exam question

Question 1

How does the Motor Insurance Database help to make the roads in the UK safer?

a.
By ensuring a SORN declaration is used to identify non-insured vehicles.

b.
By ensuring that the data for all UK insured motor vehicles can be easily accessed.

c.
By giving the police powers to seize uninsured cars.

d.
By giving victims of uninsured losses the ability to seek redress.

Answer 1

b.
By ensuring that the data for all UK insured motor vehicles can be easily accessed.

Question 2

Pete is the owner of a car. He does not drive the car but his wife, Elaine, does. The car is also driven by their children, Sophie and Fred, who are additional drivers. Under the Road Traffic Act 1988, who would be required to have third party insurance?

a.
Elaine and Pete only.

b.
Elaine, Sophie and Fred only.

c.
Pete only.

d.
Pete, Elaine, Sophie and Fred.

Answer 2

b.
Elaine, Sophie and Fred only.

Question 3

When a local scout group is given a special small bus permit, this means that the:

a.
group does not make a profit on any fares charged.

b.
vehicle is a public service vehicle and is subject to the PSV regulations.

c.
vehicle must have eight or fewer seats.

d.
group is not allowed to charge fares.

Answer 3

a.
group does not make a profit on any fares charged.

Question 4

What will an insurer primarily base its rating or premium on when underwriting long distance goods vehicles?

a.
The expected annual mileage and the vehicle weight.

b.
The experience of the driver and district rating.

c.
The experience of the driver and the expected annual mileage.

d.
The vehicle weight and carrying capacity.

Answer 4

d.
The vehicle weight and carrying capacity.

Question 5

When calculating premium rates for motor insurance, what element is typically the most difficult to predict?

a.
Expenses and commission payments.

b.
The cost of claims.

c.
The required contribution to profits.

d.
Reinsurance costs.

Answer 5

b.
The cost of claims.

Question 6

Diafra owns and runs a private hire car firm. The insurance cover on his hire cars will differ from private motor insurance because:

a.
cover is invariably restricted to Diafra and any named employees or contractors.

b.
the premiums charged are typically lower.

c.
the minimum liability under the hire policy is much higher than with private motor insurance.

d.
cover is restricted to third party fire and theft only.

Answer 6

a.
cover is invariably restricted to Diafra and any named employees or contractors.

Question 7

What day-to-day activities is a motor engineer employed by a major UK insurer LEAST likely to get involved with?

a.
Establishing the market value of a damaged car.

b.
Agreeing the cost of vehicle repairs.

c.
Agreeing the standard and quality of any repair work.

d.
Liaising with customers and providing guidance to them.

Answer 7

c.
Agreeing the standard and quality of any repair work.

Question 8

Within what period after the date of an accident would a customer normally have to make a personal injury claim?

Question 14Select one:

a.
Four years.

b.
Six years.

c.
Three years.

d.
Two years.

Answer 8

c.
Three years.

Question 9

What does the Motor Insurance Anti-Fraud and Theft Register record?

a.
All motor claims received by insurers where fraud is suspected.

b.
All motor claims received by insurers.

c.
All motor claims received by insurers where a payment [excluding windscreen claims] has been made.

d.
All motor vehicles that have been the subject of a total loss claim or have been stolen and not recovered.

Answer 9

d.
All motor vehicles that have been the subject of a total loss claim or have been stolen and not recovered.

Question 10

If motor insurance is renewed online, within what time period must an electronic insurance certificate be issued?

a.
24 hours.

b.
48 hours.

c.
Immediately.

d.
4 days.

Answer 10

a.
24 hours.

Question 11

Under the Pre-Action Protocols of the Civil Procedure Rules, what period of time does the defendant’s insurer have to respond to a Letter of Claim from the claimant’s solicitors?

a.
Three months from the date of acknowledgement of the Letter of Claim.

b.
One month from the date of the loss.

c.
One month from the date of acknowledgement of the Letter of Claim.

d.
Three months from the date of the loss.

Answer 11

a.
Three months from the date of acknowledgement of the Letter of Claim.

