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IF8 > Chapter 6 > Flashcards

Chapter 6 Flashcards

1
Q

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

A) the variability of outcomes should be small

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2
Q

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

A) some variation of rates is necessary. It’s necessary for insurers to be able to discriminate between different risks

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3
Q

Does the claim analysis need to be review on a regular basis?

A

Yes

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4
Q

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

A

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

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5
Q

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

A

Claims analysis

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6
Q

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.

A

Premium base

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7
Q

What four things must be allowed for rating structures starting with

1- adequate claims settling provision

A

2- reinsurance costs
3- the operating expenses of the insurer
4- making a profit

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8
Q

What is usually calculated on an all inclusive basis

A)commercial
B) package

A

B) package

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9
Q

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

A

Policy terms

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10
Q

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

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

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10
Q

Will a separate rate apply to the business interruption sum insured

A

Yes

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11
Q

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

A

B) postcode

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12
Q

For shop risks the rate applied to the contents sum insured will be what

A) postcode
B) postcode and trade

A

B) postcode and trade

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14
Q

Is the below a standard policy term or policy wording

Automatically exclude those elements of cover which they don’t want to insure

A

Policy term

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15
Q

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

A

B) 1k

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16
Q

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) a more accurate premium chargeable to the insurers than would be if the case if their experience were limited to a few risks

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17
Q

What is the specific exclusions on

‘Injury or damage arising from professional neglect, errors, omissions or advice’

A) shops
B) offices

A

B) offices

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18
Q

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

A) anything affecting the claims experience for a particular type or business. Eg care homes with lifting equipment

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19
Q

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

A) if there are some risks which were previously excluded under careful underwriting criteria can be considered

20
Q

What happens if work away from the premises is frequent

A) can be added to package
B) a separate contractors policy will be required

A

B) a separate contractors policy will be required

21
Q

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

A

B) conditions

22
Q

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

A

Conditions

23
Q

What must be complied with for cover to be effective

A) exclusions
B) conditions

A

B) conditions

24
Q

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

A) premium

25
Q

Why are the two ways to apply premium

A

Premium rate and premium base

26
Q

Is the below a standard policy term or policy wording

Impose minimum standards of loss control for all the risk they insure

A

Policy terms

27
Q

Is the below the premium base or the premium rate

The measure of exposure, such as turnover or wages or number of employees

A

Premium base

28
Q

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

A

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

29
Q

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

A

Premium rate

30
Q

What is the other tool used by underwriters to simplify the underwriting process

A) standard policy terms
B) standard policy wording

A

A) standard policy terms

31
Q

s the below a rate per cent or a rate per mile

The price in pounds for each thousand pounds

A

Rate per mille

32
Q

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

A) minimum premiums

33
Q

What is usually the minimum premium limit

A) £500
B) £250

A

B) 250

34
Q

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

A

Adjustable premium

35
Q

What ensure that all risks are met at a minimum underwriting standard

A) exclusions
B) conditions

A

B) conditions

35
Q

Are adjustable premiums common for package policies

A

No

36
Q

Is the below an adjustable premium or flat premium

A) charge a flat premium rather than apply a rate to a premium base.

A

Flat premium

37
Q

What does 20% tax apply to

A) motor
B) travel
C) home

A

B) travel

38
Q

Which insurance policies are exempt from tax

Reinsurance
Insurance on ships
Aircraft
Good in transit

A

All

40
Q

What is the party to whom authority is called

A) policyholder
B) coverholder

A

B) coverholder

41
Q

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

A) an agreement between to parties that sets out the scope and events of authority delegated

42
Q

What may a Lloyd’s broker used to write a risk

A) a line slip agreement
B) a cover holder

A

A) a line slip agreement

43
Q

At Lloyd’s what do the syndicated who carry the risks employ

A) managing agents
B) managing partners

A

A) managing agents

44
Q

Is the below a rate per cent or a rate per mile

The price in pounds for each hundred pounds of sum insured

A

Rate per cent

45
Q

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

A) where an intermediary is given authority to underwrite risks within given parameters

46
Q

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

A) must be sponsored by a managing

IF8 (9 decks)

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