Past Paper Exam Q's

Question 1

The process of analysing and evaluating liability risks is

A. partly qualitative and partly subjective.
B. partly quantitative and partly subjective.
C. wholly quantitative.
D. wholly subjective.

Answer 1

B

Question 2

When a new liability policy is arranged on the basis of a broker’s presentation, who is responsible for ensuring the accuracy of the information provided?

A. The broker and the proposer.
B. The broker and the underwriter.
C. The proposer and the risk surveyor.
D. The risk surveyor and the underwriter.

Answer 2

A

Question 3

Where an underwriter instructs a loss control surveyor, the Surveyor’s primary purpose is to

A. assist the insured with compliance of all aspects of health and safety legislation.
B. assist the underwriter in understanding the risk.
C. ensure all unsafe working practices are eliminated.
D. impose a robust risk management plan for all areas of the business

Answer 3

B

Question 4

A UK liability underwriter is reviewing an employers’ liability risk. If the underwriter uses the triangulation method to review the claims record, this

A. only requires two years of claims history to produce a valid result.
B. takes into account changes in legislation.
C. takes into account inflation for incurred claims values.
D. will demonstrate latency exposure.

Answer 4

D

Question 5

The operative clause trigger with the longest latency exposure would be

A. causation.
B. claims made.
C. losses discovered.
D. manifestation.

Answer 5

A

Question 6

An underwriter is assessing an expected claims cost under a liability portfolio. He should be aware that severity losses usually comprise of

A. large injury claims involving significant continuing disability.
B. long-tail disease claims.
C. recurring incidents resulting in multiple long tail disease claims.
D. small injury claims and short-tail disease claims.

Answer 6

A

Question 7

A layered excess of loss products liability insurance programme is arranged for a large corporation. In these circumstances

A. the aggregate limit of liability during the period of insurance includes actual claims payments and all claims reserves.
B. costs cover is always arranged on a proportional basis.
C. insurers are most likely to include a drop-down provision.
D. reinstatement of the limits of indemnity must be arranged layer by layer.

Answer 7

C

Question 8

An employers’ liability insurer provides cover for a UK-domiciled business with employees working in the US. Under which section of the policy would the insurer be exposed to claims brought by the
employee in the US?

A. Choice of law.
B. Jurisdiction of claims.
C. Law applicable to the claim.
D. Preamble.

Answer 8

C

Question 9

When arranging cover locally for an overseas liability risk, what method should be used to bring the cover up to the monetary amount of indemnity provided in the insured’s own territory?

A. Admitted.
B. Difference in conditions.
C. Difference in limits.
D. Non-admitted.

Answer 9

C

Question 10

To supplement existing general health and safety provisions, the Health and Safety Executive can introduce

A. approved codes of practice, changes in legislation and guidance notes.
B. approved codes of practice, guidance notes and regulations.
C. approved codes of practice and regulations only.
D. guidance notes and regulations only.

Answer 10

B

Question 11

Under the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations (RIDDOR) 1995, who will usually investigate ill health reports submitted by employers?

A. The employers’ liability insurer.
B. The Employment Medical Advisory Service.
C. The local authority.
D. A risk surveyor.

Answer 11

B

Question 12

In what circumstances would an employer be legally liable to pay damages for an employee’s mental ill health?

A. Only where it is proven the employee’s illness is partly or wholly caused by a single identifiable incident.
B. Only where it is proven the employee’s illness is wholly caused by the employee’s working environment.
C. Where the employer knew of and failed to alleviate work factors that have contributed to the employee’s illness.
D. Where the employer knew of and failed to eliminate all work factors that have contributed to the employee’s illness.

Answer 12

C

Question 13

Why may an employers’ liability underwriter be concerned about a nano technology risk?

A. It can lead to industrial deafness.
B. It has the potential to be a catastrophe hazard.
C. It is always a frequency hazard.
D. It may lead to an asbestos-type exposure

Answer 13

D

Question 14

Under the Employers’ Liability (Compulsory Insurance) Regulations 1998, what is the minimum indemnity limit for a holding company which has three subsidiary companies?

