Chapter 6 Flashcards
What happens if the insurers can insure a large number of homogeneous risks
A) the variability of outcomes should be small
B) the variability of outcomes should be large
A) the variability of outcomes should be small
What is the average claim per member of the group and the proposers characteristics in comparison with the average member
A) some variation of rates is necessary. It’s necessary for insurers to be able to discriminate between different risks
B) all variation of rates is necessary. It’s necessary for insurers to be able to discriminate between different risks
A) some variation of rates is necessary. It’s necessary for insurers to be able to discriminate between different risks
Does the claim analysis need to be review on a regular basis?
Yes
What will the statistical analysis do:
A) not identity patterns and trends which mean that certain types of risks can be grouped together to justify the same rate and terms being applied i.e postcode
B) to identity patterns and trends which mean that certain types of risks can be grouped together to justify the same rate and terms being applied i.e postcode
B) to identity patterns and trends which mean that certain types of risks can be grouped together to justify the same rate and terms being applied i.e postcode
What must be identified
With
Looking at the pattern of claims over time
What are the cause of claims
Are there any large claims that are distorting the pattern
Any individual claims reserves
Any particular trades or geographical locations
Are there any changes over time which just be taken into account
Claims analysis
Is the below the premium base or the premium rate
Used to calculate the premium for a commercial liability package policy is typically the number of employees and the turnover of the business.
Premium base
What four things must be allowed for rating structures starting with
1- adequate claims settling provision
2- reinsurance costs
3- the operating expenses of the insurer
4- making a profit
What is usually calculated on an all inclusive basis
A)commercial
B) package
B) package
Is the below a standard policy term or policy wording
Define the type of risks which insured wish to insure under a packaged commercial policy
Policy terms
What is the main rating factor
A) the contents sum insured which includes within it the rate structure for the those automatically included in the package I.e theft, money glass and liabilities
B) the contents sum insured which doesn’t includes within it the rate structure for the those automatically included in the package I.e theft, money glass and liabilities
A) the contents sum insured which includes within it the rate structure for the those automatically included in the package I.e theft, money glass and liabilities
Will a separate rate apply to the business interruption sum insured
Yes
Where there’s very little variation in the risks then the only variation to the contents rate will be the what?
A) company name
B)postcode
B) postcode
For shop risks the rate applied to the contents sum insured will be what
A) postcode
B) postcode and trade
B) postcode and trade
Is the below a standard policy term or policy wording
Automatically exclude those elements of cover which they don’t want to insure
Policy term
Most shop packages include a fixed target stock limit of what for which cover is automatically included in the standard contents rate
A)£2k
B)1k
B) 1k
What does the operation of the law of large numbers enable insurers to determine
A) a more accurate premium chargeable to the insurers than would be if the case if their experience were limited to a few risks
B) a less accurate premium chargeable to the insurers than would be if the case if their experience were limited to a few risks
A) a more accurate premium chargeable to the insurers than would be if the case if their experience were limited to a few risks
What is the specific exclusions on
‘Injury or damage arising from professional neglect, errors, omissions or advice’
A) shops
B) offices
B) offices
What is a main risk factor
A) anything affecting the claims experience for a particular type or business. Eg care homes with lifting equipment
B) some variations of rates is necessary
A) anything affecting the claims experience for a particular type or business. Eg care homes with lifting equipment
Why will a revised rating factor be applied for some risks
A) if there are some risks which were previously excluded under careful underwriting criteria can be considered
B) where premiums are higher for exclusions
A) if there are some risks which were previously excluded under careful underwriting criteria can be considered
What happens if work away from the premises is frequent
A) can be added to package
B) a separate contractors policy will be required
B) a separate contractors policy will be required
What avoids the need for the insurer to request further details provided the insured can confirm the minimum standard is met
A) exclusions
B) conditions
B) conditions
Is the below an example of a condition or exclusion
A) a requirement to meet minimum standard conditions
B) a requirement to comply with minimum security requirements for money in transit
Conditions
What must be complied with for cover to be effective
A) exclusions
B) conditions
B) conditions
What is the below
The amount paid to an insurer in consideration of the insurer agreeing to cover the risk
A) premium
B) policy covers
A) premium
Why are the two ways to apply premium
Premium rate and premium base
Is the below a standard policy term or policy wording
Impose minimum standards of loss control for all the risk they insure
Policy terms
Is the below the premium base or the premium rate
The measure of exposure, such as turnover or wages or number of employees
Premium base
Where a quotation has been done via a computerised quotation package what 4 adjustments will then be made starting with the collective performance of the scheme
2) the buying power of the scheme
3) work transfer to the intermediary
4) additional risk management feature which membership of a trade association may introduce
Is the below the premium base or the premium rate
Intended to reflect the hazards associated with the particular insured. The premium rate is a figure set by the insurer
Premium rate
What is the other tool used by underwriters to simplify the underwriting process
A) standard policy terms
B) standard policy wording
A) standard policy terms
s the below a rate per cent or a rate per mile
The price in pounds for each thousand pounds
Rate per mille
How do insurers ensure great they collect the sufficient premium to cover the costs of underwriting the business
A) minimum premiums
B) admin charges
A) minimum premiums
What is usually the minimum premium limit
A) £500
B) £250
B) 250
Is the below a minimum premium or adjustable premium
A) the rate is applied to the estimated wage roll figure and at the end of the year the insured tells the insurer the correct one and the premium is adjusted to represent this
Adjustable premium
What ensure that all risks are met at a minimum underwriting standard
A) exclusions
B) conditions
B) conditions
Are adjustable premiums common for package policies
No
Is the below an adjustable premium or flat premium
A) charge a flat premium rather than apply a rate to a premium base.
Flat premium
What does 20% tax apply to
A) motor
B) travel
C) home
B) travel
Which insurance policies are exempt from tax
Reinsurance
Insurance on ships
Aircraft
Good in transit
All
What is the party to whom authority is called
A) policyholder
B) coverholder
B) coverholder
What is a binding authority
A) an agreement between to parties that sets out the scope and events of authority delegated
B) a party that shows the delegation
A) an agreement between to parties that sets out the scope and events of authority delegated
What may a Lloyd’s broker used to write a risk
A) a line slip agreement
B) a cover holder
A) a line slip agreement
At Lloyd’s what do the syndicated who carry the risks employ
A) managing agents
B) managing partners
A) managing agents
Is the below a rate per cent or a rate per mile
The price in pounds for each hundred pounds of sum insured
Rate per cent
What are delegated authority schemes
A) where an intermediary is given authority to underwrite risks within given parameters
B) where an intermediary can underwrite risks themselves
A) where an intermediary is given authority to underwrite risks within given parameters
What certain standard would someone need to become an approved coverholder for Lloyd’s
A) must be sponsored by a managing agent and approved by Lloyd’s
B) must be approved as an intermediary a
A) must be sponsored by a managing
