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CII IF1 > All Chapters > Flashcards

All Chapters Flashcards

1
Q 
A claim for a new windscreen is an example of an event that is
A.  High Frequency and High Severity
B.  High Frequency and Low Severity
C.  Low Frequency and High Severity
D.  Low Frequency and Low Severity
A

B. High Frequency and Low Severity

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2
Q

The main elements of risk are

A. Certainty and Predictability
B. Certainty and Unpredictability
C. Uncertainty and Predictability
D. Uncertainty and Unpredictability

A

D. Uncertainty and Unpredictability

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3
Q

The key components of risk management are
A. analysis, control and insurable interest
B. identification, analysis and control
C. identification, analysis and frequency
D. identification, control and predictability

A

B. identification, analysis and control

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4
Q 
Which type of risk arises from a cause outside the control of any one individual and affects a large number of people?
A.  A fundamental risk
B.  A particular risk
C.  A pure risk
D.  A speculative risk
A

A. A fundamental risk

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5
Q 
The risk of a commercial company losing an important contract to a competitor is NOT generally insurable because the risk is
A.  fundamental
B.  particular
C.  pure
D.  speculative
A

D. speculative

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6
Q 
Key components in assessing the level of risk are
A.  certainty and predictability
B.  frequency and severity
C.  insurable interest and indemnity
D.  uncertainty and predictability
A

B. frequency and severity

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7
Q

In relation to insurance, a poor hazard is usually
A. a risk that can only be covered under special terms
B. something which an underwriter must remove before a proposal can be accepted
C. something which increases the risk of loss arising under a policy
D. something which is listed within a policy as an event for which cover is provided

A

C. something which increases the risk of loss arising under a policy

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8
Q 
A tsunami is an example of an event that is 
A.  high frequency and high severity
B.  high frequency and low severity
C.  low frequency and high severity
D.  low frequency and low severity
A

C. low frequency and high severity

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9
Q 
Following a review, a large company has decided to restrict its purchase of non-compulsory insurance to amounts in excess of a certain level.  This decision represents an increase in the company's
A.  moral hazard
B.  risk retention
C.  risk transfer
D.  uninsurable risks
A

B. risk retention

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10
Q

What is the main purpose of Insurance Premium Tax?
A. To support customers of insolvent insurers
B. To raise revenue for the Government
C. A charge levied to join the Association of British Insurers
D. A charge levied to be a Chartered Insurance Institute member

A

B. To raise revenue for the Government

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11
Q

The main reason a window cleaner purchases insurance for public liability is to provide him with
A. a fund to pay any claims
B. insurance that is required for his trade
C. more trade as he can show he is risk adverse
D. peace of mind

A

D. peace of mind

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12
Q 
A company manufactures ink cartridges, but due to a manufacturing fault the cartridges leak, causing damage to external property.  What type of policy would cover the manufacturer against a claim?
A.  A business interruption policy
B.  A material damage policy
C.  A product liability policy
D.  A public liability policy
A

C. A product liability policy

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13
Q

The main benefit to an individual when insuring her house is that
A. it reduces the chance of damage to the property
B. maintenance costs are covered
C. mortgage payments are lower
D. the risk of loss is transferred

A

D. the risk of loss is transferred

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14
Q 
A person who is risk adverse will generally transfer risk away through the use of
A.  insurance
B.  risk assessment
C.  risk surveys
D.  savings and investment
A

A. insurance

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15
Q

A risk is co-insured between two insurers. If one insurer becomes insolvent and CANNOT pay a valid claim, what is the responsibility of the other insurer?
A. It has no responsibility as the contract is void
B. It is only responsible for its signed percentage
C. If it is a compulsory Insurance it must settle the claim in full
D. It must always settle the claim in full

A

B. It is only responsible for its signed percentage

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16
Q 
An individual purchases travel insurance for when he goes on holiday without realising that his household policy also covers some similar elements.  This is known as
A.  co-insurance
B.  dual insurance
C.  re-insurance
D.  self-insurance
A

B. dual insurance

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17
Q 
Mark receives policy documentation for his motor insurance policy which shows the premium as £100 and shows an additional amount for Insurance Premium Tax (IPT).  How much IPT will be charged on the premium?
A.  £5
B.  £12
C.  £15
D.  £25
A

B. £12

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18
Q 
Which type of insurance company by definition accepts more than one class of insurance business?
A.  A captive insurance company
B.  A composite insurance company
C.  A mutual insurance company
D.  A proprietary insurance company
A

B. A composite insurance company

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19
Q

The main financial advantage for an insurer that operates on a direct basis is that it
A. can charge higher premiums
B. does not have to pay commission charges
C. incurs smaller advertising costs
D. receives fewer claims

A

B. does not have to pay commission charges

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20
Q 
Which individuals provide financial backing for Lloyd's syndicates?
A.  Managing agents
B.  Members' agents
C.  Names
D.  Underwriters
A

C. Names

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21
Q 
The third party which sometimes collects premiums from the insured on behalf of the insurer is the 
A.  intermediary
B.  re-insurer
C.  risk manager
D.  underwriter
A

