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🇮🇳 IRDAI IC38 (Insurance Agent) · flashcards
IRDAI IC38 (Insurance Agent) Introduction to Insurance and Risk Management Flashcards
49 question-and-answer cards covering Introduction to Insurance and Risk Management as it is examined in IRDAI IC38 (Insurance Agent). 24 of them are printed below, taken from across the deck — no signup, no paywall on the preview.
24 sample cards from the Introduction to Insurance and Risk Management deck
Sampled from the end of the deck, so these are different cards from the ones shown on the syllabus page.
What is a 'moral hazard'? Give an example.
An increase in risk arising from a person's dishonesty or character, e.g., deliberately causing or exaggerating a loss to claim insurance.
What is a 'morale hazard' (attitudinal hazard)?
Carelessness or indifference to loss because one is insured, e.g., leaving a car unlocked since damage would be covered—without intent to defraud.
What are the main methods of handling risk?
Risk avoidance, risk retention, risk reduction/control (loss prevention), and risk transfer (e.g., insurance).
What is 'risk avoidance' as a method of handling risk?
Eliminating the chance of loss by not engaging in the activity that creates the risk (e.g., not building a factory in a flood-prone zone).
What is 'risk retention' as a method of handling risk?
Deciding to bear the risk oneself, either consciously (self-insurance, deductibles) or unconsciously, by paying losses from one's own funds.
What is 'risk reduction' (loss control) as a method of handling risk?
Taking measures to lower the frequency or severity of losses, such as installing fire alarms, sprinklers, or safety training—loss prevention and loss minimisation.
What is 'risk transfer', and how does insurance fit in?
Shifting the financial burden of a risk to another party; insurance is the most common form, transferring risk to the insurer in exchange for a premium.
Which method of handling risk is insurance an example of, and why is it suited to certain risks?
Insurance is a method of risk transfer, best suited to risks that are low in frequency but potentially high in severity, where individuals cannot bear the loss alone.
What is a 'pure risk'? Is it insurable?
A pure risk involves only the possibility of loss or no loss (no chance of gain), e.g., fire or death. Pure risks are generally insurable.
What is a 'speculative risk'? Is it insurable?
A speculative risk involves the chance of loss, no change, or gain, e.g., business ventures or stock trading. Speculative risks are generally not insurable.
What are the key requirements for a risk to be insurable?
The loss must be measurable in money, accidental/fortuitous, the exposures large and homogeneous, there must be insurable interest, the premium economically affordable, and not against public policy.
Give examples of risks that are generally non-insurable.
Speculative/business risks, market and price-fluctuation risks, gradual wear and tear, deliberate (intentional) losses, fines/penalties, and catastrophic risks too large to pool, e.g., war (often excluded).
What is 'insurable interest', a requirement for an insurable risk?
A legally recognised financial relationship whereby the insured benefits from the continued existence of the subject and suffers loss from its damage or destruction.
What is the role of insurance within the broader risk management framework?
Insurance is one tool—specifically the risk financing/transfer step—used after risks are identified, analysed and reduced; it funds losses that cannot be economically avoided or retained.
What are the typical steps in the risk management process?
Identify the risks, evaluate/measure them (frequency and severity), select appropriate techniques to handle them (avoid, retain, reduce, transfer), implement, and monitor/review.
What does the principle 'sharing of losses among the many' mean?
The losses suffered by a few members of an insured group are spread across and paid for by the premium contributions of all members, so no single person bears the full burden.
What is the 'Law of Large Numbers' and why is it vital to insurance?
A statistical principle stating that as the number of similar, independent exposures increases, the actual loss experience moves closer to the expected (predicted) loss, allowing insurers to estimate losses and set premiums accurately.
How does probability relate to the pricing of insurance?
Insurers use the probability (likelihood) of a loss event, derived from past data and large samples, to estimate the expected loss, which forms the basis for calculating the premium.
If the probability of loss is 0.02 and each loss is ₹50,000, what is the expected (pure) loss cost per policy?
Expected loss = probability × severity = 0.02 × ₹50,000 = ₹1,000 per policy.
What is the 'premium' and what does it represent economically?
The premium is the price paid by the insured to transfer risk to the insurer; economically it is the price of risk transfer, reflecting the expected cost of losses plus expenses and margins.
What are the main components that make up an insurance premium?
The pure/risk premium (expected loss cost), loading for expenses and commissions, a margin for contingencies and profit, and adjustment for the time value of money/investment income.
What are insurance 'reserves' and why are they maintained?
Reserves are funds set aside by insurers from premiums to meet future and outstanding claim liabilities, ensuring the insurer can pay claims when they fall due.
How does the 'time value of money' affect insurance, especially life insurance?
Premiums collected now are invested and earn returns over time, so insurers can charge less today because money grows before claims are paid; the present value of future claims underlies premium and reserve calculations.
What is reinsurance, and how does it 'spread risk further'?
Reinsurance is insurance taken by an insurer from a reinsurer to transfer part of its risk; it spreads large or accumulated risks beyond the original insurer, increasing capacity and protecting solvency against catastrophic or large losses.
What this deck covers
The Introduction to Insurance and Risk Management deck follows the IRDAI IC38 (Insurance Agent) Introduction to Insurance and Risk Management syllabus — 3 chapters and 13 topics — so questions land on material that is genuinely examinable rather than trivia around it. That works out to roughly 16.3 cards per chapter.
Answers are written to be recallable, not just readable — averaging about 168 characters, which is long enough to carry the reasoning and short enough to say out loud.
A deck like this earns its keep on the second and third pass. Read the syllabus first so you know the shape of the subject, then use the cards to find the specific facts that have not stuck.
Introduction to Insurance and Risk Management flashcards FAQ
How many Introduction to Insurance and Risk Management flashcards are in this IRDAI IC38 (Insurance Agent) deck?
49 cards. This page previews 24 of them, sampled evenly across the deck so you can judge the difficulty before installing anything.
Are these IRDAI IC38 (Insurance Agent) flashcards free?
Yes. The preview here is free to read with no signup, and the full 49-card deck is free inside the Examius app.
What do the Introduction to Insurance and Risk Management cards cover?
They follow the IRDAI IC38 (Insurance Agent) Introduction to Insurance and Risk Management syllabus — 3 chapters and 13 topics — so the questions track what is actually examinable.
How should I use these flashcards?
Read the syllabus first so you know the shape of the subject, then drill the deck. Examius schedules each card with spaced repetition, so cards you keep missing come back sooner and ones you know drift further apart.