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IF3 Questions > IF3Set1010118v1 > Flashcards

IF3Set1010118v1 Flashcards

1
Q

Which of the following constitutes consideration in an insurance contract?
A. When the insurer receives the proposal form
B. When the insurer provides the quotation
C. When the insured accepts the quotation
D. When the insured pays the premium

A

D. When the insured pays the premium

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2
Q 
In relation to commercial insurance contracts, the principle of utmost good faith applies to?
A. Both the insurer and the proposer
B. Neither the insurer nor the proposer
C. The insurer only
D. The proposer only
A

A. Both the insurer and the proposer

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3
Q

Under current law, which of the following represents a duty of a consumer with regards to disclosure of material circumstances?
A. To ensure responses to questions asked are full and accurate
B. To make a fair presentation of the risk
C. To signpost important information to the insurer
D. To make a ‘reasonable search’ of their memory

A

A. To ensure responses to questions asked are full and accurate

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4
Q

Ben finds out from his neighbour that his house was damaged by flood before he owned it. Does he need to inform his new buildings insurer of this circumstance?
A. No, because he did not own the property when the flood happened
B. Yes, but only if his insurer specifically asks if the house has previously been damaged by flood
C. No, because he only found out by hearsay
D. Yes, because this is a material circumstance

A

B. Yes, but only if his insurer specifically asks if the house has previously been damaged by flood

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5
Q 
The Consumer Insurance (Disclosure and Representations) Act 2012 abolished the duty on consumers to volunteer material facts which had previously been established under which Act?
A. The Consumer Credit Act 1974
B. The Misrepresentation Act 1967
C. The Marine Insurance Act 1906
D. The Public Order Act 1986
A

C. The Marine Insurance Act 1906

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6
Q

What is a duty of a consumer in relation to disclosure of material circumstances as determined by the Consumer Insurance (Disclosure and Representations) Act 2012?
A. To avoid misrepresentation of material circumstances to the insurer
B. To truthfully disclose all known material circumstances to the insurer
C. To act honestly and with integrity in disclosing material circumstances
D. To take reasonable care not to make a misrepresentation to the insurer

A

D. To take reasonable care not to make a misrepresentation to the insurer

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7
Q 
Of what, is a mid-term increase in the value of a risk, an example?
A. An addendum to cover
B. A chargeable alteration to the policy
C. A variation to the policy
D. A short-term change to the policy
A

C. A variation to the policy

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8
Q 
What is the specific term used to describe the situation where a proposer fails to tell the insurer something they know that would have affected the underwriter's judgement in accepting the risk?
A. A mistake
B. Non-disclosure
C. Misrepresentation
D. Negligence
A

B. Non-disclosure

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9
Q 
Which of these is a moral hazard?
A. Property construction
B. Age of a driver
C. Security protection at a shop
D. Social attitudes
A

D. Social attitudes

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10
Q 
During negotiations with a client for a new commercial property policy it becomes clear the proposal form is insufficient. Which of these is most likely to be used by an insurer to gain adequate information?
A. A face to face meeting
B. A statement of facts
C. A telephone interview
D. An online questionnaire
A

A. A face to face meeting

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11
Q 
In terms of the elements required for a contract to be legally binding, the insurer’s quotation represents the:
A. offer
B. insured’s consideration
C. insurer’s consideration
D. acceptance
A

A. offer

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12
Q 
If no time is stipulated for a quotation to remain valid, for how long does the quote remain open?
A. 14 days
B. 30 working days
C. For a reasonable time
D. Indefinitely
A

C. For a reasonable time

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13
Q

The purpose of the declaration on a consumer’s proposal form is to:
A. point out which facts should be declared
B. agree to pay the premium
C. get the proposer to confirm the information is true to the best of their knowledge and belief
D. point out the dangers of not declaring material facts

A

C. get the proposer to confirm the information is true to the best of their knowledge and belief

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14
Q 
Which of these would be classified as a risk specific question on a proposal form?
A. Proposer's age
B. Proposer's address
C. Proposer's occupation
D. Proposer's name
A

A. Proposer’s age

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15
Q 
Premiums collected for risks that are similar form a:
A. contribution pool
B. claims pool
C. current pool
D. common pool
A

D. common pool

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16
Q 
The premium rate relates to the:
A.	replacement cost
B.	rating of the hazard
C.	sum insured
D.	proposal form
A

B. rating of the hazard

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17
Q 
What would the premium base be in a public and products liability policy?
A. Profit
B. Turnover
C. Fees earned
D. Wage roll
A

