Principles of Risk Management and Insurance

Course Description

Principles of Risk Management and Insurance examines the basic principles and concepts of risk management as they apply to both personal and business environments, and introduces insurance contracts and policy analysis. The course covers the three broad categories of insurable exposure: property and casualty, life, and health and disability.

Within the SCNS taxonomy, RMI is the Risk Management and Insurance prefix. RMI2001 is the survey course of the discipline — the foundation on which the more specialized courses build, including RMI2110 (Personal Insurance Planning) and RMI2212 (Personal and Business Property Insurance). It appears at approximately five Florida institutions, including both state colleges and universities, and is commonly taken as a business elective or as the entry point to an insurance-focused certificate or degree.

The course is unusually practical for a survey. Its central organizing idea — identify exposures, then decide whether to avoid, retain, reduce, or transfer each one — is a decision framework students will use on their own finances long before they use it professionally.

Learning Outcomes

Required Outcomes

• Define risk, distinguish pure from speculative risk, and distinguish hazard, peril, and loss.
• Explain the risk management process: identify exposures, analyze frequency and severity, select techniques, implement, and monitor.
• Apply the avoid / retain / reduce / transfer framework to a given exposure and justify the choice.
• Explain the law of large numbers and the characteristics that make a risk commercially insurable.
• Describe adverse selection and moral hazard and explain how insurers control each.
• Identify the elements of an insurance contract and explain the doctrines of indemnity, insurable interest, subrogation, and utmost good faith.
• Read an insurance policy and locate its declarations, insuring agreement, exclusions, conditions, and endorsements.
• Explain deductibles, limits, coinsurance, and sublimits, and calculate a loss settlement under each.
• Describe the major property and casualty lines: homeowners, automobile, commercial property, and general liability.
• Describe the major life insurance forms — term, whole, universal, variable — and the purposes each serves.
• Describe health, disability income, and long-term care coverage, and the exposure each addresses.
• Describe the structure of the insurance industry: insurers, agents and brokers, underwriting, claims, and reinsurance.
• Explain state insurance regulation, solvency oversight, and consumer protection mechanisms.
• Analyze a personal or small-business risk profile and recommend a defensible risk management plan.

Optional Outcomes

• Describe enterprise risk management and its differences from traditional insurance-centered risk management.
• Describe employee benefits, workers' compensation, and social insurance programs.
• Describe captives, self-insurance, and alternative risk transfer.
• Describe cyber liability and other emerging exposures.
• Evaluate insurer financial strength ratings and explain what they do and do not indicate.
• Describe careers and professional designations in the insurance industry.

Major Topics

Required Topics

• Risk, uncertainty, and the cost of risk to individuals and society
• Types of risk: pure and speculative, static and dynamic, fundamental and particular
• The risk management process and risk identification techniques
• Loss frequency and severity; risk mapping and prioritization
• Risk control and risk financing techniques
• Insurance as a risk transfer mechanism; requisites of an insurable risk
• Adverse selection, moral hazard, and morale hazard
• Insurance contract law: offer and acceptance, consideration, legal purpose, competent parties
• Distinguishing features of insurance contracts: adhesion, aleatory, unilateral, conditional, personal
• Policy analysis: declarations, insuring agreement, exclusions, conditions, endorsements
• Deductibles, policy limits, coinsurance, and loss valuation
• Property insurance: homeowners forms, commercial property, business interruption
• Liability insurance: negligence, general liability, professional liability, umbrella
• Automobile insurance and the no-fault question
• Life insurance: term, whole, universal, variable; needs analysis
• Health, disability income, and long-term care insurance
• Insurer operations: marketing, underwriting, rating, claims, reinsurance
• Insurance regulation and solvency

Optional Topics

• Enterprise risk management
• Workers' compensation and employee benefits
• Captives, self-insurance, and alternative risk transfer
• Cyber, environmental, and emerging exposures
• Catastrophe modeling and reinsurance markets
• Insurance careers and professional designations

Resources & Tools

• Principles of Risk Management and Insurance (Rejda, McNamara) — the dominant text in this course nationally and in Florida.
• Fundamentals of Risk and Insurance (Vaughan) — the other standard.
• Florida Office of Insurance Regulation (floir.com) — rate filings, company financial data, and market reports, all public.
• Florida Department of Financial Services (myfloridacfo.com) — consumer services, agent licensing, and the Division of Consumer Services complaint data.
• Citizens Property Insurance Corporation (citizensfla.com) — Florida's state-created insurer of last resort; its policy forms and eligibility rules are free and are the clearest window into the Florida property market.
• NAIC (naic.org) — model laws, consumer guides, and the Consumer Information Source.
• Online Sunshine (leg.state.fl.us) — the Florida Insurance Code, Chapters 624–651, F.S., free and authoritative.
• Actual specimen policy forms — ISO homeowners and commercial forms, or Citizens' published forms — for the policy analysis exercises that are the heart of the course.
• The Institutes (CPCU/AINS) and The American College (CLU/ChFC) for students continuing to professional designations.

