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Foundation Insurance Test > Module 1 > Flashcards

Module 1 Flashcards

1
Q

The insurance market is made up of

A. Insurers, Consumers and Brokers
B. Buyers, Intermediaries and Sellers
C. Insurers, Brokers and intermediaries
D. Insurance products, Buyers and sellers

A

B. Buyers, Intermediaries and Sellers

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2
Q

Millie has just bought a cottage, part of which includes an artist’s studio that she intends to use for her work. Having invested a lot of money in the property, she wants to insure her new home and business against possible loss or damage.

What is the best term that fits Millie as a ‘buyer’ of insurance at this stage?

A. The Insured
B. The Policyholder
C. The proposer

A

C. The proposer

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3
Q

What type of buyer best fits this description:

Personal insurances, such as motor and household buildings/contents form a large part of the market.

For example, if you were to purchase insurance for your mobile phone.

A. Private individual
B. Commercial Customers
C. Public bodies
D. Clubs and associations
E. Sole traders and Partnerships

A

A. Private individual

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4
Q

What type of buyer best fits this description:

Depending on their size, businesses may require quite complex insurance products, tailored to their individual needs.

For example, if your company were to purchase insurance for all of our office equipment.

A. Private individual
B. Commercial Customers
C. Public bodies
D. Clubs and associations
E. Sole traders and Partnerships

A

B. Commercial Customers

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5
Q

What type of buyer best fits this description:

Local councils and schools are all major buyers of insurance, protecting their assets and liabilities to others.

For example, a local school may have insurance for fights and bullying.

A. Private individual
B. Commercial Customers
C. Public bodies
D. Clubs and associations
E. Sole traders and Partnerships

A

C. Public bodies

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6
Q

What type of buyer best fits this description:

Sports clubs and other ‘affinity’ groups buy insurance to protect assets and to transfer potential liabilities.

For example, a football club may insure all of their football players in the event of an injury.

A. Private individual
B. Commercial Customers
C. Public bodies
D. Clubs and associations
E. Sole traders and Partnerships

A

D. Clubs and associations

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7
Q

What type of buyer best fits this description:

These might be from any number of trades or professions (e.g. plumbers, builders, consultants) and need insurance to protect their business and earning potential.

For example, a landscaper may insure their tools in the event of theft.

Partnerships don’t have a separate legal existence. Common in the medical, veterinary and legal professions. Their insurance needs, especially in the area of professional negligence, are often catered for by specialist schemes.

For example, a solicitors and an estate agent company could form a partnership and may purchase indemnity insurance.

A. Private individual
B. Commercial Customers
C. Public bodies
D. Clubs and associations
E. Sole traders and Partnerships

A

E. Sole traders and Partnerships

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8
Q

What type of insurer is owned by it’s policyholders who receive their share of profits through lower premiums?

A. Limited Liability/Proprietary companies
B. Mutual companies

A

B. Mutual companies

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9
Q

What type of insurer is owned by shareholders who buy shares in the company and then split profits?

A. Limited Liability/Proprietary companies
B. Mutual companies

A

A. Limited Liability/Proprietary companies

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10
Q

What type of insurer best fits this description:

Companies such as Aviva and AXA are this type of insurers, accepting several types/classes of business and represent the major part of the company market.

A. Composite insurer
B. Specialist insurer
C. Direct insurer
D. Captive insurer
E. Takaful

A

A. Composite insurer

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11
Q

What type of insurer best fits this description:

These tend to issue policies for only one class of business. Their expertise is in that particular niche area and so they form a valuable addition to the market but in a narrow area.

A. Composite insurer
B. Specialist insurer
C. Direct insurer
D. Captive insurer
E. Takaful

A

B. Specialist insurer

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12
Q

What type of insurer best fits this description:

These only deal direct with the public, most transactions are telephone- or web-based. Commonly operate in motor and household insurance areas.

A. Composite insurer
B. Specialist insurer
C. Direct insurer
D. Captive insurer
E. Takaful

A

C. Direct insurer

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13
Q

What type of insurer best fits this description:

These provide insurance coverage primarily, if not solely, to their parent company or group. Under this arrangement, the parent company or the group first purchases insurance coverage from its own captive company, which will then transfer part of the risk to reinsurance companies.

A. Composite insurer
B. Specialist insurer
C. Direct insurer
D. Captive insurer
E. Takaful

A

D. Captive insurer

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14
Q

What type of insurer best fits this description:

A type of insurance that has its roots in the Islamic financial services industry. Traditional insurance policies are seen as contrary to some of Islamic Law’s fundamental principles. Takaful insurance has developed to overcome this. It works on the principle that in any transaction risk and profit (and loss bearing) should be shared between the participants.

A. Composite insurer
B. Specialist insurer
C. Direct insurer
D. Captive insurer
E. Takaful

A

E. Takaful

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15
Q

Millie is considering the various insurance covers that she needs. Her neighbours recommend the insurer that they use: Cylar PLC- a composite company. Who owns this type of company?

A. Its policyholders only
B. Its shareholders only
C. Its policyholders and shareholders
D. The State

A

B. Its shareholders only

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16
Q

Who are Lloyds of London?

A. An insurer
B. A Broker
C. An intermediary
D. A Market

A

D. A Market

17
Q

What name is given to Lloyds members who are grouped together?

A. Managing agent
B. Syndicate
C. Underwriter
D. Names

A

B. Syndicate

18
Q

What best fits this description:

Companies specifically established to manage the underwriting of one or more syndicates.

They are an authorised person, which means it has been approved by the Financial Conduct Authority (FCA) in the UK to carry on one or more regulated activities.

A. Managing agent
B. Lloyd’s underwriter
C. Lloyd’s Syndicate

A

A. Managing agent

19
Q

What best fits this description:

Information about a ‘risk’ proposed for insurance (e.g. a ship) is presented to this entity on a ‘slip’.

