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IF4 > IF4 Test Questions > Flashcards

IF4 Test Questions Flashcards

1
Q

What department of an insurance company is seen as the ‘shop window’?

A

The claims department

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2
Q

In the event of a claim, the insured must prove what?

A

The amount/value of the loss

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3
Q

Which of these areas do claims conditions fall into?

A. Conditions precedent to contract
B. Conditions prior to contract
C. Conditions precedent to liability
D. Conditions subsequent to liability

A

C. Conditions precedent to liability

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4
Q

What is prompt notification to the insurer an example of?

A

An express duty

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5
Q

In which of the following circumstances would an insurance policy claim be valid? Where the damage was caused by a:

A. Expected peril
B. Named peril
C. Unnamed peril
D. Excluded peril

A

B. Named peril

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6
Q

What sort of policy/basis is provided by a sickness or personal accident policy?

A

Benefit basis or benefit policy

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7
Q

A claim under a sickness policy is usually subject to what?

A

A franchise

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8
Q

What is a franchise on a sickness policy?

A

A franchise is a period of time that must lapsed before a claim is valid.

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9
Q

What is a typical limitation of creditor insurance?

A

Cover doesn’t apply for the first month of the policy period.

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10
Q

What effect took place after the Employers Liability (Compulsory Insurance) Regulations of 1998?

A

It increased the minimum required limit of cover from £2 million to £5 million.

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11
Q

What is claims leakage?

A

Wastage or avoidable payments

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12
Q

What is the relationship between Claims reserving and setting premiums?

A

Claims reserving enables the assessment of adequacy of premium rates.

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13
Q

What key indicator arises from the process of claims reserving?

A

The financial solvency of an insurance company.

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14
Q

What is the financial threshold for micro-enterprises seeking dispute resolution via the FOS?

A

They must turn over less than £2 million per annum.

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15
Q

Under which specific rule does claims handling fall?

A. ABI General insurance Claims Code
B. ICOBS
C. ABI Statement of General Insurance Practice
D. Threshold conditions

A

B. ICOBS

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16
Q

What is the RTA personal injury claims portal?

A

A system for road traffic accident personal injury claims with a value of up to £25,000.

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17
Q

For contents insurance, what type of good are items such as towels and bedding classed as?

A

Consumer goods

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18
Q

What is mitigation?

A

Carrying out reasonable steps to prevent further damage.

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19
Q

In the context of business interruption insurance, what does an indemnity period represent?

A

The maximum length of any claim.

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20
Q

Public liability policies are often written on a losses-occurring basis. What does this mean?

A

That claims will be consider in respect of losses that are incurred during the period of insurance, even if the claim manifests itself later.

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21
Q

What are the primary and over-arching design considerations for a Claims Management System?

A

Claims philosophy and claims management procedures.

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22
Q

What are the determining factors in choosing a claims management system?

A
  • Company structure
  • Types of business written
  • Management decisions about system development
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23
Q

What type of company structure is most suited to smaller insurance organisations?

A

A functional structure.

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24
Q

What are the characteristics of a centralised organisation?

A

Authority is retained at the top and there is little delegation.

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25
Q

Who is required to act as the eyes and ears of the underwriter?

A

The surveyor.

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26
Q

What is the purpose of claims projection?

A

To establish the likely ultimate gross payout that the insurer may have to make during an underwriting year.

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27
Q

In the case of subrogation, where it is found a third party is insured, against whom will the insurers rights of recovery be?

A

The responsible third party directly.

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28
Q

Why are ex gratia payments not generally categorised as claims leakage?

A

They are not based on contractual obligation.

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29
Q

What is a solvency margin?

A

A proportion of premium income set aside to pay out reported and estimated claims.

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30
Q

What does the balance sheet of an insurance company show?

A

The entire assets and liabilities of the company at the end of the financial year.

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31
Q

What is the correct term when a claim is reported by a policyholder but the claims handler knows the amount has been understated?

A

Incurred but not enough reported.

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32
Q

In the context of claims handling, what is quantum?

A

The amount of a claim

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33
Q

Under the Insurance Act 2015, what do insurer’s need to do when a claim is received from a commercial customer in order to validate the claim which they didn’t need to do before?

A

Confirm whether the duty of fair presentation had been complied with.

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34
Q

What is the importance of Pawsey V Scottish Union and National (1907)?

A

It defined proximate cause.