Question 12

When would it NOT be necessary under the Road Traffic Act 1988 to report an incident to the police?

a.
Any accident that involves minor personal injury.

b.
Any accident that involves damage only and the driver does not stop.

c.
Any accident that involves damage only and the driver does not exchange details with a third party.

d.
Any accident that involves damage only and the drivers exchange insurance details.

Answer 12

d.
Any accident that involves damage only and the drivers exchange insurance details.

Question 13

What will an insurer take into account when determining its ‘risk appetite’?

a.
The market position of competitors.

b.
How much reinsurance to use.

c.
Shareholder returns.

d.
The reliability of electronic data interchange.

Answer 13

b.
How much reinsurance to use.

Question 14

Kate has breakdown and rescue cover but has been told that her claim is not covered under the terms of the policy. This is most likely because:

a.
the vehicle could not be fixed at the roadside and the policy did not cover the cost of being towed away.

b.
the vehicle broke down at her home.

c.
the vehicle was unroadworthy when the cover was taken out.

d.
a private car needed to be hired as a result of her vehicle breakdown.

Answer 14

c.
the vehicle was unroadworthy when the cover was taken out.

Question 15

What basis of rating insurance risks is most likely to be used on a small family-run business that sells second hand cars?

a.
Points basis.

b.
Cover basis.

c.
Named driver basis.

d.
Trade plate basis

Answer 15

c.
Named driver basis.

Question 16

An insured has committed an offence under the Road Traffic Act 1988 because she has:

a.
allowed a certificate of insurance to be used by another person with intent to deceive.

b.
allowed another driver, who is insured under another policy, to drive her car.

c.
driven a vehicle whilst holding a provisional driving licence.

d.
driven a friend’s uninsured car innocently having been told it was insured.

Answer 16

a.
allowed a certificate of insurance to be used by another person with intent to deceive.

Question 17

The database which contains details of all private cars in the UK and is used to combat fraud is
managed by the

A. Association of British Insurers.
B. Claims and Underwriting Exchange.
C. Driver and Vehicle Licensing Agency (DVLA).
D. UK Information Centre.

Answer 17

C. Driver and Vehicle Licensing Agency (DVLA).

Question 18

What was established in the case law Cutter v Eagle Star (1998)?
A. A moped being pedalled was held to be a mechanically propelled vehicle.
B. A passenger opening the vehicle door was held to not be using the vehicle.
C. A private car park to which the public had access was held not to constitute a road.
D. A vehicle rolling down a hill with the engine switched off was held to be in use.

Answer 18

C. A private car park to which the public had access was held not to constitute a road.

Question 19

The Motor Insurers’ Bureau (MIB) has been dealing with a claim for personal injury and vehicle
damage following a collision with an uninsured driver. The MIB have asked the claimant to sign an
assignment and agreement form once quantum is agreed. What is the purpose of this form?
A. It enables the claimant to choose whether he wants to pursue the uninsured driver himself for
uninsured losses.
B. It enables the claimant to formally agree to proceed to issue court proceedings against the
uninsured driver.
C. It enables the MIB to agree the full and final settlement figure with the claimant and then close
the file.
D. It enables the MIB to stand in the place of the claimant and seek a recovery against the
uninsured driver

Answer 19

D. It enables the MIB to stand in the place of the claimant and seek a recovery against the
uninsured driver

Question 20

Alan has an untaxed motor car which he keeps locked in his private garage. It is uninsured and he
has NOT made a Statutory Off Road Notification (SORN). What maximum fine could he be subject
to and by whom?
A. £100 by the Driver and Vehicle Licensing Agency (DVLA).
B. £100 by the Motor Insurers’ Bureau.
C. £1,000 or 5 times tax owed whichever is the greater by the Driver and Vehicle Licensing Agency
(DVLA).
D. £1,000 or 5 times tax owed whichever is the greater by the Motor Insurers’ Bureau.

