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Table of Contents

    • About the Authors
    • Acknowledgments
    • Dedications
    • Preface
    • 1The Nature of Risk: Losses and Opportunities
      • 1.1Links
      • 1.2The Notion and Definition of Risk
      • 1.3Attitudes toward Risks
      • 1.4Types of Risks—Risk Exposures
      • 1.5Perils and Hazards
      • 1.6Review and Practice
    • 2Risk Measurement and Metrics

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      • 2.1Links

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      • 2.2Quantification of Uncertainty via Probability Models

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      • 2.3Measures of Risk: Putting It Together

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      • 2.4Review and Practice

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    • 3Risk Attitudes: Expected Utility Theory and Demand for Hedging

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      • 3.1Links

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      • 3.2Utility Theory

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      • 3.3Uncertainty, Expected Value, and Fair Games

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      • 3.4Choice under Uncertainty: Expected Utility Theory

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      • 3.5Biases Affecting Choice under Uncertainty

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      • 3.6Risk Aversion and Price of Hedging Risk

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      • 3.7Information Asymmetry Problem in Economics

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      • 3.8Why Corporations Hedge

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      • 3.9Review and Practice

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    • 4Evolving Risk Management: Fundamental Tools

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      • 4.1Links

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      • 4.2The Risk Management Function

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      • 4.3Beginning Steps: Communication and Identification

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      • 4.4Projected Frequency and Severity and Cost-Benefit Analysis—Capital Budgeting

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      • 4.5Risk Management Alternatives: The Risk Management Matrix

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      • 4.6Comparisons to Current Risk-Handling Methods

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      • 4.7Appendix: Forecasting

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      • 4.8Review and Practice

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    • 5The Evolution of Risk Management: Enterprise Risk Management

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      • 5.1Links

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      • 5.2Enterprise Risk Management within Firm Goals

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      • 5.3Risk Management and the Firm’s Financial Statement—Opportunities within the ERM

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      • 5.4Risk Management Using the Capital Markets

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    • 6The Insurance Solution and Institutions

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      • 6.1Links

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      • 6.2Nature of Insurance

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      • 6.3Ideal Requisites for Insurability

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      • 6.4Types of Insurance and Insurers

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      • 6.5Appendix: More Exposures, Less Risk

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      • 6.6Review and Practice

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    • 7Insurance Operations

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      • 7.1Links

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      • 7.2Insurance Operations: Marketing, Underwriting, and Administration

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      • 7.3Insurance Operations: Actuarial and Investment

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      • 7.4Insurance Operations: Reinsurance, Legal and Regulatory Issues, Claims, and Management

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      • 7.5Appendix: Modern Loss Reserving Methods in Long Tail Lines

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      • 7.6Review and Practice

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    • 8Insurance Markets and Regulation

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      • 8.1Links

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      • 8.2Insurance Market Conditions

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      • 8.3Insurance Regulation

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      • 8.4Review and Practice

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    • 9Fundamental Doctrines Affecting Insurance Contracts

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      • 9.1Links

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      • 9.2Agency Law: Application to Insurance

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      • 9.3Requirements of a Contract

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      • 9.4Distinguishing Characteristics of Insurance Contracts

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      • 9.5Review and Practice

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    • 10Structure and Analysis of Insurance Contracts

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      • 10.1Links

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      • 10.2Entering into the Contract

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      • 10.3The Contract

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      • 10.4Review and Practice

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    • 11Property Risk Management

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      • 11.1Links

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      • 11.2Property Risks

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      • 11.3E-Commerce Property Risks

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      • 11.4Global Property Exposures

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      • 11.5Review and Practice

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    • 12The Liability Risk Management

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      • 12.1Links

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      • 12.2Nature of the Liability Exposure

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      • 12.3Major Sources of Liability

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      • 12.4Possible Solutions

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      • 12.5Review and Practice

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    • 13Multirisk Management Contracts: Homeowners

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      • 13.1Links

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      • 13.2Packaging Coverage, Homeowners Policy Forms, and the Special Form (HO-3)

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      • 13.3Endorsements

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      • 13.4Other Risks

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      • 13.5Personal Umbrella Liability Policies

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      • 13.6Shopping for Homeowners Insurance

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      • 13.7Review and Practice

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    • 14Multirisk Management Contracts: Auto

