Risk Management
FINC330-1401A-01: Risk Management01
1,200 words (2 pages) and included reference page
Part 1
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What is the meaning of the term reinsurance?
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Explain the reasons for reinsurance.
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Explain the term securitization of risk.
Part 2
What unfair trade practices are each of the following insurance agents violating? Explain the terms that you use.
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Agent Jones offers a client to pay a portion of the premium if the client purchases a policy.
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Agent Peterson convinces a client to replace a life insurance policy with a new policy that adds little value.
Part 3
Julia owns a building worth $800,000. She insures the building for $300,000 with Company A, $400,000 with Company B, and $100,000 with Company C. There is a fire, and the building sustains $100,000 in damage.
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How much will Julia collect in insurance?
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How much will each company pay?
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What insurance term describes this situation?