Nowadays there are clear rules on the content and format of slips which must be in line with a document called the Market Reform Contract.

This entity decides how much of the business to accept on behalf of their syndicate and signs for a percentage (a ‘line’).

Other entities (of the same type) sign under the first signature until all of the risk is insured (‘placed’).

A. Managing agent
B. Lloyd’s underwriter
C. Lloyd’s Syndicate

A

B. Lloyd’s underwriter

20
Q

Who provides financial backing for Lloyd’s syndicates?

A. Underwriters
B. Members
C. Managing agents
D. Members’ agents

A

B. Members

21
Q

Millie decides that she really needs some guidance about what sort of insurance cover will be most suitable. Rather than contact the insurer recommended by her neighbour, she approaches Raj, a local insurance broker, and asks for his assistance.

Which of these do you think BEST describes the role of the ‘insurance broker’?

A. An independent intermediary in the insurance market who acts on behalf of the client when placing business with insurers

B. An individual or firm involved in the placing of
commercial insurance business with insurers

C. A qualified and registered individual or firm whose full time occupation is the placing of insurance with insurers

A

A. An independent intermediary in the insurance market who acts on behalf of the client when placing business with insurers

22
Q

What is the definition of an Appointed representative?

A. A person who is appointed by an insurer or other authorised intermediary (known as the principal) to act on its behalf.

B. A Person appointed by the buyer to buy insurance on their behalf

A

A. A person who is appointed by an insurer or other authorised intermediary (known as the principal) to act on its behalf.

23
Q

Who is responsible for the actions of an appointed representative?

A. The insured
B. The appointed representative
C. The Principle

A

C. The Principle

24
Q

The following services are provided by what entity?

risk management;
claim notification;
recovery of uninsured losses following a claim incident;
mid-term changes;
reviewing client needs;
negotiating renewal; and
issuing some form of documentation on behalf of insurers.

A. Underwriters
B. Intermediaries
C. Lloyds of London

A

B. Intermediaries

25
Q

Where will the exact services provided by an intermediary be specified?

A. The contract
B. The policy wording booklet
C. The insurance certificate
D. The terms of business agreement

A

D. The terms of business agreement

26
Q

What type of marketing channel best fits this description?

Insurance contracts are arranged directly between the insured and the insurer

A. Direct Marketing
B. Indirect Marketing

A

A. Direct Marketing

27
Q

What type of marketing channel best fits this description?

An intermediary is involved in the sales process. The insurer normally pays a commission to the intermediary, based on the value of the business introduced.

A. Direct Marketing
B. Indirect Marketing

A

B. Indirect Marketing

28
Q

Having helped Millie to decide on the various insurance covers she needs, broker Raj telephones the local office of the Crown insurance company to obtain a quote for her various needs. He asks to speak to the underwriting team.

Which of these tasks would you expect to fall within the remit of the underwriter?

(2 correct answers)

A. Decide whether to accept an insurance proposal
B. Decide how much premium to charge for insurance cover
C. Calculate how much to pay when a claim is submitted

A

A. Decide whether to accept an insurance proposal
B. Decide how much premium to charge for insurance cover

29
Q

Which insurance professional best fits this description:

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.

A. Underwriter
B. Claims Staff
C. Loss Adjuster
D. Loss Assessor

A

A. Underwriter

30
Q

Which insurance professional best fits this description:

Deal quickly, fairly and cost effectively with all claims, whilst distinguishing between real and fraudulent claims. They also assess how much the claim will cost so that an adequate reserve is set aside prior to payment.

A. Underwriter
B. Claims Staff
C. Loss Adjuster
D. Loss Assessor

A

B. Claims Staff

31
Q

Which insurance professional best fits this description:

An independent expert in handling large or complex claims, and is appointed by the insurer to act in this capacity.

A. Underwriter
B. Claims Staff
C. Loss Adjuster
D. Loss Assessor

A

C. Loss Adjuster

32
Q

Which insurance professional best fits this description:

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

A. Underwriter
B. Claims Staff
C. Loss Adjuster
D. Loss Assessor

A

D. Loss Assessor

33
Q

Gregory appoints a loss assessor to act on his behalf in preparing and negotiating a claim for storm damage to his home. The loss assessor negotiates a settlement which is acceptable to Gregory and presents a bill for his services amounting to £2,000.

Who do you think will pay the loss assessor’s bill?

A. Gregory
B. The insurance company
C. Gregory and the insurance company will share the bill

A

A. Gregory - The loss assessor acts for the insured and is paid by them.

34
Q

What is a potential benefit of buying insurance direct from an insurer?

A. It ensures the policyholder obtains the best policy available.
B. The policyholder is able to obtain the widest range of cover.
C. They deal with a wide range of insurances, including non-standard risks.
D. Direct insurers can offer competitive premiums due to cost savings.

A

D. Direct insurers can offer competitive premiums due to cost savings.

35
Q

Who underwrites the insurance risk, if it is placed through Lloyd’s?

A. The Lloyd’s market as a whole.
B. The managing agent.
C. A Lloyd’s member.
D. A Lloyd’s syndicate.

A

D. A Lloyd’s syndicate.

36
Q

What is the main purpose of an insurance intermediary?

A. To make the public more aware of the need for insurance.
B. To bring buyers and sellers together.
C. To provide free technical expertise to those who buy insurance.
D. To maximise the sales for an insurance company.

A

B. To bring buyers and sellers together.

37
Q

The websites of insurance companies provide a wide range of services, EXCEPT:

A. Advertising
B. Providing Advice
C. Selling insurance
D. Providing information

A

B. Providing Advice

Foundation Insurance Test (11 decks)

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