Mock questions

Question 1

With household insurance policies, within what timescale is the policyholder normally required to notify the insurer of a claim?

Answer 1

Promptly

Question 2

A road traffic accident occurred when the insured, Mr Jones, and a third party, Mr Smith, both jumped amber traffic lights, resulting in a collision. In practice, if Mr Smith only had third party insurance, who is he most likely to present his claim to and what is the most likely outcome in this case?

a.
Mr Jones and he would be unlikely to receive full compensation.

b.
His own insurer and he would be unlikely to receive full compensation.

c.
Mr Jones’ insurer and he would be unlikely to receive full compensation.

d.
His own insurer and he would be likely to receive full compensation.

Answer 2

c.
Mr Jones’ insurer and he would be unlikely to receive full compensation.

Question 3

What is the primary objective of claims reserving?

Answer 3

To estimate the future cost of claims.

Question 4

When dealing with an insurance claim where there has been a fraudulent act or omission, the view of the Financial Ombudsman Service is that the insurer:

Answer 4

must pay the claim in full if the act makes no difference to the insurer’s ultimate liability.

Question 5

Under the rules contained in the Insurance: Conduct of Business Sourcebook, for how long should firms retain non-advice records?

Answer 5

As long as its relevant

Question 6

Under the Insurance Act 2015, who is required to make a fair presentation of a risk to an insurer?

Answer 6

Commercial customers.

Question 7

The Financial Ombudsman Service deals with unresolved complaints. To be eligible, the guidance states that a small business must employ fewer than:

Answer 7

50 employees and have a turnover of less than £6.5m.

Question 8

If Max has had a complaint upheld by the Financial Ombudsman Service for £15,000, he:

Answer 8

does not need to accept the award but it is binding on the insurer.

Question 9

A dispute over a claim has gone to arbitration, which found in favour of the insurer. If the insured still disputes the facts, what options, if any, would they have to pursue the matter further?

Answer 9

None.

Question 10

In addition to adjudication, what are the other two adjudicative options for resolving claim disputes?

Answer 10

Arbitration and by expert determination.

Question 11

The Consumer Duty’s new consumer principle requires firms to:

Answer 11

act to deliver good outcomes for retail customers.

Question 12

Many motor insurers use an approved repairer. What is LEAST likely to be a benefit to them of doing so?

Answer 12

Speed of claims reporting.

Question 13

In what way may the use of Information Technology [IT] cause a possible adverse cash flow effect?

Answer 13

Reinsurance recoveries may not be as fast as claims payments.

Question 14

How does factor or flag reserving operate when reserving on individual policies?

Answer 14

It applies a standard monetary reserve to each claim of a certain type.

Question 15

With the uninsured drivers’ agreement, the Motor Insurers’ Bureau will compensate victims where certain conditions are met. What is NOT one of these conditions?

Answer 15

Damages for third party personal injury must be limited to £500,000.

Question 16

How much is the excess, if any, that is applied by the Motor Insurers’ Bureau for property damage caused by unidentified third parties?

Answer 16

£400

Question 17

The terms of which Act require a company to produce annual accounts?

Answer 17

The Companies Act 1985.

Question 18

Management accounts enable an insurer to manage its key operations. How are these LEAST likely to be used by an insurer?

Answer 18

To determine asset valuations.

Question 19

Where a third party makes a claim as a result of a motoring accident, legally this would be made against the:

Answer 19

Insured

Question 20

Which reserves are required by law and are designed to smooth fluctuations in loss ratios for certain classes of business?

Answer 20

Equalisation reserves.

Question 21

Under the Claims and Underwriting Exchange database, what types of information can an insurer check?

Answer 21

Household, motor and personal injury claims for individuals.

Question 22

Which register was set up by the insurance industry and the art world in response to an increase in art theft?

Answer 22

Art Loss Register.

Question 23

What is the main purpose of the Insurance Act 2015?

Answer 23

To apply rules to aspects such as initial disclosure and dealing with fraudulent claims to non-consumer products as well as consumer products.

Question 24

An insured has breached a relatively minor warranty on a non-consumer insurance policy. Under the Insurance Act 2015, if the insured subsequently made good this breach, what would the position be?

Answer 24

The insurer is discharged from any liability under the policy from the date of the breach. If the insured repaired the breach at a later date, the insurer’s liability would start again from the date the breach was repaired.

Question 25

Alternative dispute resolution is most commonly used:

Answer 25

to resolve third party disputes without having to go to court.

Question 26

The condition under a business interruption [BI] policy that there must be a property policy indemnifying the insured before the BI policy can operate is called the:

Answer 26

property damage proviso.

