C7-General Insurance

Question 1

Define ‘Rating factor’

Answer 1

• Factors used to determine the premium rate for a policy
• Relates to the likelihood and /or severity of the risk
• A risk factor and/or proxy for a risk factor(s)

Question 2

What does liability insurance indemnify the insured against?

Answer 2

Liability insurance provides indemnity where the insured, owing to some form of negligence, is legally liable to pay some form of compensation to a third party.
- Legal expenses are covered
- An illegal act of negligence will often invalidate the cover

Question 3

Describe the legislation that prevails over liability insurance

Answer 3

For marine and aviation liability, international law is likely to prevail.
Motor and employer’s liability, national laws are likely to apply.

Question 4

Benefit provided by liability insurance

Answer 4

Benefit: Amount to indemnify the PH fully against a financial loss

Restriction on benefit ( non-indemnity)
1. Max indemnity per claim per event
2. An aggregate max per year
3. an Excess, where the first part of any claim is not paid

Question 5

List 5 main types of liability insurance

Answer 5

1. Employers’ Liability – negligent actions by employers/employees, exposure to harmful substances and/or working conditions
2. Motor Third Party Liability – motor accidents
3. Public Liability – depends on type of policy e.g. falling object, dog bite
4. Product Liability – faulty design, manufacture, packaging, misleading or incorrect instructions
5. Professional Indemnity – depends on the profession e.g. wrong medical diagnosis, error in medical operation, error in actuarial report

Question 6

5 Types for property damage insurance

Answer 6

Property Damage
1. Residential and Commercial buildings – fire, explosion, lightning, theft, storm, flood
2. Moveable property
3. Land vehicles
4/ Marine craft – perils of the sea, fire, explosion, jettison, piracy
5. Aircraft

Question 7

3 Main types of Financial Loss insurance

Answer 7

1. Pecuniary loss – bad debts, third party failure
2. Fidelity guarantee – dishonest employee actions e.g. fraud/embezzlement
3. Business interruption – fire in insured’s property of in a neighbouring property

Question 8

Fixed benefits provided by Insurance

Answer 8

Personal accident – accidents resulting in loss of limbs or other specified injury
Health insurance – need for hospital treatment in a hospital
Unemployment insurance - redundancy