A. intermediary

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22
Q

What type of business does a re-insurer usually accept?
A. Business from individuals who have already insured the risk with an insurer
B. Business from non-insurance companies which have large insurance needs
C. Business originally underwritten by an insurer
D. Business which an insurer has refused to underwrite

A

C. Business originally underwritten by an insurer

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23
Q 
An electrical fault has caused insured fire damage in excess of £10,000.  Which expert would the insured normally appoint to negotiate with the insurer on his behalf?
A.  Electrical engineer
B.  Forensic scientist
C.  Loss adjuster
D.  Loss assessor
A

D. Loss assessor

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24
Q 
Lloyd's is
A.  an insurance company
B.  an insurance market
C.  an insurance syndicate
D.  a Government body
A

B. an insurance market

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25
Q

Why might a company use an intermediary when considering the purchase of insurance?
A. To acquire protection against the insolvency of an insurer
B. To pay reduced Insurance Premium Tax
C. To ensure that the premium can be written off against Insurance Premium Tax
D. To obtain advice on the type of policy that best suits its needs.

A

D. To obtain advice on the type of policy that best suits its needs.

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26
Q

The London Market is predominantly associated with the placing of what type of risks?
A. Aviation liability insurance risks only
B. Complex international insurance and re-insurance programmes
C. Marine liability insurance risks only
D. Motor fleet insurance risks up to a premium of £500,000

A

B. Complex international insurance and re-insurance programmes

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27
Q

Which insurers make up the London Market?
A. Re-insurers and Lloyd’s syndicates only
B. Lloyd’s syndicates and captive insurers only
C. Insurers, re-insurers, Lloyd’s syndicates and protection and indemnity club members
D. Insurers, re-insurers, Lloyd’s syndicates and captive insurers

A

C. Insurers, re-insurers, Lloyd’s syndicates and protection and indemnity club members

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28
Q 
What type of insurer is owned by a non-insurance parent company and is established with the express purpose of providing cover for the parent company's own risks?
A.  A captive insurer
B.  A Lloyd's syndicate
C.  A mutual insurer
D.  A proprietary insurer
A

A. A captive insurer

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29
Q 
An insurer owned entirely by its policyholders is a 
A.  captive insurer
B.  co-insurer
C.  mutual insurer
D.  tied agent
A

C. mutual insurer

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30
Q 
An entity that enables potential policyholders to complete a single online proposal and obtain quotes from several different insurers NOT associated with the entity is known as
A. a data controller
B.  an insurance aggregator
C.  a mutual insurer
D.  a tied agent
A

B. an insurance aggregator

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31
Q

Which organisation provides information and technical services to underwriting businesses in the Lloyd’s market?
A. British Insurance Brokers’ Association
B. Lloyd’s Market Association
C. London and International Insurance Brokers’ Association
D. London Market Regional Committee

A

B. Lloyd’s Market Association

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32
Q

What element of an insurance contract is likely to be affected by purchasing insurance direct from a UK insurer?
A. The amount of Insurance Premium Tax payable
B. The complaints process
C. The premium payable
D. The protection should the insurer fail

A

C. The premium payable

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33
Q

What is meant by consideration in the context of a valid contract between two parties?
A. Each party’s duty to act fairly towards the other.
B. Each party’s duty to act with good faith.
C. Each party’s legal capacity to enter into the contract.
D. Each party’s side of the bargain which supports the contract.

A

D. Each party’s side of the bargain which supports the contract.

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34
Q

Corrine offers to supply filing cabinets to Debra who accepts the offer. What further action is required in order that a legally enforceable contract exists between them?
A. Another person needs to witness the agreement.
B. Debra needs to agree to pay Corrine for the filing cabinets.
C. The filing cabinets need to be delivered to Debra.
D. The terms of the agreement need to be written down.

A

B. Debra needs to agree to pay Corrine for the filing cabinets.

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35
Q

Who may terminate a private medical insurance contract?
A. The insured only.
B. The insured’s general practitioner (GP) or medical consultant
C. The insurer only.
D. Both the insured and the insurer.

A

D. Both the insured and the insurer.

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36
Q

If an insured has paid a premium to an agent authorised by the insurer to collect premiums on its behalf and the agent then fails to pass on the premium to the insurer, what is the legal situation?
A. The insured is not covered until such time as the premium is paid to the insurer.
B. The insured must pay a pro rata premium directly to ensure cover continues.
C. The insurer is deemed to have received the premium and the insured is fully covered.
D. The premium will be paid to the insurer out of a central fund set up for that purpose.

A

C. The insurer is deemed to have received the premium and the insured is fully covered.

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37
Q 
A person to whom an offer has been made, tells the person making the offer that she is willing to accept it if some changes are made.  Under contract law, this is known as
A.  a conditional acceptance.
B.  an implied acceptance.
C.  an invitation to treat.
D.  a unilateral contract.
A

A. a conditional acceptance.

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38
Q

What, if anything, should be stated in respect of commission in a Terms of Business Agreement between an insurer and an intermediary?
A. No reference to commission is required.
B. Reference only needs to be made to commission if the rate is more than normal market levels.
C. The amount of commission does not need to be shown, but the classes of insurance it is payable on must be identified.
D. The rate of commission and when it becomes payable.