A. £5,000,000
B. £10,000,000
C. £15,000,000
D. £20,000,000

Answer 14

A

Question 15

Most employers’ liability policies define an employee as including an individual doing similar work to a contracted employee and who is subject to

A. the same period of service.
B. the same statutory rights to holiday and sick pay.
C. a similar degree of control in the method of doing the work.
D. a similar level of remuneration

Answer 15

C

Question 16

Which type of employers’ liability insurance arrangement is a broker most likely to recommend for an employer, whose entire workforce of 5,000 employees is located in a single building?

A. An admitted policy with a minimum statutory requirement.
B. A policy with a claims-made trigger.
C. A primary policy and an excess layer policy.
D. A retrospective employers’ liability insurance policy

Answer 16

C

Question 17

A manufacturing company has a small number of its own catering staff at its head office location. How is the company’s employers’ liability insurance policy most likely to treat the risk to
employees engaged in the catering activity?

A. The exposure is shared equally with the company’s public liability insurer.
B. It would be excluded from policy cover.
C. It would be included in the policy cover.
D. There will be a sub-limit of indemnity for claims arising from this activity.

Answer 17

C

Question 18

In accordance with which regulation does an employer have a legal duty to display the approved health and safety poster in a prominent position in each workplace or to ensure the employee is
given a copy of the information in a leaflet?

A. Enterprise and Regulatory Reform Act 2013.
B. Health and Safety at Work Act 1974.
C. Health and Safety Information for Employees Regulations 2009.
D. Provision and Use of Work Equipment Regulations 1998.

Answer 18

C

Question 19

What type of industrial disease claim would an underwriter be most concerned about when considering a new employers’ liability policy for a business in the metal refining industry?

A. Byssinosis.
B. Mesothelioma.
C. Occupational asthma.
D. Silicosis.

Answer 19

C

Question 20

An employers’ liability excess layer insurance policy is rated on the insured’s

A. aggregation exposure only.
B. aggregation exposure and trade risk exposure only.
C. aggregation exposure, the limit of indemnity and trade risk exposure only.
D. aggregation exposure, the limit of indemnity, trade risk exposure and the turnover of the
business

Answer 20

C

Question 21

A public and products liability policy typically provides cover in the absence of bodily injury or
property damage for

A. advice for a fee.
B. breach of contract.
C. nuisance.
D. wrong description of products

Answer 21

C

Question 22

An underwriter is reviewing a proposed public liability insurance policy for multi-tenanted premises and has determined the risk to be low. The risk is most likely to be

A. an industrial estate.
B. a manufacturing plant.
C. an office complex.
D. a shopping centre

Answer 22

C

Question 23

To what extent, if at all, does a public and products liability policy provide cover for damage to non-tangible property and non-intellectual rights?

A. Cover is always excluded.
B. Cover is included for both, but they are subject to an aggregate limit of indemnity.
C. Non-tangible property is covered, but non-intellectual rights are excluded.
D. Non-tangible property is usually excluded and limited cover is included for non-intellectual
rights

Answer 23

D

Question 24

Under the Environment Act 1995, who is usually liable for the cost of cleaning up contaminated land if the party responsible for the contamination CANNOT be traced?

A. The bank whose capital is secured against the land.
B. The current owners of the land.
C. The environmental agency.
D. The local authority

Answer 24

B

Question 25

The Association of British Travel Agents (ABTA) requires that its members provide protection to their customers through

A. contract exclusions for foreign jurisdictions.
B. an indemnity provision with its service suppliers.
C. the purchase of a bond from an authorised financial provider.
D. the purchase of third party liability insurance.

Answer 25

C

Question 26

The definition of bodily injury under a standard public and products liability policy usually includes

A. death and disease only.
B. death and illness only.
C. death, disease and illness.
D. death, illness and wrongful eviction

Answer 26

C

Question 27

A manufacturer has a product in circulation that is found to be dangerous. The manufacturer wishes to recall the product silently to avoid reputational damage. In these circumstances, the
manufacturer would be in breach of its requirements under the

A. Consumer Protection Act 1987.
B. Consumer Rights Act 2015.
C. General Product Safety (GPS) Regulations 2005.
D. Sale and Supply of Goods Act 1994.

