key points

Question 1

risk is ?

Answer 1

Risk has an element of uncertainty, unpredictability and sometimes danger

Question 2

risk is?

Answer 2

The term risk is used in a number of different ways in the insurance market and can mean the peril or contingency that is insured, the thing (or liability) actually insured or both the thing insured and the range of contingencies or scope of cover required.

Question 3

Individuals can be either risk ———– or risk————

Answer 3

Risk seeking or risk averse

Question 4

What is the primary function of insurance

Answer 4

To act as a risk transfer mechanism

Question 5

Risk management seeks to identify analyse and

Answer 5

control risk

Question 6

Can a non financial risk be insured?

Answer 6

NO

Question 7

Can a fundamental risk be insured

Answer 7

NO

Question 8

Can a speculative risk be insured

Answer 8

NO

Question 9

An oil rig exploding is high severity and low frequency

True / Flase

Answer 9

True

Question 10

Pooling of risks is

Answer 10

Pooling of risks is the principle whereby the losses of the few are paid for by the premiums of the many who, facing the same risk, suffer no loss.

Question 11

Is public liability compulsory for equestrian centres?

Answer 11

Yes

Question 12

The main benefit of insurance is peace of mind

True / False

Answer 12

True

Question 13

Mutual companies are owned by their shareholders

True / False

Answer 13

False

Question 14

Principle of utmost good faith

Answer 14

Utmost good faith as a positive duty of disclosure, accurately and fully, all facts material to the risk being proposed, whether requested or not

Question 15

Definition of insurable interest

Answer 15

Insurable interest is the legal right to insure arising out of a financial relationship recognised at law, between the insured and the subject-matter of insurance

Question 16

Creation of insurable interest

Answer 16

Insurable interest can arise at common law, under contract or under statute

Question 17

When insurable interest must exist depends on the class of insurance

Answer 17

for life assurance it must exist at inception, for marine insurance it must exist when a claim is made and for general insurance it must exist when a claim is made and usually at inception, though this not absolute provided the contract is not a wager or a gamble

Question 18

Material fact

Answer 18

A material fact is one which would influence the judgement of a prudent insurer in fixing the premium or determining whether they will take the risk.

Question 19

What does comp stand for?

Answer 19

Fully comprehensive

Question 20

What does T.P.F.T. stand for?

Answer 20

third party fire and theft

Question 21

What does C.B.T. stand for?

Answer 21

Compulsory bike test

Question 22

Are contact lenses covered under a standard travel insurance?

Answer 22

No

Question 23

EL stands for?

Answer 23

Employers’ liability insurance is a compulsory class of cover in the UK and provides indemnity for damages, costs and expenses where an employer has legal liability for death, bodily injury or disease sustained by an employee

Question 24

PL stands for?

Answer 24

Public liability compensates an insured in respect of claims for legal liability from members of the public who suffer injury or damage to their property as a result of the insured’s negligence

Question 25

PI stands for?

Answer 25

Professional indemnity insurance covers the liability of the insured in a professional capacity for injury, damage or financial loss as a result of a breach of a professional duty. Cover is compulsory for many professional for many professional businesses.

Question 26

Money Laundering is

Answer 26

Money laundering is the process by which criminals and terrorists convert money that has been obtained illegal into legitimate funds.

Question 27

TOBA stands for?

Answer 27

Terms of Business Agreement All TOBAs should be clear, succinct, reflect the business relationship, define and allocate responsibilities and rights and ensure compliance with regulatory and statutory rules

Question 28

A agent is

Answer 28

In law an agent is one who is authorised by a principle to bring that principle into a contractual relationship with another, third party

Question 29

An agent must

Answer 29

An agent must perform their duties with obedience, accountability, personally, with due care and skill, showing good faith.

Question 30

The ABI stands for?

Answer 30

Association of british insurers

Question 31

The ABI is

Answer 31

the principle body representing insurers carrying on business in the UK

Question 32

BIBA stands for?

Answer 32

British insurance brokers association

Question 33

BIBA is

Answer 33

the major trade association for insurance intermediaries

Question 34

An underwriter

Answer 34

assesses the risk that people bring to the pool and decides whether to accept it and on what terms. They will then calculate a suitable premium

Question 35

A loss adjuster

Answer 35

is an expert in dealing with insurance claims and is appointed by the insured to assist them in negotiating a claim with the insurer

Question 36

an actuary

Answer 36

applies probability and statistical theory to problems of insurance, investment, financial and risk management and demography

Question 37

The role of the risk manager is

Answer 37

the systematic identification, analysis and economic elimination or control of risks that threaten a business

Question 38

A compliance officer is

Answer 38

responsible for ensuring that a firm complies with all legal and regulatory requirements