A

D. The rate of commission and when it becomes payable.

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39
Q 
Where a principal agrees to honour the obligations of an unauthorised act conducted by an agent, this is an agency created by
A.  apparent authority.
B.  consent.
C.  necessity
D.  ratification.
A

D. ratification.

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40
Q

Where an agent collects premiums on behalf of a principal, the agent is obliged to
A. issue monthly bank statements to the principal.
B. keep the principal’s money separate from the agent’s money.
C. pay Insurance Premium Tax on all premium receipts.
D. provide written receipts for premiums received.

A

B. keep the principal’s money separate from the agent’s money.

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41
Q

What form of consideration is a principal most likely to provide to an agent as part of their terms of agreement?
A. Access to the insurer’s rating database.
B. Commission on premium received.
C. Delegated authority to grant cover.
D. The insurer’s pre-printed documentation and stationery.

A

B. Commission on premium received.

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42
Q 
Which insurance principal will not permit Jack's car to be insured by his neighbour?
A.  Contribution.
B.  Indemnity.
C.  Insurable Interest.
D.  Subrogation.
A

C. Insurable Interest.

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43
Q

Paul has a fire insurance policy fully covering a building. The building is destroyed by an insured peril two weeks after Paul had sold it to Colin. What will Paul receive, if anything, from his fire insurer?
A. Nothing.
B. The rebuilding cost, less the sale price.
C. The rebuilding cost only.
D. The sum insured.

A

A. Nothing.

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44
Q

When purchasing a life insurance policy, Ann must be able to demonstrate insurable interest at which point in time?
A. At the point of purchase only.
B. At the point of purchase and the claims stage.
C. At the claims stage only.
D. At renewal only.

A

A. At the point of purchase only.

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45
Q 
What is the most common way that insurable interest in a car arises?
A.  Being a passenger in a car.
B.  Being involved in a car accident.
C.  Driving the car.
D.  Owning the car.
A

D. Owning the car.

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46
Q 
To whom does the duty of good faith apply in insurance contracts?
A.  The proposer only.
B.  The insurer only.
C.  Both the proposer and the insurer.
D.  Any interested third party.
A

C. Both the proposer and the insurer.

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47
Q

Tony owns an electrical shop and is arranging insurance with a new insurer. His shop is of non-standard construction and is protected by a central station alarm. He has had two burglaries in the last 12 months. Police have warned that theft of LED televisions has increased substantially in recent months. Which of these facts does Tony NOT need to disclose to the new insurer?
A. The construction of the premises.
B. The type of stock held.
C. The presence of the central station alarm.
D. The two previous burglaries.

A

C. The presence of the central station alarm.

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48
Q

Under the policy conditions of a typical motor insurance policy, when does the duty of the insured to disclose any material changes exist?
A. At the renewal date only.
B. During the 14 days before and after the renewal date.
C. During the first year only.
D. Throughout the duration of the policy.

A

D. Throughout the duration of the policy.

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49
Q 
Eddie takes out a whole of life policy with insurer X and an annual personal accident and sickness policy with insurer Y.  He is diagnosed 10 months later with a heart condition that will require surgery in 6 months' time.  Which of his insurers, if either, should he notify of this health change at the anniversary of his policies?
A.  Both insurers.
B.  Insurer X only.
C.  Insurer Y only.
D.  Neither insurer.
A

C. Insurer Y only.

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50
Q

Joe lives in a converted, thatched-roof, timber-built barn situated in a rural location. Two years ago he was convicted and fined for handling stolen goods. He applies to his insurer, a specialist underwriter of timber and thatch properties for household insurance, but his proposal is still declined. What is the most likely cause for this declinature?
A. His conviction and fine two years ago.
B. The construction of the property.
C. The remote location of the property.
D. The property is a conversion.

A

A. His conviction and fine two years ago.

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51
Q

Ruth is opening a florist shop within an area previously affected by riots. The shop suffered no damage, is protected by a sprinkler system and is sited only 50 metres away from a police station. Which of these facts, if any, must she disclose to the insurer when submitting a proposal for commercial insurance?
A. None of the facts.
B. The proximity of the police station.
C. The presence of the sprinkler system.
D. The previous riots in the area.

A

A. None of the facts.

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52
Q

When David submitted a proposal for private medical insurance, he forgot to answer one of the medical questions. The insurer did NOT query the missing information and the policy is now in force. This is NOT regarded as non-disclosure because
A. David could not be expected to know the answer.
B. David intended to provide the insurer with the answer.
C. the insurer did not request a medical report from David’s GP.
D. the insure has waived its right to the information.

