CPHRM Risk Financing 3

Question 1

A healthcare organization's risk financing feasibility study should include all of the following EXCEPT:

Accepted Answer

The organization's marketing strategy for new service lines

Answer

Five-year historical loss data by line of coverage

Answer

Actuarial projections of expected losses and variability

Answer

Cash-flow analysis of a funded self-insurance program

Question 2

Which financial metric best measures the adequacy of a self-insured healthcare organization's loss reserves relative to its exposure?

Accepted Answer

Loss development factor (LDF)

Answer

Current ratio

Answer

Reserve-to-payroll ratio

Answer

Debt-service coverage ratio

Question 3

Under a finite risk insurance arrangement, the insured organization transfers:

Accepted Answer

Limited underwriting risk combined with significant timing risk, usually with profit-sharing provisions

Answer

All underwriting risk to the insurer with no premium adjustment

Answer

Catastrophic excess losses only, retaining all attritional losses

Answer

Frequency risk but not severity risk to the insurer

Question 4

What is the primary advantage of a group captive compared to a pure captive for a mid-sized healthcare organization?

Accepted Answer

Lower capitalization requirements through shared ownership and pooled risk among members

Answer

Complete control over investment strategy without other members

Answer

Unlimited reinsurance capacity at no additional cost

Answer

Exemption from all state insurance department oversight

Question 5

In healthcare risk financing, the term 'funded retention' means the organization:

Accepted Answer

Sets aside dedicated assets to cover anticipated self-insured losses

Answer

Transfers retained losses to a third-party guarantor

Answer

Retains risk without any financial reserves

Answer

Funds only excess losses above the SIR layer

Question 6

When a risk manager benchmarks the organization's total cost of risk (TCOR), which components should be included?

Accepted Answer

Insurance premiums, retained losses, risk management administrative costs, and indirect costs of risk

Answer

Insurance premiums only

Answer

Premiums and reinsurance recoverables only

Answer

Retained losses and indirect costs, excluding insurance premiums

Question 7

A healthcare organization using a loss-sensitive insurance program will see its renewal premium increase if:

Accepted Answer

The organization's actual losses during the policy period exceed expected losses

Answer

The industry-wide medical malpractice frequency decreases

Answer

Market reinsurance capacity increases significantly

Answer

The organization expands into a new geographic market