B. Turnover

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18
Q 
A premium that is arrived at by consulting rating tables for the particular hazards covered by a policy is called:
A. an adjustable premium
B. a flat premium
C. a static premium
D. a defined premium
A

B. a flat premium

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19
Q 
A cover note for a motor policy must contain all information specified by the:
A. Consolidated Motor Directive
B. Road Traffic Act 1988
C. Insurance Act 2015
D. Consumer Rights Act 2015
A

B. Road Traffic Act 1988

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20
Q

What has the insurance industry produced to help insurers aid contract certainty and thereby avoid uncertainty and disputes over contract terms?
A. A set of compulsory rules for all firms to follow
B. A key facts booklet
C. A code of good practice
D. An ABI memorandum

A

C. A code of good practice

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21
Q 
What form are insurance policies most frequently issued in?
A. Contracted
B. Scheduled
C. Formatted
D. Narrative
A

B. Scheduled

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22
Q 
What is another name for the preamble in an insurance policy?
A. The heading
B. The operative clause
C. The recital clause
D. The declaration
A

C. The recital clause

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23
Q 
Utmost good faith is usually:
A. an implied condition
B. an express condition
C. a specific condition
D. an optional condition
A

A. an implied condition

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24
Q 
Paul would like to make a claim. Where would he find details of how to do this in his policy wording?
A. The preamble
B. The information section
C. The exceptions
D. The policy schedule
A

B. The information section

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25
Q 
Which of the following risks is generally excluded from cover, but protected under an agreement between insurers and the government through Pool Re?
A. Explosive nuclear assemblies
B. Terrorism
C. Radioactive contamination
D. War
A

B. Terrorism

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26
Q 
Under which type of policy can gradual pollution be insured?
A. Civil commotion
B. Public liability
C. Environmental impairment
D. Products liability
A

C. Environmental impairment

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27
Q

Why would an insured have a voluntary excess?
A. To receive a premium discount
B. Because the insurer has made it compulsory
C. To prove they are reliable
D. Because the insurer has decided that they are a poor risk

A

A. To receive a premium discount

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28
Q

A policy clause which calls for the insured to submit a claim promptly is an example of what kind of condition?
A. A condition precedent to contract
B. A condition subsequent to the contract
C. A condition precedent to liability
D. A condition subsequent to liability

A

C. A condition precedent to liability

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29
Q 
What is the usual period of cover for a general insurance policy?
A. One month
B. Three month
C. Six months
D. Twelve months
A

D. Twelve months

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30
Q 
Who has an obligation to renew an insurance policy at the end of the policy term?
A. The insurer
B. The insured
C. Both the insurer and the insured
D. Neither the insurer or the insured
A

D. Neither the insurer or the insured

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31
Q 
If an insured decides they no longer wish to take out a general insurance contract, how many days do they have to cancel without penalty?
A. 7 days
B. 14 days
C. 28 days
D. 30 days
A

B. 14 days

32
Q 
If an insurer wants to cancel an insurance policy, how many days’ written notice must they usually give the insured?
A. 5 days or more
B. At least 7 days
C. 14 working days
D. 1 month
A

B. At least 7 days

33
Q 
Cliff suffers a punctured tyre and crashes into another motorist and then a wall, under his comprehensive motor insurance, which of the following would be excluded from cover?
A. The damage to his tyre
B. The damage to the wall
C. The damage to his car
D. The damage to the third-party vehicle
A

A. The damage to his tyre

34
Q 
Which of these is typically excluded under a commercial motor vehicle insurance?
A. Medical expenses
B. Cover for sheets and ropes
C. Indemnity to hirers
D. Driving other cars
A

D. Driving other cars

35
Q

What is the main benefit provided by a personal accident policy?
A. Ongoing regular payments
B. Lump sum payments
C. Private medical treatment
D. Cover for damage third party personal possessions

A

B. Lump sum payments

36
Q 
The pre-set scale of benefits that insurers use to calculate lump sum payments, under a personal accident policy is called the:
A. continental scale
B. European scale
C. British scale
D. western scale
A

A. continental scale

37
Q

Which of these may be included under an accident and sickness policy?
A. Death benefit for a person who has disappeared
B. Childbirth
C. The insured being under the influence of alcohol
D. A mountaineering accident

