CRIS Risk Financing & Insurance Programs Flashcards
6 cards from real CRIS practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CRIS Risk Financing & Insurance Programs flashcards as text
What is the main advantage of using an OCIP compared to requiring each subcontractor to provide their own insurance?
Answer: It provides uniform coverage limits and reduces the risk of coverage gaps caused by subcontractor policy lapses
OCIPs ensure consistent, owner-specified coverage for all enrolled parties, eliminating the risk that a subcontractor's individual policy lapses, is inadequate, or contains exclusions that create gaps.
Which of the following best describes 'finite risk insurance' as used in construction risk financing?
Answer: A risk transfer arrangement where both loss and investment components are blended, limiting the insurer's risk
Finite risk insurance blends risk transfer with risk financing, limiting the insurer's exposure while providing the insured with cash-flow benefits and smoothing loss volatility.
A construction company uses a 'pay-as-you-go' workers' compensation program. What is the primary operational benefit?
Answer: Premiums are calculated and billed based on actual payroll each pay period rather than estimated annual payroll
Pay-as-you-go workers' comp aligns premium payments with real-time payroll data, improving cash flow and reducing the risk of large audit adjustments at year-end.
When evaluating a risk retention group (RRG) for construction liability coverage, a risk manager should be most concerned about:
Answer: The RRG's capitalization, surplus adequacy, and claims-paying ability
Because RRGs are not protected by state guaranty funds, their financial strength and surplus levels are critical indicators of their ability to pay claims.
Under a loss-sensitive insurance program, the insured benefits most when:
Answer: The insured experiences better-than-expected loss results during the policy period
Loss-sensitive programs like retrospective rating or large-deductible plans reward insureds with lower net costs when actual losses are favorable compared to projections.
Which entity typically provides actuarial analysis to determine adequate funding levels for a construction firm's self-insured workers' compensation program?
Answer: A licensed casualty actuary or actuarial firm
A licensed actuary uses statistical loss development methods to project ultimate liabilities and recommend reserve levels for self-insured programs.