1. The term insurance can be defined in both financial and legal terms. How do these
definitions differ?
2. Describe the difference between direct and indirect losses. Give examples of each.
3. What is the difference between a hazard and a peril? Give examples of each.
4. How does insurance redistribute the costs of losses?
5. How does a moral hazard differ from a morale hazard? Give examples of each.
6. Explain the term proximate cause.
7. Explain the difference between pure and speculative risk.
8. Define the law of large numbers. What are its implications for an insurance system?
9. In what ways do insurance systems benefit society?
10. What are the major costs of insurance systems?
11. What is cash flow underwriting?