Answer 20

C. £1,000 or 5 times tax owed whichever is the greater by the Driver and Vehicle Licensing Agency
(DVLA).

Question 21

A fleet manager for a large logistics company has recently been overseeing the purchase of a new
vehicle for the fleet. To remain compliant under the Motor Insurance Database (MID) rules, he has
to notify the
A. MID1 within 7 days.
B. MID1 within 14 days.
C. MID2 within 7 days.
D. MID2 within 14 days

Answer 21

D. MID2 within 14 days

Question 22

Kevin has basic roadside assistance cover included in his private car motor insurance policy. He
sets off from home, where his vehicle is normally kept, and the vehicle breaks down less than 100
metres after starting his journey. It is subsequently discovered that the breakdown was due to
inadequate servicing. What is the position regarding policy cover?

A. He is unlikely to be covered.
B. He will be covered because roadside assistance cover usually incorporates ‘at home’ assistance.
C. He will be covered because the vehicle is not at his home.
D. He will not be covered specifically because the car was not roadworthy.

Answer 22

A. He is unlikely to be covered.

Question 23

Who is permitted to drive a motorcycle under a motorcycle insurance policy?
A. The policyholder only.
B. The policyholder or her appointed representative only.
C. The policyholder or named persons only.
D. The policyholder and any driver

Answer 23

C. The policyholder or named persons only.

Question 24

What type of questions does a motor insurance underwriter ask a potential client in order to
evaluate the proposed risk?
A. General and personal questions only.
B. Historical and specific questions only.
C. Personal and historical questions only.
D. Specific and general questions only.

Answer 24

D. Specific and general questions only.

Question 25

Jack is changing his private car and telephones his broker to arrange cover. How soon can Jack’s cover for the new car become effective? A. Upon delivery of a new certificate only. B. Upon delivery of a new certificate and surrender of the old one. C. Upon verbal confirmation. D. Upon written confirmation

Answer 25

c.

Question 26

What action would an insurer take where a consumer has deliberately withheld an unspent drink driving conviction at inception? A. Apply to court for the policy to be voided from inception. B. Invoke the cancellation clause. C. Reassess and apply terms retrospectively. D. Seek recovery of the certificate of insurance

Answer 26

a.

Question 27

Steve has deliberately failed to notify his insurer that his vehicle engine size has been modified to increase power. This only becomes apparent when a claim is made where Steve was travelling at speed and collided with a tree. Further investigation reveals that he had a previous incident of non-disclosure due to vehicle alterations. Had the insurer known of the recent alteration, it would NOT have provided cover. What action would the insurer most likely take? A. Avoid the policy ab initio and retain the premium. B. Pay the claim as this involves a consumer. C. Pay the claim with a reduction to reflect any increased premium that would have been charged. D. Apply any terms that would have been applied retrospectively

Answer 27

a.

Question 28

How would the underwriting strategy of a broker-orientated provider differ from that of an internet motor insurer? A. Less cross-selling opportunities. B. A more restricted underwriting acceptance criteria. C. A wider underwriting acceptance criteria. D. Writing primarily for cash flow rather than profit.

Answer 28

c.

Question 29

Where an insurer offers an accelerated no claims discount (NCD) to a policyholder after six months, what length of NCD will the policyholder usually be granted at next renewal? A. One year. B. Two years. C. Three years. D. Four years.

Answer 29

a.

Question 30

Clare is applying for private car motor insurance with a new insurer and qualifies for a no claims discount (NCD). Typically, how will the NCD be proven to the new insurer? A. By Clare completing a self-certification in the form of a statutory declaration. B. By Clare producing the previous insurance policy including any endorsements. C. By Clare providing the renewal notice issued by the previous insurer. D. By the new insurer checking with the Motor Insurance Database

Answer 30

c

Question 31

The cost of reinsurance for motor insurance is usually expressed as a percentage of the original insurer’s A. claims costs. B. claims reserves. C. gross written premium. D. net written premium.

Answer 31

c

Question 32

. In what way does the rating for an agricultural vehicle differ from that for a commercial vehicle? A. The claims history is not normally taken into account. B. There are fewer rating areas. C. There is no age restriction for drivers. D. The value of the vehicle is of no significance.

