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IF3 Questions > IF3Set2010118v2 > Flashcards

IF3Set2010118v2 Flashcards

1
Q

How does the legal principle of ‘let the buyer beware’ apply to insurance contracts?
A. It is central to an insurance contract
B. It applies to motor insurance policies only
C. It does not apply to any insurance contract
D. It is applicable to certain contracts

A

C. It does not apply to any insurance contract

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2
Q

The Insurance Act 2015 limits an insurer’s ability to rely on any misrepresentation or non-disclosure. This means that:
A. consumers are less vulnerable than under previous legislation
B. consumers are more vulnerable than under previous legislation
C. non-consumers are less vulnerable than under previous legislation
D. non-consumers are more vulnerable than under previous legislation

A

C. non-consumers are less vulnerable than under previous legislation

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3
Q

Mark had an accident in his car two years ago, but this did not result in a claim because there was no damage to either vehicle involved. Should he declare this to an insurer when seeking a new policy?
A. Yes, providing his insurer asks him a question relating to such accidents
B. No, this is not a material circumstance because a claim was not made
C. No, because the potential insurer should check with Mark’s previous insurer
D. No, because this is not in the previous renewal year

A

A. Yes, providing his insurer asks him a question relating to such accidents

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4
Q
  1. Don’s workers are required to wear ear defenders whilst operating grinding machinery. This is an example of:
    A. one good and one poor physical hazard
    B. one good moral hazard and one poor physical hazard
    C. two poor physical hazards
    D. one good physical and one poor moral hazard
A

A. one good and one poor physical hazard

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5
Q 
For a motor insurance policy, when does the duty of fair presentation begin?
A.	On receipt of the premium
B.	At inception of the contract
C.	At the end of negotiations
D.	At the start of negotiations
A

D. At the start of negotiations

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6
Q

The Consumer Insurance (Disclosure and Representations) Act 2012 defines a qualifying breach as being deliberate if the insured:
A. did not take reasonable care
B. could not have known the circumstance should have been disclosed
C. did not make the insurer aware of a relevant material circumstance
D. asked the intermediary to complete their proposal form

A

A. did not take reasonable care

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7
Q 
When an insured makes a statement that is substantially false that relates to the subject matter of the contract and has induced the insurer into entering into the contract, this is called a:
A.	falsification
B.	non-disclosure
C.	disclosure
D.	misrepresentation
A

D. misrepresentation

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8
Q

If a commercial customer deliberately makes a qualifying breach what remedy does the insurer have?
A. Void the policy and refuse claims
B. Sue the policyholder
C. Fine the policyholder
D. Transfer the policyholder to a different policy

A

A. Void the policy and refuse claims

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9
Q 
The technical term given to the event that gives rise to a loss is called?
A.	A catastrophe
B.	A peril
C.	A hazard
D.	A disaster
A

B. A peril

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10
Q 
What is the link between what is written in a proposal form and the policy that is issued?
A.	Loss assessing
B.	Marketing
C.	Underwriting
D.	Risk management
A

C. Underwriting

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11
Q 
What part of a valid contract is the proposer agreeing to the quotation?
A.	Offer
B.	Acceptance
C.	Counter Offer
D.	Consideration
A

B. Acceptance

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12
Q

A proposal form would probably be suitable for each of the following with the exception of:
A. a motor insurance policy for a consumer
B. a household insurance policy for a consumer
C. an insurance policy for a small retail shop
D. an insurance policy for an industrial complex

A

D. an insurance policy for an industrial complex

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13
Q 
What is the most common mechanism by which an underwriter receives information regarding a consumer risk to be insured?
A.	Arranging a face to face meeting
B.	Reviewing a proposal form
C.	Conducting a survey
D.	Carrying out a fact find
A

B. Reviewing a proposal form

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14
Q 
Which of these is usually classified as a general question on a proposal form?
A.	Business details
B.	Period of insurance required
C.	Sum insured or limit of liability
D.	Description of the subject matter
A

B. Period of insurance required

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15
Q 
Which of these risks would be the most difficult for an underwriter to calculate a suitable premium for?
A.	A motor car
B.	A pianist's fingers
C.	A cruise ship
D.	A factory
A

B. A pianist’s fingers

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

D. sum insured

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17
Q 
A premium which would be finalised at the end of the policy period, when the insured can provide an exact figure for the premium base, is called?
A.	A deposit premium
B.	An adjustable premium
C.	A conditional premium
D.	An initial premium
A