Answer 27

C

Question 28

Public and products liability policies typically operate on the basis of

A. a claims-made trigger.
B. a losses-discovered trigger.
C. a manifestation trigger.
D. an occurrence trigger.

Answer 28

D

Question 29

A public and products liability underwriter is reviewing a proposal for a hotel. In these circumstances, the underwriter may typically rate the proposal based on turnover and the

A. number of beds.
B. number of staff.
C. qualifications of management.
D. total wageroll.

Answer 29

A

Question 30

When, if at all, would a liability underwriter adjust the premium of a manufacturing risk for public and products liability cover?

A. Every quarter.
B. At the mid-year point only.
C. At the end of the policy year only.
D. It would never be adjusted.

Answer 30

C

Question 31

Common exclusions under a public and products liability policy typically include

A. injury to employees only.
B. injury to employees and advice given for a fee only.
C. injury to employees, advice given for a fee and offshore operations only.
D. injury to employees, advice given for a fee, offshore operations and product recall.

Answer 31

D

Question 32

What effect did the Higgs Report have on the composition of the board of a listed company?

A. Directors must have five years’ specific industry experience to become a board member.
B. A minimum number of independent non-executive directors on the board is no longer required.
C. At least 50% of the board must comprise of independent non-executive directors.
D. 50% of a company’s board of directors are required to take on outside directorships.

Answer 32

C

Question 33

Under the Bribery Act 2010, what is the maximum penalty for offences committed by a company director?

A. 5 years and a £100,000 fine.
B. 5 years and unlimited fines.
C. 10 years and a £100,000 fine.
D. 10 years and unlimited fines.

Answer 33

D

Question 34

Which type of company director is one that has been formally appointed to the office?

A. A de facto director.
B. A de jure director.
C. An independent director.
D. A shadow director.

Answer 34

B

Question 35

What is the main effect of the Companies Act 2006 on the duties of the directors of a company?

A. It codifies directors’ duties and made them more objective.
B. It increases the number of common law duties of directors.
C. It introduces a statutory requirement for directors’ and officers’ liability insurance.
D. It made the personal accountability of directors subject to a limit of £5,000,000.

Answer 35

A

Question 36

Under s214 of the Insolvency Act 1986, from what category of director can a liquidator seek a personal contribution for wrongful trading?

A. Any director or shadow director.
B. A full-time or executive director only.
C. An independent or non-executive director only.
D. A shadow director only.

Answer 36

A

Question 37

For what main reason would a directors’ and officers’ liability insurer seek information concerning the likelihood of claims arising from past events in relation to a proposed new risk?

A. It may be exposed to claims as cover would be provided on a claims-made basis.
B. The previous aggregate limits of liability may already be partially eroded.
C. To ascertain whether the insurers from previous years can be approached for a contribution
towards claims.
D. To index link the reserves for specific claims in line with inflation.

Answer 37

A

Question 38

The premium rating for directors’ and officers’ liability insurance is typically based upon the

A. limit of indemnity and the net profit.
B. limit of indemnity and the turnover.
C. number of employees and the net profit.
D. number of employees and the turnover

Answer 38

B

Question 39

How can a corporate manslaughter conviction against an organisation lead to a civil liability claim by shareholders against an individual director under a directors’ and officers’ liability policy?

A. Shareholders may be obliged to exercise rights under their preference shares in the company.
B. Shareholders may demand compensation for a criminal fine imposed against the company.
C. Shareholders may seek indemnity for an injury to an employee incurred by the company.
D. Shareholders may sue for a fall in their investments following damage to the company’s brand

Answer 39

D

Question 40

Professional persons owe a duty of care to their clients and customers under

A. common law and contract only.
B. common law and tort only.
C. common law, contract and tort only.
D. common law, contract, statute and tort.

