Part I: True or False: (2.5 marks, 0.5 each) (ILOs: A1, A2)

1. Insurance is a risk treatment method that is best used for losses that happen frequently, and of which the severity is low.

( T / F )

2. An insurance contact is aleatory, which means that the values exchanged between the insured and insurer are not equal.

(T / F)

3. During an insurance hard market condition, a Companys Risk Manager would prefer to obtain more insurance coverages and renegotiate existing terms.

( T / F )

4. A business firm is allowed to insure the life of its CEO if a pecuniary interest is proven to the insurer.

(T / F)

5. Using retention as a risk treatment method is suitable if losses are unpredictable and have a high impact.

( T / F )