B. An adjustable premium

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18
Q

What effect does the absence of a policy document have?
A. It means that there is no contract in place
B. The contract is invalid
C. The contract is still in place but the insured has no evidence of it
D. The insurer can change the policy conditions at any time

A

C. The contract is still in place but the insured has no evidence of it

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19
Q

All of the following information must be shown on a motor insurance policy certificate with the exception of:
A. name of policyholder
B. person or classes of person entitled to drive
C. registration of vehicle
D. the scope of policy cover

A

D. the scope of policy cover

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20
Q 
What type of condition is premium payment in an insurance contract?
A.	Explicit
B.	Implied
C.	Stated
D.	Active
A

B. Implied

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21
Q 
What type of information does the schedule hold?
A.	Substantial
B.	Variable
C.	Standardised
D.	Claims
A

B. Variable

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22
Q 
The signature on a policy wording:
A.	triggers the cover under the policy
B.	is a compulsory requirement
C.	is a legal requirement
D.	is an optional requirement
A

D. is an optional requirement

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23
Q 
Where would details of the sum insured usually appear in the policy wording?
A.	The information section
B.	The policy schedule
C.	The recital clause
D.	The operative clause
A

B. The policy schedule

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24
Q

What do general exclusions apply to?
A. All sections of the policy
B. Particular sections of the policy
C. Sections of the policy relating to claims
D. Sections of the policy relating to risk management

A

A. All sections of the policy

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25
Q 
Fundamental risks are generally:
A.	uninsurable
B.	insurable
C.	subject to a large excess
D.	applicable to the Lloyd's market
A

A. uninsurable

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26
Q 
Which of these conditions deals with the insurer’s right to call upon other insurers to share in a claim?
A.	Contractual liability
B.	Alteration
C.	Subrogation
D.	Contribution
A

D. Contribution

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27
Q

Which type of policies most commonly contain time franchises?
A. Engineering business interruption policies
B. Travel insurance policies
C. Personal accident and sickness policies
D. Motor insurance policies

A

C. Personal accident and sickness policies

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28
Q 
Which of these must be complied with at the time of a claim in order for that claim to be valid?
A.	Conditions precedent to the contract
B.	Conditions prior to payment
C.	Conditions subsequent to the contract
D.	Conditions precedent to liability
A

D. Conditions precedent to liability

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29
Q 
The anniversary date of an insurance policy is also referred to as the:
A.	renewal date
B.	premium date
C.	payment date
D.	instalment date
A

A. renewal date

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30
Q 
How are most insurance policies paid for?
A.	By instalments
B.	By a one-off payment
C.	By credit card
D.	By cheque
A

A. By instalments

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31
Q

At policy renewal the insurer and the insured are:
A. continuing with an existing contract
B. entering into a new contract
C. varying their original contract
D. discontinuing their contractual arrangement

A

B. entering into a new contract

32
Q

What is excluded from cover under a Road Traffic Act only motor insurance?
A. Third party property
B. Bodily injury to third parties
C. Emergency medical treatment and hospital expenses for third parties
D. Theft of own vehicle

A

D. Theft of own vehicle

33
Q 
Of what are goods carrying vehicles an example?
A.	Vehicles of special construction
B.	Commercial vehicles
C.	Uninsurable vehicles
D.	Private vehicles
A

B. Commercial vehicles

34
Q 
Which of the following covers provided under motor fleet insurance provides indemnity to a policyholder where an employee is using their own vehicle on the employer’s business and their own insurance proves to be inoperative?
A.	Joint insured
B.	Contingent third party insurance
C.	Driving other vehicles extension
D.	Occasional business use
A

B. Contingent third party insurance

35
Q 
The continental scale is used to calculate benefits under which section of a health insurance policy?
A.	Permanent partial disablement
B.	Temporary partial disablement
C.	Death
D.	Hospital benefits
A

A. Permanent partial disablement

36
Q

A usual condition of the permanent total disablement section of a personal accident policy is that:
A. there is a time franchise for the weekly benefit
B. the disablement occurs within an agreed period of the accident date
C. the lump sum will be adjusted on the continental scale
D. the weekly benefit is reduced by a percentage to reflect tasks a person can still do

A

B. the disablement occurs within an agreed period of the accident date

37
Q 
Which type of policy primarily provides cover for people who are seeking medical treatment outside the NHS?
A.	Medical expenses
B.	Public liability
C.	Personal accident
D.	Sickness
A