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35
Q

Ambulances, Forklift trucks and Cranes are all examples of what in the context of commercial insurance?

A

Vehicles of special construction.

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36
Q

A personal accident and sickness policy will usually exclude cover for sickness contracted within how many days of policy inception?

A

21 days

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37
Q

What cover under a personal accident and sickness policy typically provide a weekly benefit for a maximum of 104 weeks?

A

Temporary total disablement.

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38
Q

What is subsidence?

A

The movement of land on which the insured’s building stands on due to movement in the underground workings.

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39
Q

What are mediation and conciliation examples of?

A

Ways of seeking to resolve a claims dispute by alternative dispute resolution.

40
Q

What is the financial threshold for micro-enterprises seeking dispute resolution via the FOS?

A

They must turn over less than £2 million (May also appear as Euros, €).

41
Q

In the context of business interruption insurance, what does an indemnity period represent?

A

The maximum length of any claim.

42
Q

What does it mean when a policy is written on a ‘loss-occurring basis’?

A

That claims will be considered in respect of losses that are occur d during the period of insurance, even if a claim manifests later.

43
Q

What are the primary and over-arching design considerations for a claims management system?

A

Claims philosophy and claims management procedures.

44
Q

What are the factors in determining the choice of a claims management system?

A
  • Company structure
  • Type of business written
  • Management decisions about system development.
45
Q

What type of company structure is most suited to smaller insurance organisations?

A

A functional structure.

46
Q

Authority is retained at the top and there is little delegation. What type of organisation is this describing?

A

A centralised organisation.

47
Q

They are the eyes and ears of the underwriter. Who is being described here?

A

The surveyor.

48
Q

What is the purpose of claims projection?

A

To establish the likely ultimate gross payout that an insurer may have to make during an underwriting year.

49
Q

What is the purpose of the Arbitration Act 1996?

A

It details the powers of arbitrators and the processes to be followed in the case of a tribunal.

50
Q

What does a balance sheet of an insurance company show?

A

The entire assets and liabilities of the company at the end of the financial year.

51
Q

What is the correct term to apply where a claim is reported by a policyholder but the claims handler knows the the amount to have been understated?

A

Incurred but not enough reported.

52
Q

What type of duty is mitigation?

A

An implied duty.

53
Q

Under the Insurance Act 2015, what must an insurer now check when establishing whether a claim from a commercial customer is valid that they didn’t have to check before?

A

That the duty of fair presentation has been complied with.

54
Q

Ambulances, cranes and forklift trucks are all examples of what?

A

Vehicles of special construction.

55
Q

A personal accident and sickness insurance policy will usually exclude cover for a sickness contracted within how many days of policy inception?

A

21 days.

56
Q

Under a personal accident and sickness insurance policy, what cover is typically provided on a weekly benefit for a maximum of 104 weeks?

A

Temporary total disablement.

57
Q

By whom is the Standard Fire Policy form recommended on the UK insurance market?

A

The ABI (Association of British Insurers).

58
Q

What is extended or full theft cover?

A

A theft policy which has been extended to include theft without forceable or violent entry.

59
Q

What is effective claims reserving a key indicator of?

A

A company’s financial solvency.

60
Q

What is the objective of the Art Loss Register?

A

To increase the recovery rate of stolen artwork and deter theft by making it a sale of stolen items more difficult.

61
Q

Introduced with the intention of reducing cost, delay and complexity in the way personal injury claims were handled. What rules are being described here?

A

The Civil Procedure Rules 1999.

62
Q

What means may firms use to effectively demonstrate they are consistently providing fair treatment to their customers?

A

Delivering on the FCA’s six customer outcomes.

63
Q

What is the scope of the Personal Injury Pre-Action Protocols under the Civil Procedure Rules?

A. They include all personal injury claims arising from motor incidents.
B. They include all personal injury claims.
C. They include all non-motor personal injury claims.
D. They include personal injury claims arising from non-commercial incidents.

A

B. They include all personal injury claims.

64
Q

What are special damages?

A

Damages for losses that can be quantified.

65
Q

What is the role of IT in the effective management of claims information?

A

It controls the technical issues of a large process.

66
Q

What are the key considerations when designing a claims management system?

A

The volume and complexity of claims.

67
Q

What type of structure would allow employees to specialise in their type of work?

A

A functional structure.

68
Q

What does MPL mean?