Answer 40

D

Question 41

Which insurance policy may cover the financial consequences of a company director’s dishonesty?

A. A directors’ and officers’ liability policy.
B. A fidelity policy.
C. A legal expenses policy.
D. A theft policy.

Answer 41

B

Question 42

A teacher at a private college approaches her trade union in relation to an employment dispute. The trade union appoints a solicitor to act on the teacher’s behalf and the solicitor
provides poor advice resulting in a financial loss to her. Which professional indemnity policy(ies) will ultimately cover the loss arising from the poor legal advice the teacher received?

A. The college’s policy only.
B. The solicitor’s policy only.
C. The college’s policy and the trade union’s policy.
D. The solicitor’s policy and the trade union’s policy.

Answer 42

B

Question 43

Due to stipulations within the trade body, retrospective date restrictions under a professional indemnity policy must be removed for which professionals?

A. Chartered accountants.
B. Chartered insurance brokers.
C. Chartered insurers.
D. Chartered surveyors.

Answer 43

D

Question 44

A professional indemnity insurance policy usually excludes

A. claimant’s costs and court attendance expenses.
B. death, disease or bodily injury to an employee.
C. losses occurring after the policy’s retroactive date.
D. unliquidated damages.

Answer 44

B

Question 45

When a professional indemnity policy has a discovery period condition, it normally means that the insurer will

A. continue to remain liable for a fixed period of time for claims that become apparent after the expiry date.
B. continue to remain liable until expiry of all exposure for all losses that occurred during the period of insurance.
C. only pay claims that are discovered during the period of insurance.
D. only pay losses occurring and discovered during the period of insurance.

Answer 45

A

Question 46

Why does a proposal form for professional indemnity insurance include questions about the proposer’s contract control?

A. It indicates whether contracts are in hard copy or electronic format.
B. It will help defend a claim if contract terms are properly recorded and retained.
C. The insurer can assess the burning cost of claims compared to contract volumes.
D. The insurer can assist with the drafting of the proposer’s professional contracts.

Answer 46

B

Question 47

When a professional indemnity insurance policy is rated by considering a firm’s gross fees, the insurer is most likely to require information regarding

A. all clients from whom fees have been paid over the past 3 years.
B. the firm’s total number of employees and their individual annual salaries over the past 5 years.
C. the largest 5 contracts undertaken in the last 3 years.
D. the professional experience of all employees over the past 10 years.

Answer 47

C

Question 48

Fidelity liability insurance provides cover against a financial loss sustained by a firm as a result of

A. failing to take reasonable care when carrying out a client’s instructions.
B. failing to take required legal action before the period of limitation expires.
C. a fraudulent act by an employee.
D. negligent professional advice to a client.

Answer 48

C

Question 49

A major underwriting rating factor for a professional indemnity insurance risk is the

A. firm being well-established and its size increasing steadily over the last 10 years.
B. insured’s request for policy cover on a claims-made basis.
C. number of support staff employed by the firm in areas such as human resources.
D. relevant qualifications and experience of the partners or directors.

Answer 49

D

Question 50

For a professional indemnity risk, what is the best benchmark for an underwriter to use when assessing the competence of the partners or directors?

A. The requirements laid down in the relevant regulatory field and any imposed by law.
B. The requirements that the partners or directors set for themselves and the other partners or
directors on the board.
C. The standards the company sets itself within its Memorandum of Understanding and the
company values statement.
D. The standards, including any examinations laid down by the relevant professional body of that
particular profession, and their relevant experience.

Answer 50

D

Question 51

Statistical analysis and quantitative forecasting are most appropriate for which type of risks?

A. Catastrophe.
B. Frequency.
C. Latency.
D. Severity.

Answer 51

B

Question 52

What is the main responsibility of a manufacturing company’s formally‐appointed risk manager in respect of a liability risk?

