVERVIEW OF AUTOMOBILE COVERAGES
    2. LEGAL LIABILITY AND THE AUTOMOBILE
    3. THE AUTOMOBILE INSURANCE PROBLEM AND CHANGES IN THE TORT SYSTEM
    4. AUTOMOBILE INSURANCE RATES
    5. THE SHIFTING VIEW OF AUTO INSURANCE
    6. IMPORTANT CONCEPTS TO REMEMBER
    7. QUESTIONS FOR REVIEW
    8. QUESTIONS FOR DISCUSSION
    9. SUGGESTIONS FOR ADDITIONAL READING
    10. WEB SITES TO EXPLORE
  38. Chapter 30: The Personal Auto Policy
    1. GENERAL NATURE OF THE PERSONAL AUTO POLICY
    2. LIABILITY COVERAGE
    3. MEDICAL PAYMENTS COVERAGE
    4. UNINSURED MOTORIST COVERAGE
    5. POLICY CONDITIONS
    6. ENDORSEMENTS TO THE PAP
    7. BUYING AUTOMOBILE INSURANCE
    8. SUMMARY
    9. IMPORTANT CONCEPTS TO REMEMBER
    10. QUESTIONS FOR REVIEW
    11. QUESTIONS FOR DISCUSSION
    12. SUGGESTIONS FOR ADDITIONAL READING
    13. WEB SITES TO EXPLORE
  39. Chapter 31: Commercial Property Insurance
    1. COMMERCIAL PROPERTY COVERAGE
    2. COMMERCIAL PROPERTY DIRECT LOSS COVERAGES
    3. COMMERCIAL PROPERTY COVERAGE FOR INDIRECT LOSS
    4. BOILER AND MACHINERY INSURANCE
    5. TRANSPORTATION COVERAGES
    6. THE NATIONAL FLOOD INSURANCE PROGRAM
    7. INSURANCE AGAINST DISHONESTY
    8. PACKAGE POLICIES FOR BUSINESS FIRMS
    9. SUMMARY
    10. IMPORTANT CONCEPTS TO REMEMBER
    11. QUESTIONS FOR REVIEW
    12. QUESTIONS FOR DISCUSSION
    13. SUGGESTIONS FOR ADDITIONAL READING
    14. WEB SITES TO EXPLORE
  40. Chapter 32: Commercial Liability Insurance
    1. EMPLOYERS LIABILITY AND WORKERS COMPENSATION
    2. GENERAL LIABILITY INSURANCE
    3. CYBER LIABILITY INSURANCE
    4. COMMERCIAL AUTOMOBILE INSURANCE
    5. INSURANCE FOR BAILEES
    6. AVIATION INSURANCE
    7. EXCESS LIABILITY AND UMBRELLA LIABILITY COVERAGE
    8. IMPORTANT CONCEPTS TO REMEMBER
    9. QUESTIONS FOR REVIEW
    10. QUESTIONS FOR DISCUSSION
    11. SUGGESTIONS FOR ADDITIONAL READING
    12. WEB SITES TO EXPLORE
  41. Chapter 33: Surety Bonds, Trade Credit, and Financial Guaranty Insurance
    1. SURETY BONDS
    2. TRADE CREDIT INSURANCE
    3. FINANCIAL GUARANTY INSURANCE
    4. MORTGAGE GUARANTY INSURANCE
    5. IMPORTANT CONCEPTS TO REMEMBER
    6. QUESTIONS FOR REVIEW
    7. QUESTIONS FOR DISCUSSION
    8. SUGGESTIONS FOR ADDITIONAL READING
    9. WEB SITES TO EXPLORE
  42. Chapter 34: Insurance in the Future (Online)
    1. HEALTH AND RETIREMENT SECURITY
    2. GLOBALIZATION OF INSURANCE
    3. REGULATION
    4. PROTECTION FOR CATASTROPHE EXPOSURE
    5. CHANGES IN THE LEGAL ENVIRONMENT
    6. CHANGES IN THE INSURANCE INDUSTRY
    7. SOME PERSISTENT PROBLEMS
    8. CAREER OPPORTUNITIES IN INSURANCE
    9. CONCLUDING OBSERVATION
    10. IMPORTANT CONCEPTS TO REMEMBER
    11. QUESTIONS FOR REVIEW
    12. QUESTIONS FOR DISCUSSION
    13. SUGGESTIONS FOR ADDITIONAL READING
    14. WEB SITES TO EXPLORE
  43. Glossary
  44. AUTHOR INDEX
  45. SUBJECT INDEX