A

D. the insure has waived its right to the information.

53
Q

An insurer proves an insured deliberately answered a question of fact wrongly on the proposal form to reduce the premium. What is the insurer legally entitled to do on discovery of this information?
A. Apply additional terms from inception only.
B. Apply additional terms from the date of discovery only.
C. Avoid the policy ab initio.
D. Avoid the policy from the date of discovery only.

A

C. Avoid the policy ab initio.

54
Q

Relevant facts are considered by an underwriter to
A. analyse the likely frequency and severity of catastrophic events that might impact on a class of business.
B. assess the level of risk of an insurance proposal to determine the cover that can be offered and at what premium.
C. negotiate and settle a claim made by the insured under an insurance policy.
D. provide the statistical analysis required to comply with reporting requirements to the industry regulator.

A

B. assess the level of risk of an insurance proposal to determine the cover that can be offered and at what premium.

55
Q 
Tom wishes to insure his joinery business.  The premises are heated by an unguarded wood-burning stove, large stocks of flammable paints and solvents are held and there has been a history of malicious damage attacks on the premises.  The premises are located within a vulnerable flood area although no flooding has occurred.  Which of these facts does Tom NOT need to disclose to his insurer?
A.  Malicious damage attacks.
B.  Method of heating.
C.  Stock level of flammable liquids.
D.  Vulnerable flood area location.
A

D. Vulnerable flood area location.

56
Q

Who, if anyone, has a duty of fair presentation when a commercial insurance policy is renewed?
A. The duty of fair presentation does not apply at renewal.
B. The insurer only.
C. The policyholder only.
D. Both the insurer and the policyholder.

A

D. Both the insurer and the policyholder.

57
Q 
When an insurer refers to the proximate cause of a loss, what cause is actually being referred to?
A.  The direct cause.
B.  The dominant cause.
C.  The indirect cause.
D.  The remote cause.
A

B. The dominant cause.

58
Q 
Julie falls from her horse and sustains minor injuries.  Several days later she goes to hospital and subsequently dies from an infection.  What is the proximate cause of her death?
A.  The fall from her horse.
B.  Her stay in hospital.
C.  The infection.
D.  Riding her horse.
A

C. The infection.

59
Q 
Matt's portfolio of insurance policies include private car, household, legal expenses and mortgage protection.  Which of these can be termed a benefit policy?
A.  Household.
B.  Legal expenses.
C.  Mortgage protection.
D.  Private car.
A

C. Mortgage protection.

60
Q 
The placing of an insured in the same financial position after a loss as he was in immediately prior to the loss is the definition of which insurance principal?
A.  Contribution.
B.  Indemnity.
C.  Insurable interest.
D.  Subrogation.
A

B. Indemnity.

61
Q

Nigel’s five-year-old car is written off following an accident which was his fault. He submits a claim for the replacement costs of a brand new car to his insurer. Why will the insurer only offer him the market value of his car immediately before the accident?
A. This is a statutory requirement.
B. His premium was not based on a new car value.
C. The accident was his fault.
D. This is the extent of his financial interest.

A

D. This is the extent of his financial interest.

62
Q 
Gavin's machine, which is adequately insured on an indemnity basis, is destroyed by an insured peril.  A new machine costs £1,000 and a similar second-hand machine £700.  In both cases the cost of transport and installation is £100.  How much will Gavin receive?
A.  £700
B.  £800
C.  £1,000
D.  £1,100
A

B. £800

63
Q 
An aircraft is insured on an agreed value basis of £20,000,000.  At policy inception the market value is £18,000,000 which then increases to £21,000,000 on the day the aircraft crashes and is a total loss.  However, when the claim is agreed it has fallen to £19,000,000.  How much is the airline entitled to receive for the loss?
A.  £18,000,000
B.  £19,000,000
C.  £20,000,000
D.  £21,000,000
A

C. £20,000,000

64
Q 
Simon's garage buildings are valued at £200,000 and insured for £150,000 under an insurance policy which is subject to average.  If he suffers a £50,000 insured loss, how much will his insurer pay?
A.  £12,500
B.  £33,333
C.  £37,500
D.  £50,000
A

C. £37,500

65
Q

Property and liability policies are contracts of indemnity because
A. they are annually renewable contracts.
B. a value can be placed on the subject matter insured.
C. benefits are fixed.
D. only cash settlement options are available.

A

B. a value can be placed on the subject matter insured.

66
Q 
Colin's cottage is valued at £100,000 and is covered by two fire insurance policies, one with a sum insured of £50,000 and the other with a sum insured of £100,000.  Under the principal of contribution, what maximum payment will Colin receive from the first policy if a fire causes damage costing £60,000 to repair?
A.  £20,000
B.  £25,000
C.  £30,000
D.  £50,000
A

A. £20,000

67
Q 
An insurer pays for the repair of damage to a policyholder's car caused by a vandal, who is later identified.  What option can the insurer exercise to recover the claim paid?
A.  The arbitration clause.
B.  The average clause.
C.  The contribution condition.
D.  Its subrogation rights.
A

D. Its subrogation rights.

68
Q

By exercising its rights of subrogation, an insurer can
A. deduct an amount for wear and tear.
B. ensure that the insured bears part of the loss.
C. recover costs from a third party.
D. request a contribution from another insurer.