Career Pathways

• Insurance agent or producer — personal lines, commercial lines, life and health. Requires a Florida license; see the note below.
• Underwriter — evaluating and pricing submitted risks; the classic career-track entry role at a carrier.
• Claims adjuster — the largest single employment category in Florida insurance, and the one most directly driven by the state's catastrophe exposure.
• Risk manager — in-house at hospitals, municipalities, school districts, hospitality companies, and large employers.
• Loss control / safety consultant — inspecting and advising insured operations.
• Reinsurance and catastrophe analysis — Florida is a globally significant catastrophe risk market, which supports analytical roles that do not exist in most states.
• Financial services adjacent — financial planning, employee benefits consulting, surety and bonding.
• SOC codes 13-2053 Insurance Underwriters, 13-1031 Claims Adjusters, Examiners, and Investigators, and 41-3021 Insurance Sales Agents. Florida's insurance employment is concentrated in Jacksonville, Tampa, Orlando, and South Florida.

Special Information

⚠ Florida is the most distorted insurance market in the United States, and this course is where students learn why

Almost every general principle taught in a national textbook behaves differently in Florida, and a student who learns the general rule without the Florida overlay will give bad advice here. The essentials:

• Percentage hurricane deductibles. Florida homeowners policies carry a separate hurricane deductible expressed as a percentage of the dwelling limit, not a flat dollar amount. On a $400,000 home, a 2% hurricane deductible is $8,000 — and most people believe their deductible is the $1,000 on the declarations page. This single mechanic causes more surprise than any other in Florida insurance.
• Flood is excluded from every standard homeowners policy. Coverage comes from the NFIP or the private flood market, separately purchased, typically with a 30-day waiting period. Florida has more NFIP policies than any other state, and a very large share of Florida flood losses occur outside designated high-risk zones — where lenders do not require the coverage and buyers therefore decline it.
• Citizens Property Insurance Corporation is a state-created residual market insurer, not a normal company. Its eligibility rules, depopulation program, and assessment mechanism have no clean analogue in most states.
• The market has been under active legislative reconstruction. Florida enacted major property-insurance and tort reforms across 2022 and 2023 — including changes to assignment of benefits, one-way attorney fee provisions, litigation procedure, and comparative negligence — that were specifically aimed at insurer litigation costs. Rule 11 applies hard here: this is the fastest-moving insurance regulatory environment in the country, and a textbook chapter or study outline more than a couple of years old may describe repealed law. Verify against the Florida Insurance Code and the Office of Insurance Regulation, not against a secondary source.

⚠ Auto insurance: Florida does not require what most people assume it does

Florida is a no-fault state. Drivers must carry Personal Injury Protection (PIP), which pays a portion of the insured's own medical costs regardless of fault, historically capped at $10,000 — and lower where no emergency medical condition is diagnosed. Critically, Florida does not require bodily injury liability coverage in the way most states do.

The practical consequence is the single most useful fact in this course for a Florida resident: the driver who injures you may carry nothing at all for your injuries. Florida has one of the highest uninsured-motorist rates in the country. That makes uninsured/underinsured motorist coverage more valuable here than almost anywhere — and it is optional, inexpensive, and routinely declined by people trying to lower a premium. Repeal or restructuring of the no-fault system has been proposed repeatedly; verify current requirements before relying on any figure.

⚠ Licensing: this course does not license you, and the exam is not the hard part

Selling insurance in Florida requires a license issued by the Florida Department of Financial Services — different licenses for different lines (2-15 life and health, 2-20 general lines, 6-20 all-lines adjuster, and others), each with its own pre-licensing education requirement, state examination, fingerprinting, and continuing education. Completing RMI2001 does not satisfy the pre-licensing requirement by itself, though some degree programs carry an exemption for specific license types — verify with DFS, in writing, rather than assuming.

Career-honesty note worth stating plainly: the licensing exam is the easy gate. The hard part of agency work is that most entry-level producer roles are commission-based with a limited draw, and attrition in the first two years is high. Salaried carrier roles — underwriting, claims, loss control — are the more predictable entry into the industry and are where a degree is worth most. Florida's adjuster market is the exception to the commission rule and is unusually accessible, particularly after catastrophe events.

The organizing principle worth carrying out of the course

Insure what you cannot absorb. The instinct most people bring is the opposite: low deductibles on small, frequent, payable losses, and thin limits on the catastrophic ones. The defensible structure inverts it — take the highest deductible you can genuinely fund, and buy high liability limits and an umbrella, because a liability judgment, a long-term disability, or a premature death is the exposure that actually ends a household's finances. The most underinsured exposures for working people are consistently liability, disability, and life, in that order.

Course format and transfer

RMI2001 is a lecture course, 3 credits and approximately 45 contact hours, offered fall and spring at Daytona State with no prerequisite. Expect policy-reading exercises, case-based risk analysis, and calculation problems on deductibles, coinsurance, and loss settlement.

How Florida course levels affect transfer: the first digit denotes the year of offering, not transferability. 1000- and 2000-level courses transfer transparently between Florida public institutions; the boundary that matters is 2000 to 3000, where lower-division credit generally cannot satisfy an upper-division requirement. RMI2001 transfers as lower-division credit and commonly satisfies a business elective. It is not a general education social science course, and students heading to a business baccalaureate should confirm whether their target program requires an upper-division risk management course (frequently numbered RMI3011 or similar) that this will not replace.