FIT Flashcards
When an insurer sells insurance over the internet, this is known as A. an agency relationship. B. a first loss policy. C. dual insurance. D. e-trading.
D. e-trading.
Which type of intermediary normally transacts business in the Lloyd’s market? A. Approved representatives. B. Independent insurance intermediaries. C. Lloyd’s agents. D. Lloyd’s brokers.
D. Lloyd’s brokers.
What is the main advantage of an individual buying motor insurance directly from an insurer?
A. Different insurance products are promoted by the insurer.
B. A financial saving is possible as the insurer would not include commission in the premium.
C. Independent advice can be given by the insurer.
D. The insurer can be more flexible in the types of risks which can be covered.
B. A financial saving is possible as the insurer would not include commission in the premium.
What is the main function of an underwriter?
A. Making ultimate decisions as to whether a claim is covered by the policy wording.
B. Setting premiums and policy terms to build a profitable portfolio of business.
C. Undertaking detailed statistical analysis of claims figures and forecasting future loss trends.
D. Undertaking surveys of risks presented to the insurer.
B. Setting premiums and policy terms to build a profitable portfolio of business.
he main function of a loss adjuster is to
A. identify, evaluate and control an insurable risk.
B. fix the terms, conditions and scope of cover for a risk.
C. investigate and negotiate a claim on behalf of the insurer.
D. investigate and negotiate a claim on behalf of the insured.
C. investigate and negotiate a claim on behalf of the insurer.
Who is responsible for the regulatory conduct of an appointed representative?
A. The approved representative.
B. The Association of British Insurers.
C. The British Insurance Brokers’ Association.
D. The principal.
D. The principal.
From where may an insured obtain free advice regarding the cover provided under his personal lines insurance policy? A. The Chartered Insurance Institute. B. The Financial Conduct Authority. C. The Financial Ombudsman Service. D. The insurer’s telephone helpline.
D. The insurer’s telephone helpline.
How is direct insurance transacted through e-trading? A. Face to face. B. Over the telephone. C. Via a broker. D. Via the internet.
D. Via the internet.
Which type of risk can always be insured against? A. A fundamental risk. B. A non-financial risk. C. A pure risk. D. A speculative risk.
C. A pure risk.
What term is given to the basic principle of insurance that the losses of the few are met by the contributions of the many? A. Pooling of risks. B. Risk management. C. Risk transfer mechanism. D. Subrogation.
A. Pooling of risks.
The primary function of insurance is to A. act as a risk transfer mechanism. B. minimise claims. C. prevent losses from occurring. D. reduce risk.
A. act as a risk transfer mechanism.
A risk which arises from a cause outside the control of any one individual is known as a A. fundamental risk. B. particular risk. C. pure risk. D. speculative risk
A. fundamental risk.
What is the main benefit to a policyholder when purchasing an insurance policy?
A. His financial position is guaranteed to improve.
B. He receives commission to cover the expenses of purchasing the insurance policy.
C. He maintains his current financial position in the event of a loss.
D. His credit rating is enhanced.
C. He maintains his current financial position in the event of a loss.
When an insurer transfers a portion of its risk to a third party in return for a premium, this is known as A. co-insurance. B. dual insurance. C. reinsurance. D. self insurance.
C. reinsurance.
Motor insurance windscreen claims can be classed as A. high frequency, high severity. B. high frequency, low severity. C. low frequency, high severity. D. low frequency, low severity
B. high frequency, low severity.
What are the consequences of an insured’s deliberate non-disclosure of material facts becoming apparent
when a claim is made?
A. The insurer must pay the claim then cancel the policy.
B. The policy is voidable from inception at the insurer’s option.
C. The policy is voidable from inception at the policyholder’s option.
D. The insurer can only avoid the claim but must continue the policy
B. The policy is voidable from inception at the insurer’s option.
What forms the insured’s consideration for an insurance contract?
A. The acceptance of the policy terms and conditions.
B. The agreement to comply with any warranties imposed by the insurer.
C. The disclosure of material facts.
D. The payment of, or the promise to pay, the premium.
D. The payment of, or the promise to pay, the premium.
Which insurance principle describes a policyholder’s duty to disclose material facts? A. Contribution. B. Indemnity. C. Insurable interest. D. Utmost good faith.
D. Utmost good faith.
After a car crashes into Paul’s house, his insurer pays to reinstate the damage and recovers its outlay from
the driver’s insurer. This recovery is an example of
A. arbitration.
B. indemnity.
C. ratification.
D. subrogation
D. subrogation
Underinsurance occurs when the
A. sum insured is a pre-agreed value.
B. sum insured is based on a first loss value.
C. value at risk is less than the sum insured.
D. value at risk is more than the sum insured.
D. value at risk is more than the sum insured.
Whilst assisting a client to complete a proposal form for a household insurance policy, a broker must explain
the customer’s duty to disclose
A. facts of law.
B. material facts and the consequences of non-disclosure.
C. material facts which lessen the risk.
D. spent convictions.
B. material facts and the consequences of non-disclosure.
The disclosure of all material facts enables an underwriter to
A. arrange adequate reinsurance.
B. automatically accept a proposal.
C. fully assess the level of risk.
D. guarantee the payment of future claims.
C. fully assess the level of risk.
Stock with a sum insured of £30,000 is insured under a commercial policy and is subject to average. A fire
completely destroys the stock, which has a replacement value of £40,000. What settlement figure will the
insurer pay?
A. £10,000
B. £22,500
C. £30,000
D. £40,000
C. £30,000
An insurance policy has a renewal date of 30 June. The insurer advises the insured of the renewal terms on
the 7 June, subject to confirmation of no material changes affecting the insured risk. The insured informs the
insurer on 14 June that he will renew and that there are no material changes. He pays the premium on 28
June. On what date did acceptance of this insurance contract take place?
A. 7 June.
B. 14 June.
C. 28 June.
D. 30 June.
B. 14 June.