A

C. recover costs from a third party.

69
Q 
A private medical insurance policy includes a clause that allows the insurer to recover payment from a third party for private medical treatment expenses that arise as a result of accidental injury caused by the third party.  Under which insurance principal is this clause allowing the insurer to assume the rights of the insured?
A.  Contribution.
B.  Reinstatement.
C.  Subrogation.
D.  Tort.
A

C. Subrogation.

70
Q

Why does the regulator approve individuals to perform controlled functions?
A. To comply with EU solvency requirements.
B. To comply with Insurance Premium Tax legislation.
C. To ensure that they are fit and proper.
D. To ensure that they comply with the Chartered Insurance Institute’s Code of Ethics.

A

C. To ensure that they are fit and proper.

71
Q 
Eddie works for a firm providing insurance advice.  Under Financial Conduct Authority regulations, if Eddie leaves the firm, for how long must records of training and competence be kept?
A.  3 months.
B.  6 months.
C.  3 years.
D.  6 years.
A

C. 3 years.

72
Q 
A firm submits information to the Financial Conduct Authority about the number of appointed representatives it has and details about the way they are monitored.  This data relates to which part of the Retail Mediation Activities Return?
A.  Accounting information.
B.  Conduct of Business data.
C.  Product sales data.
D.  Threshold conditions.
A

B. Conduct of Business data.

73
Q

Why is it important for insurers to ensure the fair treatment of customers?
A. It is a contractual requirement.
B. It is a regulatory requirement.
C. It is a requirement of the Lloyd’s Market Association.
D. It is a requirement of the London and International Broker’s Association.

A

B. It is a regulatory requirement.

74
Q 
The Consumer Rights Act 2015 is designed to protect the 
A.  aggregator.
B.  broker.
C.  insurer.
D.  policyholder.
A

D. policyholder.

75
Q 
An approved person working for a Lloyd's broker fails to comply with the relevant regulatory requirements.  Against whom can an enforcement action be taken?
A.  Lloyd's only.
B.  The approved person only.
C.  The broker only.
D.  The broker and the approved person.
A

D. The broker and the approved person.

76
Q

If a personal lines insurance policy contains a term which has NOT been individually negotiated and causes significant detriment to the policyholder, this is likely to be a breach of the
A. Contracts (Rights of Third Parties) Act 1999.
B. Data Protection Act 2018.
C. Money Laundering Regulations.
D. Consumer Rights Act 2015.

A

D. Consumer Rights Act 2015.

77
Q

Why is motor insurance compulsory?
A. To ensure the Government has a minimum level of income from Insurance Premium Tax.
B. To protect innocent victims of road accidents.
C. To protect the insurance industry by securing jobs.
D. To protect the motor repair industry by securing jobs.

A

B. To protect innocent victims of road accidents.

78
Q

Insurance intermediaries conduct business within the terms set by the
A. Association of British Insurers.
B. British Insurance Broker’s Association.
C. Financial Ombudsman Service.
D. Insurance: Conduct of Business sourcebook (ICOBS)

A

D. Insurance: Conduct of Business sourcebook (ICOBS)

79
Q

The nature and extent of the regulator’s supervisory relationship with an intermediary depends on the
A. amount of annual brokerage income of the intermediary.
B. geographical scope of the intermediary operations.
C. level of risk the regulator considers the intermediary presents to its statutory objectives.
D. number of awards made against the intermediary by the Financial Ombudsman Service.

A

C. level of risk the regulator considers the intermediary presents to its statutory objectives.

80
Q

What legal provision is contained within the Contracts (Rights of Third Parties) Act 1999?
A. It allows a third party to claim directly against an insurer, where the negligent insured has become bankrupt.
B. It allows an onerous contract term to be set aside where it is considered to be unfair and to the detriment of a customer.
C. It allows an insurer, having indemnified a policyholder for loss or damage by riot, to seek recovery costs from the police.
D. It allows for a third party, who is a named beneficiary under an insurance policy, to enforce the policy against the insurer.

A

D. It allows for a third party, who is a named beneficiary under an insurance policy, to enforce the policy against the insurer.

81
Q

In addition to meeting the Financial Conduct Authority’s principles and standards, firms transacting general insurance must comply with further guidelines on financial promotions, product disclosure, identifying client needs and advising and selling standards. These are known as
A. Data Protection Regulation.
B. Financial Ombudsman Service guidelines.
C. Insurance: Conduct of Business sourcebook (ICOBS)
D. CII Code of Ethics.

A

C. Insurance: Conduct of Business sourcebook (ICOBS)

82
Q

The regulator insists on enhanced capital requirement to
A. ensure Insurance Premium Tax levels are consistent.
B. meet Association of British Insurers’ requirements.
C. minimise the risk of an insurance company becoming insolvent.
D. protect shareholders of insurance companies.