A. Assess the impact.
B. Eliminate the impact.
C. Establish a captive insurer.
D. Underwrite the risk.

Answer 52

A

Question 53

A commercial liability policyholder has a high frequency of slip and trip claims. The underwriter is assessing the impact that an increased excess would have on the insurer’s exposure. Using past
claims data, what is the most appropriate technique to assess the impact?

A. A banded claims history.
B. A burning rate calculation.
C. A claims triangulation.
D. An incurred but not reported forecast.

Answer 53

A

Question 54

A commercial liability underwriter is calculating a burning rate percentage for a risk. What data is needed to perform this calculation?

A. Claims paid and claims frequency.
B. Total claims and claims frequency.
C. Total claims and wage roll.
D. Wage roll and outstanding claims.

Answer 54

C

Question 55

An insurer, who wishes to limit its latency exposure to employers’ liability claims, would typically issue a policy based on which trigger?

A. Claims made.
B. Losses discovered.
C. Manifestation.
D. Occurrence.

Answer 55

A

Question 56

When seeking to determine the likely claims cost for a new employers’ liability risk, which type of losses are most likely to be difficult for an underwriter to predict?

A. Catastrophe losses.
B. Frequency losses.
C. Latency losses.
D. Severity losses.

Answer 56

C

Question 57

Under a specialist cyber liability insurance policy, what first party cover is available?

A. Damage to the insured’s website from an intentional virus attack.
B. Damage to the insured’s website from a negligent employee.
C. Infringement of intellectual property rights.
D. Loss of third party data from a negligent employee.

Answer 57

A

Question 58

A UK‐based toy manufacturer with a French manufacturing subsidiary sells goods within the EU. An American tourist purchases a toy whilst on holiday in Spain and during the holiday suffers an injury from the toy. The toy was manufactured in France. If a personal injury claim is made, the law of which country would usually apply?

A. France.
B. Spain.
C. UK.
D. USA

Answer 58

B

Question 59

A typical reason for an insured to purchase an admitted liability policy is to

A. always operate on a fully‐insured basis solely within a home territory.
B. always ensure full compliance with overseas regulation.
C. ensure that all claims can be considered under home legislation.
D. help overcome situations where the insurer is unlicensed to write business in a particular
overseas country.

Answer 59

B

Question 60

A Health and Safety Inspector has served an improvement notice on an employer for a breach of health and safety regulations. What is the minimum number of days after the issue of the notice
that the compliance period will start?

A. 7 days.
B. 14 days.
C. 21 days.
D. 30 days.

Answer 60

C

Question 61

The Health and Safety Executive’s main responsibilities include

A. auditing and maintaining workplace equipment.
B. devising safe traffic routes in the workplace.
C. overseeing staff in the workplace.
D. producing technical guidance notes.

Answer 61

D

Question 62

Under the Health and Safety at Work etc. Act 1974, the duty of every employer to ensure the health, safety and welfare at work of all its employees is a duty based upon what legal test?

A. Either an absolute duty or so far as reasonably practicable.
B. An absolute duty only.
C. So far as reasonably practicable only.
D. Strict liability

Answer 62

A

Question 63

Employees exposed to coal dust are at risk of contracting what type of industrial disease?

A. Byssinosis.
B. Dermatitis.
C. Mesothelioma.
D. Pneumoconiosis.

Answer 63

D

Question 64

What is the minimum indemnity limit required under the Employers’ Liability (Compulsory Insurance) Regulations 1998?

A. £5,000,000 exclusive of costs and expenses per claim.
B. £5,000,000 inclusive of costs and expenses per claim.
C. £10,000,000 exclusive of costs and expenses per claim.
D. £10,000,000 inclusive of costs and expenses per claim

Answer 64

B

Question 65

When an employers’ liability insurance policy includes a claims notification condition, what typically would the insured NOT be required to do in the event of a claim?

A. Appoint an expert to investigate liability and report on the claim.
B. Immediately notify the claim or occurrence which could result in a claim.
C. Pass all communications from third parties to the insurer in relation to the claim.
D. Provide the insurer with all the help and information required in respect of the claim.

