1. Which of the following exposures to loss would be a likely basis for an insurance system? Explain why the exposures would or would not qualify as a basis for insurance.
a. The potential loss of domestic pets
b. The potential loss of farm animals
c. The potential loss of a person’s memory
d. The theft of a college student’s textbooks
e. The loss of a valuable stamp collection f. The possible rainout of a baseball game
2. What is the definition of a catastrophic loss?
3. Why are certain crime losses, such as the theft of furs and jewelry, a more difficult exposure to insure than fire loss? (Refer to ideal insurance transactions.)
4. What difficulties would be present in combining a group of men and women of the same age in the same life insurance pool?
5. What would happen to an insurance system in which the insureds were indifferent to the occurrence of losses?