A

A. Death benefit for a person who has disappeared

38
Q 
Under buildings insurance, which of these perils is not usually subject to an exclusion to cover, if a property is unoccupied for more than 30 or 60 days:
A. Escape of water
B. Escape of oil
C. Accidental breakage of glass
D. Storm or flood
A

D. Storm or flood

39
Q 
Kevin has a number of different means of transportation. All of them can be covered as optional extensions under his household contents insurance with the exception of his:
A. caravan
B. bicycle
C. small boat
D. motorcycle
A

D. motorcycle

40
Q 
Which of these occurrences is usually excluded from cover provided by a travel insurance policy?
A. Stolen baggage
B. Stolen money
C. Confiscated luggage
D. Delayed baggage
A

C. Confiscated luggage

41
Q 
What does standard fire cover consist of?
A. Fire, lightning and explosion
B. Fire, lightning and flood
C. Fire, explosion and flood
D. Fire, flood and earthquake
A

A. Fire, lightning and explosion

42
Q 
Which of these is regarded as a risk that is more properly insured under another type of policy, rather than under fire and special perils insurance?
A. Subterranean fire
B. Consequential loss
C. Malicious damage
D. Sprinkler leakage
A

B. Consequential loss

43
Q 
A common exclusion to a theft policy is:
A. index-linking
B. temporary removal within the British Isles
C. replacement of locks
D. cash and bank notes
A

D. cash and bank notes

44
Q 
What is the sum insured based on in a business interruption policy?
A. Gross profit
B. Turnover
C. Uninsured working costs
D. Increased costs of working
A

A. Gross profit

45
Q 
Business interruption insurance requirements usually arise from each of the following with the exception of:
A. "all risks" policies
B. fire and special perils policies
C. engineering policies
D. motor insurance policies
A

D. motor insurance policies

46
Q 
The minimum limit of indemnity required by an employers’ liability insurance policy is
A. £2 million
B. £5 million
C. £10 million
D. £20 million
A

B. £5 million

47
Q 
On what basis is professional indemnity insurance usually made?
A. Claims made
B. Claims occurring
C. Claims notified
D. Claims processed
A

A. Claims made

48
Q 
The main aim of risk control is to:
A. survey risk
B. analyse risk
C. identify risk
D. reduce risk
A

D. reduce risk

49
Q

If an insured has an accident that is not their fault, what will happen to their no claim discount?
A.It will be lost
B. It will be reinstated if the third party pays insurer pays a fine
C. It will be reinstated if the insurer recovers their outlay
D. It will be reinstated if the insured pays a fee

A

C. It will be reinstated if the insurer recovers their outlay

50
Q 
What is the difference between underwriting commercial insurance and underwriting personal insurance?
A. Personal risks are more complex
B. Commercial risks are less complex
C. Personal risks are less homogenous
D. Commercial risks are less homogenous
A

D. Commercial risks are less homogenous

51
Q

What is the relevance of family circumstances as an underwriting factor for health insurance?
A. They help establish appropriate benefit levels
B. They provide insight into the proposer’s lifestyle
C. They give an indication of the proposer’s own state of health
D. They allow insurers to categorise customers by type

A

A. They help establish appropriate benefit levels

52
Q

Why is destination a key rating factor for travel insurance?
A. It allows insurers to classify customers by type
B. Holidays in the UK and near Europe are generally less expensive that other destinations
C. Statistically, the rate of cancellation is greater for ‘long haul’ holidays
D. Because the risk of high medical expenses is very high in some countries

A

D. Because the risk of high medical expenses is very high in some countries

53
Q

Andrew would like to take out business interruption insurance for his catering firm. Which of these is not one of the considerations an underwriter would be concerned with?
A. Age of his employees
B. Details of his suppliers
C. Availability of replacement equipment
D. Ability to operate his business from different premises

A

A. Age of his employees

54
Q 
Which of these policies is usually sold at ‘point of sale’?
A. Public liability
B. Business interruption
C. Extended warranty
D. Pollution liability
A

C.Extended warranty

55
Q

In the context of insurance fraud on a household policy, of what is the action of throwing paint on a carpet an example?
A. Exaggerating the effects of an insured event
B. Inventing a loss event
C. Deliberately creating an insured event
D. Creating a claim

A

C. Deliberately creating an insured event

56
Q 
Under the Equality Act 2010, which of the following can be described as ‘discrimination against an individual because others think they possess a particular protected characteristic’?
A. Associative discrimination
B. Direct discrimination
C. Indirect discrimination
D. Perceptive discrimination
A

