PART 1 RISK AND THE RISK MANAGEMENT PROCESS 1
1 Introduction to Risk 2
The Burden of Risk 3
Definitions of Risk 4
Sources of Risk 5
Measurement of Risk 8
Management of Risk 11
2 Risk Identification and Evaluation 14
Risk Identification 15
Risk Evaluation 17
Accuracy of Predictions 25
3 Property and Liability Loss Exposures 30
Property Loss Exposures 31
Liability Exposures 32
Types of Liability Damages 33
Criminal and Civil Law 35
Torts 36
Basic Law of Negligence 36
Defenses Against Negligence Claims 37
Factors Leading to Higher Standards of Care 38
Types of Liability Exposures 41
Integrated Risk Exposures 50
Miscellaneous Liability 50
4 Life,Health,and Loss of Income Exposures 53
Exposures Due to Premature Death 54
Exposures Due to Loss of Health 62
Other Income Loss Exposures 71
5 Risk Management Techniques:Noninsurance Methods 75
Risk Avoidance 76
Loss Control 76
Risk Retention 80
Risk Transfer 83
The Value of Risk Management 85
6 Insurance as a Risk Management Techniaue:Principles 89
The Nature of Insurance 90
Principle of Indemnity 91
Principle of Insurable Interest 91
Principle of Subrogation 93
Principle of Utmost Good Faith 94
Requisites of Insurable Risks 97
Requirements of an Insurance Contract 101
Distinguishing Characteristics of Insurance Contracts 102
Role of Agents and Brokers 103
Principles of Social Insurance 105
Social and Economic Values and Costs of Insurance 107
7 Insurance as a Risk Management Technique:Polincy Provisions 112
Declarations 113
The Insuring Agreement 113
Exclusions 114
Common Policy Conditions 117
Definitions 121
Basis of Recovery 121
Clauses Limiting Amounts Payable 122
8 Selecting and Implementing Risk Management Techniques 133
Avoid Risks If Possible 134
Implement Appropriate Loss Control Measures 134
Select the Optimal Mix of Risk Retention and Risk Transfer 138
Implementing Decisions 143
Subjective Risk Management 146
Enterprise Risk Management and Alternative Risk Transfer 147
PART 2 COMMERCIAL RISK MANAGEMENT APPLICATIONS：PROPERTY-LIABILITY 153
9 Risk Management and Commercial Property—Part Ⅰ 154
The Simplified Commercial Lines Portfolio Policy 155
Boiler and Machinery Insurance 159
Business Owners Program 160
Other Commercial Property Forms 161
Reporting Forms 162
Time-Element Contracts 163
Consequential Loss Coverage 163
Contracts Without Time Element 167
10 Risk Management and Commercial Property—Part Ⅱ 172
Transportation Insurance 173
Ocean Transportation Insurance 176
Land Transportation insurance 182
Floater Contracts 183
Credit Insurance 184
Title Insurance 186
Plate Glass Insurance 187
Crime 187
Crime Insurance and Bonds 188
Burglary, Robbery, and Theft Insurance 190
Risk Management of the Crime Peril 192
Disaster Risk Management:A Case Study 192
11 Business Liability and Risk Management Insurance 196
Common Liability Contract Provisions 197
Commercial Liability Insurance 203
Commercial General Liability 203
Employment Practices Liability 206
Business Auto Coverage 206
Professional Liability Insurance 209
Captive Insurance Companies 213
Workers Compensation Insurance 219
12 Workers Compensation and Alternative Risk Financing 219
Major Reform 220
Risk Management and Workers Compensation 228
Conclusions 237
PART 3 PERSONAL RISK MANAGEMENT APPLICATIONS：PROPERTY—LIABILITY 239
13 Risk Management for Auto Owners—Part Ⅰ 240
The High Cost of Automobile Losses 240
Insurance Claims 241
The Need for Insurance 243
Personal Automobile Policy 243
Personal Automobile Policy Components 244
Automobile Insurance and the Law 255
Risk Management and Personal Automobile Rating 259
14 Risk Management for Auto Owners—Part Ⅱ 266
Premiums and Death Rates 266
Car Theft 268
Who Pays 270
Cost Containment 270
No-Fault 272
Alcohol and Driving 275
New Laws 275
Advances in Driver and Auto Safety 276
A Potential Crisis 278
Airbags, Auto Property Damage, and Teenage Drivers 278
15 Risk Management for Homeowners 281
Homeowners Program:Development 282
Outline of Homeowners Coverages 283
Analysis of Homeowners Policy 285
Perils Covered in Homeowners Insurance 292
Optional Property Endorsements to Homeowners Policies 298
Flood Insurance 302
Personal Articles Floater (PAF) 302
Mobile Home Endorsement to Homeowners Policy 303
Comprehensive Personal Liability and Medical Payments Insurance 304
Dwelling Program (Not Homeowners ) 311
Farmowners —Ranchowners Policy 313
Risk Management—Personal Lines 313
Personal Risk Management 317
PART 4 RISK MANAGEMENT APPLICATIONS：LIFE,HEALTH, AND INCOME EXPOSURES 325
16 Loss of Life 326
Types of Life Insurance 327
Income Tax Treatment of Life Insurance 336
Life Insurance Contract Provisions 337
17 Loss of Health 351
Health Insurance Providers 352
Mechanics of Cost Sharing 355
Health Expense Insurance 357
Disability Income Insurance 363
Health Insurance Policy Provisions 364
Health Care Reform 367
18 Retirement Planning and Annuities 374
Structure of Annuities 375
Annuity Characteristics 376
Annuity Taxation 381
19 Employee Benefits:Life and Health Benefits 387
Reasons for Employee Benefits 388
Premature Death Benefits 389
Health Expense Benefits 395
Disability Income Benefits 403
20 Employee Benefits:Retirement Plans 408
Social Security Retirement Benefits 409
Pension Plans 412
Plan Qualification 413
Deferred Profit-Sharing Plans 422
Employee Savings Plans 423
Individual Retirement Accounts 424
Simple Plans 426
Keogh Plans 426
Section 403(b)Plans 427
21 Financial and Estate Planning 431
Financial Planning 432
Estate Planning 432
A Case Study:The Johnson Family 439
Considerations in Buying Life and Health Insurance 448
PART 5 THE RISK MANAGEMENT ENVIRONMENT 455
22 Risk Management and the Insurance Industry 456
The Field of Insurance 457
Types of Insurers 460
Channels of Distribution in Insurance 464
Globalization of Risk Management and the Insurance Industry 471
23 Functions and Organization of Insurers 476
Functions of Insurers 477
Reinsurance 491
24 Government Regulation of Risk Management and Insurance 497
Why Insurance Is Regulated 498
The Legal Background of Regulation 499
The McCarran-Ferguson Act 500
Federal versus State Regulation 502
Responsibilities of the Insurance Regulators 504
Miscellaneous Insurance Laws 509
Tort Reform 511
Taxation of Insurance 512