A. Medical expenses

38
Q

What is the purpose of “all risks” cover under a household policy?
A. To protect items not typically insured by a household policy
B. To provide blanket cover for all personal possessions irrespective of value
C. To provide cover for personal and business possessions
D. To protect personal possession regularly taken outside the premises

A

D. To protect personal possession regularly taken outside the premises

39
Q 
An exclusion under the legal expenses section of a household buildings and contents policy is:
A.	civil defence costs
B.	libel and slander defence costs
C.	recovery costs
D.	prosecution defence costs
A

B. libel and slander defence costs

40
Q 
Extended warranty cover is usually offered to buyers of:
A.	jewellery
B.	electrical goods
C.	pets
D.	airline flights
A

B. electrical goods

41
Q 
Which of these is included as standard under a fire policy rather than as a special peril?
A.	Lightning
B.	Earthquake
C.	Storm and flood
D.	Impact
A

A. Lightning

42
Q

Which of these statements is FALSE with regard to “all risks” commercial property insurance?
A. Gradually operating causes are covered
B. All losses must have occurred accidentally in respect of the insured
C. All risks are covered unless specifically excluded
D. There are no optional extensions

A

A. Gradually operating causes are covered

43
Q

Which of the following is excluded by glass insurance because it is more properly insured under another type of insurance policy?
A. Damage to shopfront contents
B. Damage to washbasins in hairdressing salons
C. Damage to glass caused by lightning
D. Boarding up for security purposes

A

C. Damage to glass caused by lightning

44
Q

Business interruption insurance will provide protection in all of the following circumstances except:
A. overheads that will still exist even if a business is not working
B. increases in costs to keep the business going
C. repairs to a building following fire damage
D. loss of earnings

A

C. repairs to a building following fire damage

45
Q

Which of these is not something that is usually covered under an optional extension to a business interruption policy?
A. Damage occurring on a contract site where the insured is working
B. Notifiable disease preventing the insured from conducting their business
C. Losses due to operational error
D. Prevention of access by customers to the premises

A

C. Losses due to operational error

46
Q 
Which of these is covered by a public liability insurance policy?
A.	Professional negligence
B.	Injury to employees
C.	Consequential loss to third parties
D.	Deliberate acts
A

C. Consequential loss to third parties

47
Q

When are the services of approved repairers most frequently used?
A. For public liability insurance claims
B. For household contents insurance claims
C. For motor insurance claims
D. For travel insurance claims

A

C. For motor insurance claims

48
Q 
What can be purchased with a motor insurance policy to aid the recovery of uninsured losses?
A.	Professional indemnity cover
B.	No win, no fee cover
C.	Legal expenses cover
D.	Personal accident cover
A

C. Legal expenses cover

49
Q

An underwriter will perform each of the following tasks with the exception of:
A. calculating premiums
B. deciding whether to accept a claim
C. deciding whether to accept a risk
D. determining what terms and conditions to apply

A

B. deciding whether to accept a claim

50
Q

Under which Act are commercial customers required to give a ‘fair presentation’ of their risk?
A. Marine Insurance Act 1906
B. The Deregulation Act 2015
C. The Consumer Insurance (Disclosure and Representations) Act 2012
D. The Insurance Act 2015

A

D. The Insurance Act 2015

51
Q 
Which of these underwriting factors is of more relevance to motor insurance than health insurance?
A.	Age
B.	Lifestyle
C.	Address
D.	Occupation
A

C. Address

52
Q

Which of these statements is TRUE in respect of the comparison between underwriting “all risks” cover and underwriting fire and special perils insurance?
A. Fire and special perils cover is wider
B. There are different rating factors
C. The rating factors are essentially the same
D. “All risks” cover is more limited

A

C. The rating factors are essentially the same

53
Q 
Which of these is more relevant as an underwriting factor to motor and health insurances than to professional indemnity insurance?
A.	Age
B.	Occupation
C.	Experience
D.	Professional qualifications
A

A. Age

54
Q

Each of the following is a database used to help with fraud detection with the exception of?
A. Motor Insurance Bureau (MIB)
B. Art Loss Register (ALR)
C. Motor Insurance Anti-Fraud and Theft Register (MIATR)
D. Claims and Underwriting Exchange (CUE)

A

A. Motor Insurance Bureau (MIB)

55
Q

From an underwriting perspective, which of the following is unjustifiable under the Equality Act 2010?
A. Offering less favourable terms due to actuarial data
B. Offering less favourable terms due to a protected characteristic
C. Offering less favourable terms due to medical research information
D. Offering less favourable terms due to statistical data