D. Perceptive discrimination

57
Q 
The top level of the information pyramid is:
A. shareholder reporting
B. board level reporting
C. manager reporting
D. operational level reporting
A

B. board level reporting

58
Q 
When reporting at board level, how is solvency usually expressed?
A.	In terms of premium income
B.	As a return on investment
C.	In terms of profitability
D.	In the context of profit and loss
A

A. In terms of premium income

59
Q 
The principle cost of production for an insurer is:
A. advertising
B. salaries
C. claims
D. credit control
A

C. claims

60
Q 
The measure of how often a particular type of claim has occurred is called its:
A. frequency
B. regularity
C. severity
D. constancy
A

A. frequency

61
Q 
Marie owns a sweet shop which has suffered several small losses due to shoplifting. This level of risk is classified as:
A. low frequency, high severity
B. high frequency, low severity
C. high frequency, high severity
D. low frequency, low severity
A

B. high frequency, low severity

62
Q 
The ratio of how much of a policy premium is earnt in the financial year in which the premium is booked onto the accounts is called:
A. account loss ratio
B. claims loss ratio
C. earned loss ratio
D. outstanding loss ratio
A

C. earned loss ratio

63
Q

Which of the following statements is true with regards claim frequency and costs?
A. You would expect a higher claim frequency on a fire account than a motor account, but the average cost claim on a fire account is lower than on a motor account
B. You would expect a similar claim frequency on a fire account and a motor account, but the average cost claim on a fire account is higher than on a motor account
C. You would expect a higher claim frequency on a motor account than a fire account, but the average cost claim on a motor account is lower than on a fire account
D. You would expect a higher claim frequency on a motor account than a fire account, and the average cost claim on a motor account is higher than on a fire account

A

C. You would expect a higher claim frequency on a motor account than a fire account, but the average cost claim on a motor account is lower than on a fire account

64
Q 
An accumulation of claims that result from a common event are called:
A. accumulation claims
B. large claims
C. catastrophe claims
D. disaster claims
A

C. catastrophe claims

65
Q 
An example of an insurer's variable costs is the cost of:
A.	record keeping
B.	policy issue
C.	certificate production
D.	claims handling
A

D. claims handling

66
Q 
The amount paid to an intermediary for introducing business to the insurer is called:
A. incentives
B. commission
C. underwriting
D. bonus
A

B. commission

67
Q 
Which of the following correctly shows the three elements of the combined operating loss ratio?
A. Loss, premium, expense
B. Loss, commission, profit
C. Turnover, commission, expense
D. Loss, commission, expense
A

D. Loss, commission, expense

68
Q 
Of what is ‘crash for cash’ an example in the context of fraud?
A. Claims fraud
B. Application fraud
C. Premium fraud
D. Underwriting fraud
A

A. Claims fraud

69
Q 
When premium rates are reducing, it is said that the insurance market is:
A. decreasing
B. sliding
C. softening
D. hardening
A

C. softening

70
Q 
What effect on the insurance market cycle does a reduced capacity to accept risks have?
A.	Higher prices and higher profits
B.	Lower prices and lower profits
C.	Higher prices and lower profits
D.	Lower prices and higher profits
A

A. Higher prices and higher profits

71
Q 
What do insurance underwriters need to consider when assessing the exposure caused by a property risk?
A.	Estimated maximum return
B.	Estimated maximum loss
C.	Sum insured at a single location
D.	Sum insured at all locations
A

B. Estimated maximum loss

72
Q 
Which of these is used by the insurance market to facilitate the handling of large liability risks?
A. Excess of loss ‘layers’
B. ‘Umbrella’ liability policies
C. Contingency insurance policies
D. Syndicate policies
A

A. Excess of loss ‘layers’

73
Q

If reinsurance is in place for a risk, when must an insurer settle their liabilities to their customer, in the event of a claim?
A. Before seeking indemnity from their insurers
B. After seeking indemnity from their reinsurers
C. At the same time as seeking indemnity from their reinsurers
D. Either before or after seeking indemnity from their reinsurers

A

A. Before seeking indemnity from their insurers

74
Q 
The term used to describe a risk that has been passed to a reinsurer is:
A. shared
B. ceded
C. divided
D. surplus
A

B. ceded

75
Q 
Which type of reinsurance is used by insurers to protect their loss ratio?
A.	Quota share
B.	Excess of loss
C.	Surplus
D.	Stop loss
A

D. Stop loss

IF3 Questions (4 decks)

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