Answer 32

b

Question 33

In what way can a claims handler assist an underwriter in analysing the performance of a new motor policy wording? A. By analysing competitors’ policy wordings. B. By identifying contentious areas of the policy wording. C. By being involved in all underwriting matters. D. By involving the underwriter in all claims reserving

Answer 33

B. By identifying contentious areas of the policy wording.

Question 34

Other than for a claim, when would a motor vehicle engineer’s report be requested by an insurer and who would pay for the report? A. When the vehicle exceeds a set value and paid for by the policyholder. B. When the vehicle is a grey import and paid for by the insurer. C. When the vehicle is a kit car and paid for by the policyholder. D. When the vehicle is an off-road vehicle and paid for by the insurer.

Answer 34

b.

Question 35

The new managing director of an insurer is setting targets for its claims department. What should be his main focus? A. Faster claims payments. B. Minimising third party payments. C. The overall corporate strategy. D. Staff turnover

Answer 35

c

Question 36

Terry has purchased a car and his potential insurer has received a warning from the Credit Industry Fraud Avoidance System. This indicates that A. precautions should be taken to ensure that Terry’s address is genuine. B. Terry has a conviction for fraud. C. Terry has defaulted on a hire purchase arrangement for a vehicle. D. Terry is an undischarged bankrupt

Answer 36

A

Question 37

For what reason would an insurer introduce voice recognition software? A. To assist liaison between underwriters and claims handlers. B. To identify potentially fraudulent claims. C. To meet its obligations under ISO 9001. D. To record information more efficiently.

Answer 37

b

Question 38

Where a third party is unhappy with the final settlement offer made by an insurer, in what circumstances, if any, can arbitration be pursued? A. Arbitration can be pursued in all cases. B. Arbitration can only be pursued if approved by the Financial Ombudsman Service. C. Arbitration can only be pursued if the claimant is an individual. D. Arbitration cannot be pursued

Answer 38

a

Question 39

A goods-carrying vehicle has an unladen weight of 2,000 kg and a carrying capacity of three tonnes. Under the Transport Act 1968, it would be regarded as: a. a large goods vehicle. b. not having a plated value. c. a medium goods vehicle. d. a small goods vehicle.

Answer 39

c. a medium goods vehicle.

Question 40

An insurer has invoked the cancellation under a private motor policy and provides the insured with seven day’s notice by recorded delivery. At what point does the insurer’s liability under the policy cease? A. Seven days from the date on the letter. B. Seven days from when the letter is received. C. When the Motor Insurance Database is updated. D. When any refund of premium is sent to the insured.

Answer 40

A. Seven days from the date on the letter.

Question 41

How does cover for legal fees under a commercial vehicle policy differ to that provided by a private car policy? A. It includes the cost of defending a claim for wrongful delivery. B. It includes the cost of defending proceedings for a breach of health and safety legislation. C. It includes the cost of fines following criminal prosecution due to a vehicle defect. D. It includes legal costs for uninsured loss recovery.

Answer 41

B. It includes the cost of defending proceedings for a breach of health and safety legislation.

Question 42

A motorist is insured for third party, fire and theft and takes his car to an approved repairer following damage by an insured peril. What cover, if any, is typically provided by his policy for a courtesy car lent by the repairer, whilst his own car is being repaired? A. Cover is not provided. B. Third party only. C. Third party, fire and Theft. D. Comprehensive.

Answer 42

B. Third party only.

Question 43

A motorcycle and private car are both comprehensively insured. How would cover compare for both vehicles whilst left in the custody of a motor trader for service or repair? A. Both vehicles would be covered for fire, theft and accidental risks only. B. Both vehicles would have comprehensive cover. C. The private car would have comprehensive cover and there would be no cover for the motorcycle. D. The private car would have comprehensive cover but the motorcycle would have an exclusion for theft.

Answer 43

D. The private car would have comprehensive cover but the motorcycle would have an exclusion for theft.

Question 44

How does cover in respect of the unauthorised movement of a vehicle under a commercial vehicle policy differ from the driving other cars cover under a private car policy? A. Cover only applies whilst on trade premises. B. It extends to include cover for defence costs against criminal prosecution. C. It extends to include cover for the vehicle being moved. D. Territorial limits are extended to include EU member states.

