1 Find the risk before the contract
The common language of Paper 1: risk types, hazards, risk management and contract roles.
Risk, peril and hazard
- Risk is uncertainty of outcome; insurance mainly addresses pure risks that can produce loss. Definition
- A peril causes loss, such as fire; a hazard increases the likelihood or severity of loss. Compare
- Avoidance, reduction, transfer and retention are different decisions. Insurance finances risk; it does not remove the event itself. Exam
字眼定位
For what causes loss, identify the peril. For what makes loss more likely or severe, identify the hazard.
Three hazard categories
| Type | Focus | Example |
|---|---|---|
| Physical | Condition of property or environment | Defective wiring |
| Moral | Dishonesty or deliberate conduct | Inflating a claim |
| Morale | Carelessness because cover exists | Reduced loss-prevention effort |
How it is examined
Is the scenario a peril or a hazard?
- Identify the event directly causing loss
- Then decide whether the wording concerns likelihood, severity or the loss itself
Five roles that cannot be interchanged
- The proposer applies and normally pays premium; the insured is the person or interest exposed to risk. Definition
- The insurer accepts risk and pays contractual benefits; a beneficiary receives benefits but may not own policy rights. Compare
- Agents and brokers differ in whom they represent. Ask whose interests the intermediary legally represents. Trap
角色表
For surrender, assignment, beneficiary or claim questions, write who owns rights, who is the risk subject and who receives benefits.