A

The maximum probable loss that could occur.

69
Q

What is the loss development factor method?

A

A method used to project claims for reserving purposes.

70
Q

What do a company’s management accounts provide for?

A

Planning, monitoring and control.

71
Q

What was the effect of the Third EU Motor Insurance Directive 1992 on motor insurance policies issued in the UK?

A

Cover had to provide for the insured vehicle to be used in any other EU country.

72
Q

For buildings insurance… What is the typical duration in the case of an unoccupancy period exclusion?

A

30 or 60 days.

73
Q

What is a global claims reserve?

A

A reserve covering a whole book of business.

74
Q

What are the limitations of the arbitration clause in an insurance policy?

A

It will only deal with matters of quantum… Matters of liability cannot be referred through arbitration.

75
Q

What does ATE legal expenses cover do?

A

It underwrites the possibility that a court action will be unsuccessful.

76
Q

What type of company structure is most suited to large, multi-product insurance organisations?

A

A traditional hierarchy.

77
Q

What is the most common form of claims settlement?

A

Cash payment

78
Q

What types of firms are subject to the least intrusive levels of regulation by the FCA?

A

Flexible portfolio firms.

79
Q

What are the overview roles of a claims manager?

A

Strategy - Ensuring a coherent approach to claims management.

Cost - Monitoring and controlling the running costs of the department and the costs the claims themselves.

Staffing - Recruit, train and motivate staff.

80
Q

What are the 4 steps of preventing leakage?

A
  • Senior management focus
  • Employee skills
  • Supervision of staff
  • Quality management
81
Q

What are the 5 ‘other’ types of reserve?

A
  • Equalisation reserves
  • Catastrophe reserves
  • Unearned premium reserve and unexpired risk reserve
  • Provision for claims handling expenses
  • Reopened claims reserves.
82
Q

What type of structure is suited to a large multi product company?

A

Divisional structure.

83
Q

In relation to legal proceedings, what was introduced as a result of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LAPSO)?

A

Qualified one way costs shifting.

84
Q

What department provides the largest outflow of money within an insurance company?

A

The claims department.

85
Q

Under the ABI Personal Effects Contribution Agreement, contribution doesn’t apply when?

A

There is a claim involving loss or damage to personal effects due to theft from a vehicle.

86
Q

What sort of obligations do motor insurers have under Part VI of the Road Traffic Act?

A

Statutory obligations.

87
Q

What sort of basis are Professional Indemnity policies written on?

A

Loss occurring basis.

88
Q

Under a personal accident policy, what is usually paid out as an annuity?

A

Permanent total disablement.

89
Q

Who sets claims handling standards that all authorised insurers must comply with?

A

The Financial Conduct Authority (FCA).

90
Q

What did the case law ‘Konstantinos Agapitos Vs Ian Charles Agnew’ establish? Hint: IC

A

Fraud - If any of the claim is fraudulent or exaggerated, the whole claim fails.

91
Q

What did the case law ‘Manifest Shipping Company Vs Uni-Polaris Shipping establish? Hint: Manifest has an F in it.

A

Fraud - If any of the claim is fraudulent or exaggerated, the whole claim fails.

92
Q

What did the case law ‘Gabay Vs Lloyd’ establish? Hint: Horses

A

Proximate Cause - A ship carrying horses encountered a storm. The horse were scared and caused injury to each other.

93
Q

What did the case law ‘Marsden Vs City & County Insurance’ establish? Hint: Marsden begins with M.

A

Proximate cause - A fire in a shop next door, windows smashed and damage was caused. A riot caused the fire so the riot was the proximate cause.

94
Q

What did the case law ‘Versloot Dredging Vs HDI Gerling Industrie’ establish? Hint: Loot

A

Fraud - Superseded previous fraud case law, meaning if the fraud is immaterial to the loss then the claim will still be paid.

95
Q

What are the 2 main ways of seeking resolutions by ADR?

A

Mediation or Conciliation.

96
Q

What is mediation?

A

Both parties agree to the appointment of an impartial party. The chosen party will then clarify the position of each party and facilitate an amicable settlement. The mediator is NOT an expert however and if no settlement agreed may still proceed to court.

97
Q

What is conciliation?

A

A conciliator is chosen for their expertise and they will assist in providing a dispute resolution. Both parties may agree in advance that any award given is binding.

IF4 (1 decks)

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