A

C. minimise the risk of an insurance company becoming insolvent.

83
Q

The regulator has powers to supervise insurers
A. by the voluntary consent of insurance market participants.
B. under the Data Protection Act 2018.
C. under the Financial Services Act 2012.
D. under insurance directives from the Association of British Insurers.

A

C. under the Financial Services Act 2012.

84
Q

An approved person is an individual who must
A. describe the essential elements of a valid contract.
B. explain the consequences of a non-disclosure or misrepresentation of relevant information.
C. identify and distinguish between indemnity and benefit policies.
D. perform one or more controlled functions.

A

D. perform one or more controlled functions.

85
Q 
Under which Act was the Assets Recovery Agency established?
A.  Criminal Justice Act 1993.
B.  Data Protection Act 2018.
C.  Proceeds of Crimes Act 2002.
D.  Serious Crimes Act 2007.
A

C. Proceeds of Crimes Act 2002.

86
Q

Where the regulator’s rules oblige a firm to appoint a Money Laundering Reporting Officer, the person appointed must
A. be a qualified solicitor or accountant.
B. have a relevant financial services qualification.
C. have served at least five years with the firm.
D. have a suitable level of seniority and resources.

A

D. have a suitable level of seniority and resources.

87
Q

If an insurer fails to ensure the security of customer’s data, which organisation will impose a penalty?
A. The Association of British Insurers.
B. The Financial Ombudsman Service.
C. The Information Commissioner’s Office.
D. The National Crime Agency.

A

C. The Information Commissioner’s Office.

88
Q 
In order to comply with the Proceeds of Crime Act 2002, a business transacting insurance must appoint a 
A.  Data Protection committee.
B.  Financial Ombudsman.
C.  Compliance Officer.
D.  Money Laundering Reporting Officer.
A

D. Money Laundering Reporting Officer.

89
Q

What is money laundering?
A. A legal way of using funds from criminal activity to help the community.
B. An illegal way of concealing the illegitimate proceeds of crime.
C. An investment option used to reduce risk.
D. An investment option used to eliminate bad debt.

A

B. An illegal way of concealing the illegitimate proceeds of crime.

90
Q

What is the main purpose of an insurer’s privacy notice?
A. To advise customers on the way in which their data will be used and how long it will be stored for.
B. To provide customers with access to a website portal to view policy information.
C. To provide customers with details of the data they must submit when making a claim.
D. To provide customers with details of the data they must submit when making a complaint.

A

A. To advise customers on the way in which their data will be used and how long it will be stored for.

91
Q

What Act gives individuals protection to ensure that information collected about them is accurate?
A. Contract (Rights of Third Parties) Act 1999.
B. Data Protection Act 2018.
C. Financial Services and Markets Act 2000.
D. Proceeds of Crime Act 2002.

A

B. Data Protection Act 2018.

92
Q

In which circumstances, if any, may an insurer levy a charge to investigate a complaint?
A. The insurer can levy a charge at its own discretion.
B. The insurer can only levy a charge where a notice to this effect is included within its Terms of Business Agreement.
C. The insure can only levy a charge where the complaint has been referred to the Financial Ombudsman Service.
D. The insurer cannot levy a charge in any circumstances.

A

D. The insurer cannot levy a charge in any circumstances.

93
Q

The main function of the Financial Ombudsman Service is to arbitrate in disputes regarding claims settlements between
A. large commercial policyholders and brokers.
B. large commercial policyholders and insurers.
C. private policyholders and insurers.
D. private policyholders and the regulator.

A

C. private policyholders and insurers.

94
Q

An insurer ceases trading with liabilities far outweighing its assets. Which organisation will compensate the insurer’s policyholders?
A. The Association of British Insurers.
B. The Chartered Insurance Institute.
C. The Financial Ombudsman Service.
D. The Financial Services Compensation Scheme.

A

D. The Financial Services Compensation Scheme.

95
Q

What are an insurer’s responsibilities, if any, after a consumer has referred an unresolved complaint to the Financial Ombudsman Service (FOS) for resolution?
A. It has no further responsibilities.
B. It must continue to negotiate a resolution with the customer.
C. It must negotiate with the FOS.
D. It must co-operate with the FOS and comply promptly with any award made by it.

A

D. It must co-operate with the FOS and comply promptly with any award made by it.

96
Q

The Financial Services Compensation Scheme is funded from
A. general taxation.
B. a levy on authorised firms.
C. a percentage levy on investment and pension funds.
D. proceeds of Insurance Premium Tax.

A

B. a levy on authorised firms.

97
Q

Jack is a broker and has acquired a large new commercial client who insists on settling all transactions in cash. He suspects an element of money laundering may be taking place. What must Jack do in compliance with the Chartered Insurance Institute’s Code of Ethics?
A. Disclose his concerns to the insurers and let them decide whether to continue trading with the client.
B. Discontinue trading with the client.
C. Maintain client confidentiality by not reporting his concerns and continue to trade.
D. Report his concerns to the relevant authorities.