Question 27

What type of policy is most often written on a claims-made basis?

Answer 27

Professional indemnity

Question 28

Jane has a comprehensive motor policy with a voluntary excess of £250. She is involved in a no-fault collision with a third party. Who could she use to claim this excess back from the responsible third party?

Answer 28

Uninsured loss recovery service.

Question 29

Which of these is NOT a pre-action protocol under the Civil Procedure Rules?

a.
Personal injury.

b.
Professional negligence.

c.
Defamation.

d.
Property damage.

Answer 29

d.
Property damage.

Question 30

An insurer outsources the rehabilitation services that it provides to some claimants. What is most likely to be its reason for doing so?

Answer 30

Enables it to access specialist services and reduces claim costs.

Question 31

Steve suffered a loss on his buildings insurance when a storm blew over his garden wall. He has been asked to submit a quotation to repair it and for the builder to send the final invoice to the insurer direct. This type of claim settlement is known as:

Answer 31

paying for repairs.

Question 32

When determining a strategy for its claims management, senior management will want to focus on:

Answer 32

clear claims procedures, including reserving practices.

Question 33

Which Act requires the PRA to consider financial stability in its regulation of authorised persons?

Answer 33

The Financial Services Act 2012.

Question 34

What does the balance sheet of an insurance company show?

Answer 34

The assets and liabilities of the company.

Question 35

For what type of insurance claim would the policyholder normally have to only prove that an insured peril had occurred?

Answer 35

Liability claims.

Question 36

Which legislation requires an insurer to ensure that its insurance contracts are fair by being clear and understandable?

Answer 36

Consumer Rights Act 2015.

Question 37

Most insurers operate a first notification of loss process. With a low value claim on a motor insurance policy, what action is the policyholder LEAST likely to take?

Answer 37

Complete and sign a written claim form.

Question 38

When dealing with a standard motor insurance claim, the claim handler will check the details on the claim form against the original application form. This is to check that:

Answer 38

all material information was notified to the underwriters at the start of the policy.

Question 39

What are the typical territorial limits under an employers’ liability policy?

Answer 39

UK, Isle of Man and Channel Islands or while temporarily outside these territories.

Question 40

Who besides the claims manager should be involved in reserving reviews?

Answer 40

Underwriters

Question 41

What circumstances does the incurred but not enough reported [IBNER] reserve cover?

Answer 41

Claim amounts reported that are understated.

Question 42

Which industry body has responsibility for sharing insurance fraud data and intelligence?

Answer 42

The Insurance Fraud Bureau.

Question 43

Greg is the director of a limited company. On behalf of the company, he has submitted claims in a short period of time to insurers for three events; a loss to a vehicle, a claim for employers’ liability and a loss under the buildings insurance for an office. Which of these, if at all, would an insurer be able to check on the Claims and Underwriting Exchange?

a.
Motor, liability and buildings insurance.

b.
Motor and buildings insurance only.

c.
Motor insurance only.

d.
None of them.

Answer 43

d.
None of them.

Question 44

The Financial Ombudsman Service only deals with disputes from eligible complainants. To be eligible, a trust must have a net asset value of less than:

Answer 44

£5 million

Question 45

When settling a claims dispute, the process of mediation involves the two parties to the dispute jointly:

Answer 45

appointing an impartial third party to facilitate an amicable agreement, without having to meet each other.

Question 46

Which is NOT one of the four outcomes set out within the Consumer Duty?

Answer 46

Treat consumers fairly.

Question 47

What key change was introduced by the Access to Justice Act 1999?

Answer 47

It set out the rules on recoverable costs so far as legal costs are concerned

Question 48

Part of a surveyor’s role is to advise the insurer on what they consider to be the ‘worse case scenario’ loss. What is this known as?

Answer 48

Maximum probable loss.

Question 49

If a policyholder with a comprehensive motor policy makes a claim for damage, the insurer will typically:

Answer 49

authorise payment for a garage to repair the vehicle.

Question 50

A claims handler is responsible for determining individual case reserves. In estimating these reserves, they are LEAST likely to use information from a[n]:

Answer 50

Underwriter

Question 51

Under the terms of a policy, when is an insurer able to commence subrogation rights against a negligent third party?

Answer 51

As soon as a claim is made.

Question 52

What type of insurance policy would usually have a time franchise?

Answer 52

Personal accident

Question 53

If a major haulage contractor wished to limit its cover to large claims and be its own insurer for small claims, what action may it take?

Answer 53

Arrange for a deductible on its policy.

Question 54

When supervising authorised firms, the FCA’s supervision:

Answer 54

varies depending on the level of risk of each firm.