A

B. Offering less favourable terms due to a protected characteristic

56
Q

The General Data Protection Regulation (GDPR) introduces a duty of breach of notification on?
A. All organisations
B. Organisations with more than 20 employees
C. Organisations with a turnover in excess of £500,000
D. Organisations with more than 100 data subjects

A

A. All organisations

57
Q 
Which factor that affects profit is outside the control of an insurance company?
A.	Targeted products
B.	Targeted markets
C.	Competitive performance
D.	Natural disasters
A

D. Natural disasters

58
Q 
When underwriting managers are looking at the amount of business that is being kept and not lost to competitors this is called:
A.	retention rates
B.	loss ratios
C.	growth by product
D.	reserve consistency
A

A. retention rates

59
Q 
One of the key considerations for an underwriting manager when setting underwriting terms and premiums is:
A.	compliance control
B.	staff training
C.	credit control
D.	trends in claims
A

D. trends in claims

60
Q 
The measure of how serious a claim will be is called its:
A.	severity
B.	frequency
C.	gravity
D.	constancy
A

A. severity

61
Q

The claims loss ratio is calculated by:
A. multiplying the claims incurred by the amount of premium received
B. dividing the amount of premium received by the claims incurred
C. multiplying the amount of premium received by the claims incurred
D. dividing the claims incurred by the amount of premium received

A

D. dividing the claims incurred by the amount of premium received

62
Q 
Tracking the performance of individual insurance contracts is usually done by:
A.	calendar year tracking
B.	policy year tracking
C.	underwriting year tracking
D.	accounting year tracking
A

B. policy year tracking

63
Q 
The usual difference in claims severity between fire and motor claims is:
A.	lower severity in fire claims
B.	greater severity in motor claims
C.	greater severity in fire claims
D.	lower predictability in motor claims
A

C. greater severity in fire claims

64
Q 
"Long tail" claims are also known as:
A.	inflated claims
B.	latent claims
C.	catastrophe claims
D.	liability claims
A

B. latent claims

65
Q 
An insurer's variable expenses exclude the cost of:
A.	certificate production
B.	underwriting
C.	commission payments to intermediaries
D.	claims handling
A

A. certificate production

66
Q

Each of the following factors is usually taken into account when calculating the cost of claims handling with the exception of?
A. The number of likely claims
B. The volume of work involved in complex claims
C. Variances for product and claims types
D. Commission payable to intermediaries

A

D. Commission payable to intermediaries

67
Q

Which of these describes an effect of the Mesothelioma Act 2014?
A. It applies a standard claims handling procedure to mesothelioma claims
B. It introduces a scale of benefits for mesothelioma claimants
C. It applies a levy to all employers’ liability policies
D. It requires employers’ liability insurers to pass on the increased costs of mesothelioma claims to their customers

A

C. It applies a levy to all employers’ liability policies

68
Q 
The specific risks presented by an event being insured are called:
A.	queried aspects
B.	qualitative aspects
C.	questionable aspects
D.	quantitative aspects
A

B. qualitative aspects

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

B. hardening

70
Q 
What is the usual length of the insurance market cycle?
A.	2-5 years
B.	5-10 years
C.	10-15 years
D.	15-20 years
A

A. 2-5 years

71
Q 
Who plays a critical role in helping an underwriter identify an estimated maximum loss?
A.	A risk surveyor
B.	A loss assessor
C.	A loss adjuster
D.	A risk assessor
A

A. A risk surveyor

72
Q 
What is cover based on, in liability insurance?
A.	The limit of liability
B.	The estimated maximum loss
C.	The sum insured
D.	The maximum probable loss
A

A. The limit of liability

73
Q 
What are the two main types of reinsurance?
A.	Critical and non-critical
B.	Proportional and non-proportional
C.	Hazardous and non-hazardous
D.	Indemnity and non-indemnity
A

B. Proportional and non-proportional

74
Q 
The type of reinsurance where the insurer covers the proportion of each loss according to the proportion of the risk they have a treaty of reinsurance for, is called?
A.	Excess of loss
B.	Surplus
C.	Stop loss
D.	Quota share
A

D. Quota share

75
Q 
Excess of loss reinsurance can be arranged per:
A.	risk or per customer only
B.	event only
C.	event or per risk only
D.	customer only
A

C. event or per risk only

IF3 Questions (4 decks)

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