A

D. Report his concerns to the relevant authorities.

98
Q

What factors would show a positive indication of adherence to the Chartered Insurance Institute’s Code of Ethics?
A. A business culture which seeks to ensure that all business attitude and behaviour result in highly satisfied customer service.
B. Consistently achieving or exceeding business targets.
C. Operating a speedy and efficient complaints handling system.
D. Maintaining a highly motivated and trained workforce.

A

A. A business culture which seeks to ensure that all business attitude and behaviour result in highly satisfied customer service.

99
Q

What is the essential purpose of the Chartered Insurance Institute’s Code of Ethics?
A. To encourage insurers to exercise restraint in awarding or setting executive’s pay and bonuses.
B. To influence insurers’ investment strategy towards environmentally responsible and recurring sustainable investments.
C. To meet standards which inform decision making, business relationships and general behaviour.
D. To reduce the prospect of mis-selling insurance products.

A

C. To meet standards which inform decision making, business relationships and general behaviour.

100
Q

Julie works as an underwriter for an insurer. She has been given two tickets to New York by one of her clients in advance of the renewal of a large commercial portfolio. By refusing the tickets, Julie is complying with which specific principle in the Chartered Insurance Institute’s Code of Ethics?
A. Acting in the best interest of the client.
B. Acting with the highest standards of ethics and integrity.
C. Treating people fairly.
D. Providing a high standard of service.

A

B. Acting with the highest standards of ethics and integrity.

101
Q 
Policies which pay out a pre-agreed amount in the event of an accident or sickness are called
A.  compensation policies.
B.  accidental damage policies.
C.  speculative policies.
D.  benefit policies.
A

D. benefit policies.

102
Q 
Pete's Delivery Service Ltd believes that it can save money by purchasing third party only motor insurance for its fleet of delivery vans.  The money saved is to be set aside in a separate account and used to cover the cost of repairing any damage to its own vehicles.  This is an example of
A.  dual insurance
B.  co-insurance.
C.  reinsurance.
D.  self-insurance.
A

D. self-insurance.

103
Q 
An example of a direct marketing channel is
A.  a broker.
B.  an agent.
C.  a company sales team.
D.  a consultant.
A

C. a company sales team.

104
Q

How does the Motor Insurers’ Bureau raise the funds necessary to run it?
A. By collecting fines for offences committed by overseas drivers in the UK.
B. By charging a levy on all authorised UK motor insurers.
C. By charging a levy on all authorised UK insurers.
D. By collecting a small additional premium from all insured UK motorists.

A

B. By charging a levy on all authorised UK motor insurers.

105
Q 
If a policy holder cancels their policy mid-term some insurers allow them a partial refund, with an adjustment for the insurers' costs.  The premium for cover already provided is charged at
A.  proportionate rates.
B.  early cancellation rates.
C.  pro-rata rates.
D.  short-period rates.
A

C. pro-rata rates.

106
Q

What is the consideration provided by the insured to the insurer at the outset of a policy?
A. The promise to pay their premium(s).
B. Signing the declaration on their proposal form.
C. Posting their proposal form to the insurer.
D. Answering each of the questions on the proposal form faithfully.

A

A. The promise to pay their premium(s).

107
Q 
A person who holds property on a temporary basis on behalf of a legal owner, is called
A.  a trustee.
B.  an agent.
C.  a bailee.
D.  a tenant.
A

C. a bailee.

108
Q 
Insurable interest must exist at the time of a loss but need not exist at inception, provided that there is a reasonable expectation of interest.  To which class of interest does this statement apply?
A.  Life.
B.  Marine.
C.  General.
D.  Pecuniary.
A

B. Marine.

109
Q

The Fantastic Tool Manufacturing Factory has its premises surveyed by its insurer. The surveyor is given a full tour of the building and it is explained that some low risk machines are left switched on overnight. The surveyor does not make any recommendation about this. There is later a fire overnight, caused by one of these machines. Can the insurer avoid paying out on the policy because this was not declared at policy inception?
A. Yes, the insured should have mitigated the risk by not leaving the machines on overnight.
B. Yes, it should have been declared at the proposal stage.
C. No, because the process was part of their usual business practice.
D. No, because the survey made the insurer aware of this.

A

D. No, because the survey made the insurer aware of this.

110
Q

Eileen is applying for motor insurance. Which of the following is an example of a moral hazard her potential insurer will be concerned about?
A. The age of her car.
B. Whether Eileen has a full or provisional licence.
C. Where her car will be kept overnight.
D. Previous criminal convictions.