Answer 44

C. It extends to include cover for the vehicle being moved.

Question 45

When a claim is notified for an incident occurring in the expiring period of insurance after the renewal invitation has been issued, what action, if any, will the insurer take regarding the renewal premium? A. Collect the premium and charge an additional premium from next renewal. B. Recalculate the premium according to the revised risk and reissue documentation. C. Recalculate the premium, with a fixed loading of 50% and reissue documentation. D. Suspend the policy from the date of the incident until the full circumstances are investigated, then reinstate the policy and charge an additional premium.

Answer 45

B. Recalculate the premium according to the revised risk and reissue documentation.

Question 46

As part of its strategic objectives, an insurer’s underwriting strategy with regard to claims and expense ratios A. must be kept below a prescribed threshold level. B. should be kept under constant review. C. should not exceed its risk appetite. D. should only rise in a hard or hardening market.

Answer 46

B. should be kept under constant review.

Question 47

A motor insurer’s loss ratio is determined by taking into account its A. incurred but not reported claims and premiums earned only. B. incurred claims cost and investment income only. C. incurred claims cost and net earned premium only. D. investment income, incurred claims cost and premiums earned.

Answer 47

C. incurred claims cost and net earned premium only.

Question 48

On what basis is a goods-carrying vehicle most commonly rated by a motor insurer? A. By using a postcode rating. B. By using the vehicle’s plated weight. C. With reference to the turnover of the business proposing the insurance. D. With reference to the vehicle’s value.

Answer 48

B. By using the vehicle’s plated weight.

Question 49

From a motor insurer’s perspective, a key concern when insuring a small coach which is owned by a social club or charitable organisation is that it A. is likely to be used excessively. B. is unlikely to be stored in a garaged facility. C. may be serviced inadequately. D. will be driven by an individual without an appropriate licence.

Answer 49

D. will be driven by an individual without an appropriate licence.

Question 50

A private motor car policyholder advises her insurer of a change in her occupation, as she is now becoming a florist rather than working in education. In these circumstances, the insurer is most likely to A. cancel the existing policy. B. impose an additional premium to reflect the cover required and the increased risk. C. remove any no claims discount as the policy will now be a commercial policy. D. seek a review of the policyholder’s claims and accident record with reference to the Driver and Vehicle Licensing Agency’s register.

Answer 50

B. impose an additional premium to reflect the cover required and the increased risk.

Question 51

How does an insurer test the suitability of cover in terms of the requirements and expectations of customers? A. By analysing repudiated claims. B. By conducting surveys and seminars. C. By referring to the Claims and Underwriting Exchange. D. By regularly analysing its premium levels to ensure they are in line with industry standards.

Answer 51

B. By conducting surveys and seminars.

Question 52

What is a key difference between an insurer’s claims mission statement and its claims vision statement? A. Only the mission statement will reflect its competitiveness. B. Only the mission statement will reflect its level of customer service. C. Only the vision statement will reflect its aspirations. D. Only the vision statement will reflect its values.

Answer 52

D. Only the vision statement will reflect its values.

Question 53

To which category of claims costs does the Association of British Insurers’ general terms of agreement apply? A. Car hire costs. B. Labour costs. C. Legal costs. D. Material costs.

Answer 53

A. Car hire costs.

Question 54

Who is bound by a decision made by The Financial Ombudsman Service? A. The insured only. B. The insurer only. C. Both the insured and the insurer. D. Neither the insured nor the insurer.

Answer 54

C. Both the insured and the insurer.

Question 55

In what circumstances, if any, is a solicitor permitted to pay a referral fee to a claims-handling agent? A. Under no circumstances. B. Only if the fee does not relate to personal injury claims. C. Only if the fee relates to personal injury claims. D. In all circumstances.

Answer 55

A. Under no circumstances.

Question 56

a commercial company was in an accident and has an excess of £400. do they pay just excess excess plus tax excess minus tax just tax

Answer 56

just excess

Question 57

MIB Agreements with HM Government

Answer 57

If there is no valid insurance, the innocent victim’s claim will be considered by the MIB under one of two agreements; these are formal agreements between the MIB and HM Government. Separate but similar agreements apply in Northern Ireland, the Isle of Man, Jersey, Guernsey and Gibraltar.

