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MPF intermediaries
MPFMPF Intermediaries ExaminationAn underwriter says, 'We will accept this warehouse; it is a good risk.' Here 'risk' refers to:
Answer: the property being insured or considered for insurance. Practitioners may use 'risk' to mean the property or person at risk that they are insuring or considering insuring.Why not the others:• the premium the insurer will charge: The premium is the price of cover, not a meaning of 'risk'.• the peril insured against, such as fire: 'Risk' can mean the peril, as in 'all risks' cover, but here the word describes the building.• the uncertainty that any loss will occur: That is the general meaning of risk, but here the underwriter is describing the warehouse itself.Watch out: Applying the textbook definition of risk when practitioners are using the word for the thing insured.Rule: Practitioners may use 'risk' for the property or person insured, or for the peril insured against.Source: IA P1 Study Notes, 2024 Edition (8th ed., Nov 2024; for exams from 17 Feb 2025), 1.1.1 Note, p. 1/1
Applying the textbook definition of risk when practitioners are using the word for the thing insured.
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