Mock Exam Questions

Question 1

In a soft market what happens to premiums and exposures

Answer 1

Reduced premiums and increase in exposures

Question 2

Which body is responsible for monitoring emerging risks to the uk financial system

Answer 2

Financial policy committee

Question 3

Insurers provide the employers liability tracing office with policy info how long after inception

Answer 3

90 days

Question 4

Which body is responsible for the conduct of the Society of Lloyd’s

Answer 4

FCA

Question 5

What are standard industrial classification codes used for

Answer 5

Compiling health and safety statistics

Question 6

Under a delegated authority the frequency for a Bordeaux to be submitted is

Answer 6

Monthly

Question 7

Which types of average can most commonly be distorted as a result of outliers in the data sets

Answer 7

Mean and median

Question 8

Which technique involves generating a large number of statistically stimulated scenarios

Answer 8

Stochastic modelling

Question 9

What LOV would an underwriter use claims triangulation to predict claims

Answer 9

Employers and public liability

Question 10

IT costs is what type of expense

Answer 10

Fixed expense

Question 11

What LOB does the claims and underwriting exchange hold on its data base

Answer 11

Household and motor

Question 12

What LOB does the claims and underwriting exchange hold on its data base

Answer 12

Household and motor

Question 13

What level of certainty of future losses will a cat model likely provide

Answer 13

Low certainty

Question 14

What level of certainty of future losses will a cat model likely provide

Answer 14

Low certainty

Question 15

Stop loss reinsurance provides protection for

Answer 15

A portfolio of business over a 12 month period

Question 16

What is the objective of an insurer operating a self auditing process / peer checks

Answer 16

Identify corrective action to take place at the earliest opportunity

Question 17

Consequence of a soft market for an insurer

Answer 17

Rising expense ratios

Question 18

During a hard market phase, what will happen to profits

Answer 18

Higher profits due to high premiums for same level of cover/ exposure

Question 19

Cancellation clause allows cancellation by

Answer 19

Both the insured and the insurer

Question 20

Why would an underwriter give delegated authority to a specialist cover holder

Answer 20

To access more customers with a lower distribution cost

Question 21

What intermediary will be used for any form of business

Answer 21

An intermediary

Question 22

What is the usual role of the Insurance Fraud Enforcement Department

Answer 22

To identify altered client info and invalid policy docs

Question 23

Disadvantage of using the median average figure

Answer 23

The middle value is an unfair representation of the full dataset

Question 24

What should the increasing standard deviation of claims indicate to the underwriter?

Answer 24

The volatility of claims experience is increasing

Question 25

Main advantage of liaison between underwriter and claims relates to

Answer 25

Ongoing viability of loss ratio data

Question 26

Who would be responsible for pricing adjustment following analysis of competitors in the market?

Answer 26

An actuary

Question 27

Which risk analysing approach incorporates claim triangulation?

Answer 27

Burning cost method

Question 28

What mechanism does Defaqto use to depict comparisons in different insurers policies

Answer 28

Star rating

Question 29

How can underwriters avoid the unreliability of past data and predict future claims

Answer 29

Use their sound judgement based on experience

Question 30

Which type of average should be used for measuring preferences

Answer 30

Mode only

Question 31

Underwriter can calculate the expected value of claims by combining…

Answer 31

Frequency and severity with associated probability

Question 32

How can an insurer implement its corporate strategy and prevent internal tensions

Answer 32

Regular communication of its objectives to each key division of the business

Question 33

An insurance companies capital resources requirement is the higher of its

Answer 33

Minimum capital requirement and its enhances capital requirement

Question 34

Who would be responsible for pricing adjustment after analysing competitors

Answer 34

Underwriting manager

Question 35

If a burning cost has continued to increase what does it mean in terms of claims

Answer 35

The total level of incurred claims has increased in relation to fleet size

Question 36

What’s most important reason why underwriters should liaise with claims

Answer 36

Ongoing visibility of loss ratio data

Question 37

What will happen to expense ratios during a soft market

Answer 37

Rise

Question 38

what should insurers do to quickly grow a portfolio to premium and profitability

Answer 38

Charge cheaper premiums and compromise profitability

Question 39

Which body is responsible for the conduct of society of Lloyd’s

Answer 39

FCA

Question 40

Capital requirements 2005

Answer 40

Minimum capital requirement and enhanced capital requirement