PSI Ohio Insurance Practice Exam

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Study for the Ohio Insurance Test. Prepare with flashcards and multiple choice questions, each question accompanied by hints and explanations. Excel in your exam!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

Which of the following is a purpose of risk management in insurance?

To eliminate all risks
To assess and control risks
To avoid legal issues
To maximize profits

The correct answer is: To assess and control risks

The purpose of risk management in insurance primarily revolves around assessing and controlling risks. This process involves identifying potential risks that could affect an insured entity or individual, analyzing the likelihood and impact of those risks, and implementing strategies to mitigate them. Effective risk management does not seek to eliminate all risks, as that is often impractical or impossible; instead, it focuses on managing those risks in a way that protects the insured's interests while ensuring the sustainability of the insurance provider. By systematically controlling risks, insurance companies can provide policies that are more aligned with the actual exposure faced by the insured, leading to better underwriting and pricing decisions. This proactive approach not only safeguards the insured but also enhances the overall financial stability of the insurance market.