New Hampshire Insurance Licensing Practice Exam

The STARR! approach is a risk management technique that emphasizes various strategies to manage and mitigate risks within an organization. The components of STARR! include Retention, Reduction, and Sharing, which provide a framework for understanding how to handle risk exposure.

Reinsurance, while a valid strategy in the insurance industry for managing the risk of loss by spreading it among multiple insurers, does not fall under the STARR! framework. Instead, it is a practice used by insurance companies to ensure they remain solvent by distributing some of their risk to other insurers. Therefore, it is distinct from the core concepts of the STARR! approach, which focuses more on how organizations can directly respond to and manage risks on their own.

Understanding the components of STARR! helps professionals analyze the various strategies available for risk management. Retention involves accepting the risk and planning for possible outcomes. Reduction focuses on implementing measures to decrease the likelihood or impact of a risk. Sharing entails distributing the risk across different parties, such as through contracts or partnerships. Recognizing that reinsurance does not belong to this specific framework clarifies its role as a separate tool available to insurers but not a foundational principle of risk management strategies conveyed by STARR!.