Chapter 1: Managing Personal Risks 1. The Smith family, which consists of two parents and a one-year-old son, recently moved into a single home that includes a two-car garage, a garden shed, and a swimming pool. Their parents and their insurance agent counseled them that this is an important event in their lives and that, as new homeowners, they should make a conscious effort to use a structured risk management process to assess their loss exposures and develop and implement a risk management plan to manage them. They decide to undertake this project. a. Outline the steps the Smiths should follow in developing and implementing a risk management plan. b. What kinds of assets should the Smiths be identifying that are at possible risk of loss? c. What kinds of loss exposures can affect real and personal property? d. How would the insurance agent explain to the Smiths that they may be exposed to liability losses? c. Explain the difference between a loss prevention technique and a loss reduction technique. 1. Explain two types of risk financing techniques Rubric: 25 points in total for this question. For question a, 6 points total. 1 points for each step correctly identified Question b, 4 points total. Question c. 2 points total. Question d, 4 points total, 1 points for liability loss definition, 3 points for how the liability tous will influence the family assets loss. Questione, 4 points total Question f. 5 points total. 1 points for each correctly identified techniques. And 15 points for each correctly explained technique 2. XYZ Insurance has its home office in a state with a population that consists predominantly of people of a particular ethnic origin. XYZ wanted to encourage state residents to buy insurance policies, so it filed rates with the state insurance regulators that extended a flat 70 percent discount to all applicants of the predominant ethnic origin, after considering other rating factors Explain why the state regulators might not approve these rates based on each of the following rating objectives. a. Rates must be adequate to pay all claims and expenses b. Rates must not be unfairly discriminatory Rubric: 25 points in total for this question. For question a, 10 points total. Please explain what happens if rates are not adequate. For question b, 15 points total. Please explain from the angle of the relationship between loss potential and ethnicity