Question 58

What information is included in a Form A Certificate

Answer 58

Registration mark of vehicle Name of Policyholder Effective date of insurance Expiry date of insurance Persons or classes of persons entitled to drive Limitations as to use

Question 59

How does Form B differ from Form A?

Answer 59

Form B replaces "Registration mark of vehicle" with "Description of vehicles" for item 1. Description example: "Any motor car the property of the policyholder or hired to him under a hire purchase agreement." Known as the ‘blanket certificate,’ used for motor trade and large fleet policies.

Question 60

What is the wording for certificates in cover notes (Form C)?

Answer 60

"I/We hereby certify that this covering note satisfies the requirements of the relevant law applicable in Great Britain."

Question 61

how long does a cover note last till if it started on the 17th december at 1:30 and lasts 10 days

Answer 61

27th december till midnight/ end of day. (unless specified otherwise)

Question 62

a motorcycle cover has 3 riders, what information would reflect the premium

Answer 62

least driver experience

Question 63

how long can you normally be abroad for under uk insurance

Answer 63

90 days (3 months)

Question 64

The General Terms of Agreement (GTA) is an industry framework between insurers and credit hire companies. It:

Answer 64

Sets maximum daily hire rates for different categories of vehicles. Specifies the appropriate type of replacement vehicle based on the claimant’s needs. Provides a structure for liability admission and claim handling between insurers and credit hire companies.

Question 66

whats the limit for coverage for business and personal motor insurance in regards to property damage

Answer 66

20 million for personal 5 million for business (commonly) max 20 million for business

Question 67

what is not covered in personal affects

Answer 67

.money, stamps, tickets, documents, cheques or share or bond certificates

Question 68

what is covered under loading and unloading regarding third party property damage

Answer 68

Loading and unloading by anyone else, for example, a customer’s employee, is only covered if it happens ‘within the limits of any carriageway or thoroughfare’; i.e. it is only covered if the accident happens on the road or on the pavement. if it was someone else unloading... it would not be covered if it happened beyond those confines and the risk would fall to be dealt with under the public liability policy of the negligent person or their employer

Question 69

a tractor is being used by the council to clear a road, what type of vehicle would the tractor be classified as

Answer 69

The tractor would be classified as a special types vehicle under motor insurance. It is being used for a non-agricultural purpose (clearing roads for the council).

Question 70

What are the typical territorial limits of the policy aside from the minimum EU requirements?

Answer 70

United Kingdom of Great Britain and Northern Ireland Channel Islands Isle of Man (British Isles) Sometimes the Republic of Ireland

Question 71

What does the Road Traffic (New Drivers) Act 1995 state?

Answer 71

If a person accumulates six penalty points within two years of passing their driving test: Their licence will be automatically revoked. They must apply for a provisional licence again. They need to take a further driving test before driving unaccompanied.

Question 72

What is the practice and importance of sending reminders for non-payment?

Answer 72

No obligation for insurers to issue reminders for non-payment. Common practice to send reminders shortly before expiry if renewal instructions are not received. Reminders highlight the dangers of driving uninsured. Importance increased with the withdrawal of temporary covering notes and the introduction of Continuous Insurance Enforcement (CIE).

Question 73

What is the plated weight range for a medium goods vehicle, and what is its passenger capacity limit?

Answer 73

A: A medium goods vehicle has a plated weight of 3.5 tonnes to 7.5 tonnes and is not adapted to carry more than eight passengers, including the driver.

Question 74

What is the permitted maximum weight of a vehicle covered by a standard licence if it is powered by alternative fuel?

Answer 74

A: The maximum weight is 4.25 tonnes, provided the vehicle is powered by electricity, natural gas, biogas, or hydrogen.

Question 75

What are the trailer registration requirements for UK trailers traveling abroad under the Trailer Registration Regulations 2018?

Answer 75

Commercial trailers over 750kg and all trailers over 3,500kg must be registered with the DVLA, display a registration plate, and have a Trailer Registration Certificate before traveling to countries that have ratified the Vienna Convention.