A

D. Previous criminal convictions.

111
Q 
Which insurance principle seeks to establish which peril caused a loss?
A.  Proximate cause.
B.  Subrogation.
C.  Good faith.
D.  Contribution.
A

A. Proximate cause.

112
Q 
Under a standard fire policy, which of the following perils would be classified as an uninsured or unnamed peril?
A.  War.
B.  Lightning.
C.  Theft.
D.  Explosion.
A

C. Theft.

113
Q 
Improvements that result from the repair or reconstruction of a building after a loss are called
A.  new for old.
B.  betterment.
C.  reinstatement.
D.  augmentation.
A

B. betterment.

114
Q 
Which of the following policies will always involve a cash payment as settlement?
A.  Household - contents.
B.  Household - buildings.
C.  Fidelity guarantee.
D.  Fire and special perils.
A

C. Fidelity guarantee.

115
Q

Can an insured take out two policies that cover the same risk?
A. Yes, if there is no fraudulent intent.
B. No, because this is fraudulent.
C. Yes, provided they declare both policies to both insurers.
D. No, because an insurer will not accept a risk that is insured elsewhere.

A

A. Yes, if there is no fraudulent intent.

116
Q 
In settlement of a claim for damages caused by a negligent third party an insurer pays £5,000 and allows the insured to retain the salvage which is valued at £500.  How much can the insurer subsequently claim from the third party when pursuing their subrogation rights?
A.  £500
B.  £4,500
C.  £5,000
D.  £5,500
A

C. £5,000

117
Q 
Which kind of insurance, typically provided by an extension to a household policy, is compulsory for private individuals who own dangerous wild animals?
A.  Public Liability Insurance.
B.  Bodily Injury Insurance.
C.  Personal Accident Insurance.
D.  Professional Indemnity Insurance.
A

A. Public Liability Insurance.

118
Q

The correct order of the three stages of money laundering is
A. layering, placement and integration.
B. positioning, integration and layering.
C. integration, placement and levelling.
D. placement, layering and integration.

A

D. placement, layering and integration.

119
Q

What is the scope of the General Data Protection Regulation?
A. To regulate the use of personal data relating to private individuals.
B. To regulate the use of data relating to private individuals and businesses.
C. To regulate all data held and processed within the EU.
D. To regulate data held by private companies in the UK.

A

A. To regulate the use of personal date relating to private individuals.

120
Q 
Complaints from eligible complainants must be acknowledged 
A.  on the day of receipt.
B.  promptly.
C.  within 48 hours of receipt.
D.  within 5 working days.
A

B. promptly.

121
Q

What case law established the principle that a valid contract is formed at the point of postage?

A. Household fire insurance company V Grant (1879)

B. Currie V Misa (1875)

C. Hyde V Wrench (1840)

D. Castellain V Preston (1833)

A

A. Household fire insurance company V Grant (1879)

122
Q

In general insurance. What case illustrates the principle that an expectation of acquiring insurable interest at some time in the future may not create an insurable interest:
A. Currie V Misa (1875)

B. Hyde V Wrench (1840)

C. Lucena V Craufurd (1806)

D. Castellian V Preston (1883)

A

C. Lucena V Craufurd (1806)

123
Q

What case defined the relationship between subrogation and indemnity?

A. Lister V Romford Ice and Cold Storage Ltd (1957)

B. Yorkshire Insurance Co. V Nisbet Shipping (1961)

C. Castellian V Preston (1883)

D. North British Mercantile V Liverpool and London and Globe (1877)

A

C. Castellian V Preston (1883)

124
Q 
Which of the following Acts did away with the requirement for a motor policyholder to return their certificate of motor insurance when cancelling their policy mid-term?
A. Finance Act 2015
B. Deregulation Act 2015
C. Insurance Act 2015
D. Consumer Rights Act 2015
A

B. Deregulation Act 2015

125
Q 
Which of the following insurance principles was summarised in the case of Rozanes v. Bowen (1928)?
A. Insurable interest
B. Subrogation
C. Utmost good faith
D. Disclosure
A

C. Utmost good faith

126
Q

The case which originally explained the duty of disclosure in insurance contracts was:
A. Rozanes v. Bowen (1928)
B. Kettlewell v. Refuge Assurance Company (1909)
C. Carter v. Boehm (1766)
D. Currie v. Misa (1875)

A

B. Kettlewell v. Refuge Assurance Company (1909)

127
Q 
Which case contains the following definition of insurable interest: " To be interested in the preservation of a thing, is to be so circumcised with respect to it, as to have benefit from its existence, or prejudice from its destruction"?
A.  Lambert v Barclays 1975
B.  Castellain v Preston 1883
C.  Rylands v Fletcher 1868
D.  Lucena v Craufurd 1806
A

D. Lucena v Craufurd 1806

128
Q 
Which case clarifies that what is insured is the financial interest of the Insured in the 'Subject matter of the Insurance' rather than the physical property per se.?
A.  Pan Atlantic v Pine Top 1994
B.  Castellain v Preston 1883
C.  Napier v Kershaw 1993
D.  Legal & General v Drake 1991
A

B. Castellain v Preston 1883

129
Q

Which of these cases concluded that an insured can never recover more than their actual loss even if two or more policies exist?
A. Banque v Westgate 1988
B. Pan Atlantic v Pine Top 1994
C. Lambert v Barclays 1975
D. Scottish Amicable v Northern Assurance 1883

A

D. Scottish Amicable v Northern Assurance 1883

CII IF1 (1 decks)

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