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      • 14.1Links

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      • 14.2The Fault System and Financial Responsibility Laws

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      • 14.3Ensuring Auto Insurance Availability

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      • 14.4Types of Automobile Policies and the Personal Automobile Policy

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      • 14.5Auto Insurance Premium Rates

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      • 14.6Review and Practice

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    • 15Multirisk Management Contracts: Business

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      • 15.1Links

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      • 15.2Commercial Package Policy and Commercial Property Coverages

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      • 15.3Other Property Coverages

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      • 15.4Commercial General Liability Policy and Commercial Umbrella Liability Policy

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      • 15.5Other Liability Risks

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      • 15.6Review and Practice

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    • 16Risks Related to the Job: Workers’ Compensation and Unemployment Compensation

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      • 16.1Links

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      • 16.2Workers’ Compensation Laws and Benefits

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      • 16.3How Benefits Are Provided

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      • 16.4Workers’ Compensation Issues

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      • 16.5Unemployment Compensation

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      • 16.6Review and Practice

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    • 17Life Cycle Financial Risks

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      • 17.1Links

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      • 17.2The Risks Related to Mortality

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      • 17.3The Risks Related to Longevity

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      • 17.4The Risks Related to Health and Disability

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      • 17.5Global Trends and Their Impact on Demography and the Life Cycle Risks

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      • 17.6Appendix: How Much Life Insurance to Buy?

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      • 17.7Review and Practice

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    • 18Social Security

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      • 18.1Links

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      • 18.2Definition, Eligibility, Benefits, and Financing of Social Security

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      • 18.3Medicare

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      • 18.4Issues and Global Trends in Social Security

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      • 18.5Review and Practice

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    • 19Mortality Risk Management: Individual Life Insurance and Group Life Insurance

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      • 19.1Links

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      • 19.2How Life Insurance Works

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      • 19.3Life Insurance Market Conditions and Life Insurance Products

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      • 19.4Taxation, Major Policy Provisions, Riders, and Adjusting Life Insurance for Inflation

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      • 19.5Group Life Insurance

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      • 19.6Review and Practice

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    • 20Employment-Based Risk Management (General)

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      • 20.1Links

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      • 20.2Overview of Employee Benefits and Employer Objectives

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      • 20.3Nature of Group Insurance

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      • 20.4The Flexibility Issue, Cafeteria Plans, and Flexible Spending Accounts

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      • 20.5Federal Regulation Compliance, Benefits Continuity and Portability, and Multinational Employee Benefit Plans

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      • 20.6Review and Practice

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    • 21Employment-Based and Individual Longevity Risk Management

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      • 21.1Links

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      • 21.2The Nature of Qualified Pension Plans

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      • 21.3Types of Qualified Plans, Defined Benefit Plans, Defined Contribution Plans, Other Qualified Plans, and Individual Retirement Accounts

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      • 21.4Annuities

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      • 21.5Pension Plan Funding Techniques

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      • 21.6Review and Practice

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    • 22Employment and Individual Health Risk Management

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      • 22.1Links

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      • 22.2Group Health Insurance: An Overview, Indemnity Health Plans, Managed-Care Plans, and Other Health Plans

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      • 22.3Individual Health Insurance Contracts, Cancer and Critical Illness Policies, and Dental Insurance

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      • 22.4Disability Insurance, Long-Term Care Insurance, and Medicare Supplementary Insurance

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      • 22.5Review and Practice

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    • 23Cases in Holistic Risk Management

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      • 23.1Links

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      • 23.2Case 1: The Smith Family Insurance Portfolio

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      • 23.3Case 2: Galaxy Max, Inc., Employee Benefits Package

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      • 23.4Case 3: Nontraditional Insurance Programs and Application to the Hypothetical Loco Corporation

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      • 23.5Review and Practice

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      • 23.6Chapter Bibliography

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    • AAppendix A

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      • A.1Sample Homeowners Special Form (HO-3) HO 00 03 05 01

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    • BAppendix B

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      • B.1Sample Personal Automobile Policy (PAP) PP 00 01 01 05

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    • CAppendix C

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      • C.1Sample State Farm Whole Life Insurance Policy Basic Plan Description

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    • DAppendix D

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      • D.1Sample Universal Life Insurance Policy Basic Plan Description

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