Question 76

How does a standard motor policy cover crop spraying?

Answer 76

A: Liability for crop spraying outside the insured’s own farm(s) is excluded, except as required by the RTA. Contractors spraying on other farms need a special policy extension with adjusted rating.

Question 77

What is retrocession in reinsurance?

Answer 77

When a reinsurer transfers part of its own risk to another reinsurer to further spread large losses.

Question 78

What does stop loss reinsurance cover?

Answer 78

It protects an insurer when the loss ratio (claims vs. premium income) exceeds a set threshold.

Question 79

What is the purpose of an index clause in reinsurance?

Answer 79

It adjusts the insurer’s retention and reinsurer’s liability to account for inflation, ensuring claims settlements remain fair over long time periods.

Question 80

The data controller for MIAFTR and CUE is ?

Answer 80

the Motor Insurers' Bureau.

Question 81

AskCUE PI is designed to help reduce fraud, and is a joint initiative by the...

Answer 81

ABI Motor Insurers’ Bureau Motor Accident Solicitors Society Association of Personal Injury Lawyers Law Society.

Question 82

What is Big Data in the context of motor insurance?

Answer 82

The collection and analysis of large, structured and unstructured data sources to improve underwriting, claims handling, and fraud detection.

Question 83

How has data collection evolved in motor insurance?

Answer 83

Traditionally collected at proposal and claims stages, but now includes multiple data streams like social media, news websites, satellite imagery, and CCTV footage.

Question 84

Which reinsurance arrangement limits the insurer’s loss to a defined amount per event? A. Quota share reinsurance. B. Excess of Loss reinsurance. C. Facultative reinsurance. D. Stop loss reinsurance.

Answer 84

B. Excess of Loss reinsurance. Excess of Loss reinsurance is a non-proportional reinsurance arrangement where the reinsurer covers losses exceeding the insurer’s retention limit for a single event.

Question 85

A motor insurer uses the “earned vehicle years” method for rating. If a fleet consists of 10 vehicles, each insured for 6 months during the past year, calculate the total earned vehicle years for that fleet.

Answer 85

(10 vehicles x 6 months) / 12 = 5 vehicle years.

Question 86

How does the stability (index) clause in reinsurance work?

Answer 86

It adjusts the insurer’s retention and the reinsurer’s liability in line with the change in the UK wages index from the inception of the treaty to the time of settlement, accounting for inflation.

Question 87

What is the difference between Proportional and Non-Proportional Reinsurance?

Answer 87

Proportional Reinsurance: Insurer and reinsurer share premiums and claims (e.g., Quota Share). Non-Proportional Reinsurance: Reinsurer only pays when claims exceed a threshold (e.g., Excess of Loss).

Question 88

How does motor insurance cover differ when driving abroad?

Answer 88

EU/EEA countries: Minimum third-party cover is automatically included. Non-EU countries: A Green Card may be required. Duration of foreign use: Most policies allow up to 90 days, but extensions can be requested. Driving Other Cars (DOC) Extension: Typically not valid abroad.

Question 89

How does NCD protection work?

Answer 89

NCD protection prevents NCD loss after a claim, but does not stop the premium from increasing. Without protection, a single fault claim typically reduces NCD by 2 years.

Question 90

What was the VNUK decision, and how did it affect motor insurance?

Answer 90

A 2014 European Court of Justice (ECJ) ruling that required all motor vehicles (even off-road and non-road-going vehicles) to have motor insurance. The UK scrapped VNUK rules in 2022 to prevent mandatory insurance on private land and off-road vehicles (e.g., farm machinery, golf buggies).

Question 91

What are the penalties for not declaring a vehicle as SORN (Statutory Off-Road Notification)?

Answer 91

Fixed Penalty: £100. Fines up to: £2,500. Wheel-clamping, seizure, or crushing of the vehicle.

Question 92

How does legal fees cover differ between commercial and private motor insurance?

Answer 92

Commercial policies cover legal costs for defending health and safety breaches. Private policies cover uninsured loss recovery.