Risk Management and Insurance Practices

These flashcards focus on key terms and concepts related to risk management and insurance practices, preparing students for exams in these subjects.

Hold-Harmless Agreement

A contract in which one party agrees to assume the liability for damages or losses incurred by the other party.

Self-Insurance

A risk management strategy where an organization retains its own risks by setting aside funds to cover potential losses instead of purchasing insurance.

Captive Insurance

An insurance company created and owned by a parent company to provide coverage for its own risks.

Retrospective Rating Plan

A rating plan that adjusts the insured's premium for the current policy period based on the insured's loss experience during current policy periods.

Insurance Pool

A collective group or arrangement where organizations pool their resources to share risk and reduce costs.

Risk Control Transfer

A method of transferring risk exposure to another party through contracts or arrangements to reduce liability.

Exculpatory Clause

A contractual provision that relieves one party from liability resulting from a negligent or wrongful act.

Indemnity

A legal obligation of one party to compensate another for losses or damages.

Loss Limit

The maximum cap applied on each individual loss within a retrospective rating plan to limit losses included in the calculation of the premium.

Basic Form Agreement

A form of hold-harmless agreement that provides limited indemnification.

Group Self-Insurance Plan

An arrangement where multiple organizations come together to share the management of risks and insurance-related expenses.

Pooling and Funding Mechanism

A risk financing strategy that allows members to combine their resources to manage risks collectively.

Legal Enforceability

The ability of a contract to be upheld in a court of law.

Contractual Risk Transfer

The process of transferring risk from one party to another through a legally binding contract.

Management of Uncertainty

The process of identifying and mitigating risks to reduce the unpredictability of outcomes.