Answer 65

A

Question 66

Which type of incident would an employee NOT be able to claim for successfully under the standard definition of bodily injury in an employers’ liability policy?

A. Anxiety.
B. Chronic pain.
C. Defamation of character.
D. Post‐traumatic stress disorder

Answer 66

C

Question 67

An employee was injured at work and has a valid claim against his employer, who has since ceased trading following insolvency. How is the employee most likely to be compensated for his injury?

A. A claim against the employers’ liability insurer on risk at the time of the injury.
B. An ex gratia payment from the employers’ liability insurer on risk at the time of the injury.
C. As an ordinary creditor in insolvency proceedings.
D. Under the Financial Services Compensation Scheme for statutory classes of insurance.

Answer 67

A

Question 68

Which Act removed the concept of strict liability and allows more freedom for employer’s to defend claims?

A. Compensation Act 2006.
B. Corporate Manslaughter and Corporate Homicide Act 2007.
C. Disability Discrimination Act 1995.
D. Enterprise and Regulatory Reform Act 2013.

Answer 68

D

Question 69

When an underwriter is considering the application of a specific exclusion to an employers’ liability insurance policy, it should always refer to a

A. particular type of disease.
B. particular type of injury.
C. specific activity of the employee.
D. specific activity of the employer.

Answer 69

D

Question 70

What are the implications of a reimbursement clause in relation to an employers’ liability risk?

A. The insured will handle and settle claims above an agreed limit with the insurer managing the claims below.
B. The insurer will handle and settle claims above an agreed limit with the insured managing the claims below.
C. The insured will handle and settle the claims, but the insurer will reimburse the insured up to a certain limit.
D. The insurer will handle and settle the claims, but the insured will reimburse the insurer up to a certain limit.

Answer 70

D

Question 71

A policyholder has incurred clean‐up costs in addition to the statutory costs imposed following sudden and accidental pollution. How would a public liability policy typically provide for these
costs, if at all?

A. As a collateral warranty.
B. As an exclusion and costs would not be covered.
C. As an extension.
D. As a policy condition

Answer 71

C

Question 72

The rule in Rylands v Fletcher is one of

A. negligence.
B. nuisance.
C. strict liability.
D. trespass.

Answer 72

C

Question 73

Why is it important to establish the legal nature of an organisation when determining liability for bodily injury or damage to third party property?

A. A corporation has no distinct legal entity from its shareholders.
B. A partnership always enjoys a corporate personality.
C. Individual members of an unincorporated entity are jointly and severally liable for their own
torts.
D. Unincorporated entities can be sued in the entity’s name

Answer 73

C

Question 74

Which type of business is required by law to have public liability insurance?

A. A cat rescue shelter.
B. A children’s nursery.
C. A horse riding establishment.
D. A water utility company.

Answer 74

C

Question 75

What is a possible defence available to a manufacturer being sued under the Consumer Protection Act 1987?

A. A full disclaimer was issued with the product.
B. The defect did not exist in the product at the time it was produced.
C. The manufacturer did not approve the design of the product.
D. The supply of the product was in the course of business.

Answer 75

B

Question 76

A hotel guest gave her purse and jewellery to the manager of the hotel she was staying in for safekeeping. Whilst in the custody and control of the hotel, cash of £200 and jewellery valued at
£500 was stolen. What is the maximum amount the hotel can be held liable for in respect of the guest’s stolen property?

A. £50
B. £100
C. £500
D. £700

Answer 76

D

Question 77

Under the operative clause of a public liability policy, cover provided for damage to property always includes

A. an employee’s non‐intellectual property rights.
B. the insured’s material property.
C. a third party’s intangible property.
D. a third party’s tangible property.

Answer 77

D

Question 78

When is the claims made trigger typically used in the UK in respect of a public and product liability risk?

A. Product liability insurance for electrical products.
B. Product liability insurance for pharmaceutical products.
C. Public liability insurance for financial institutions.
D. Public liability insurance for retail shops.

Answer 78

B

Question 79

A claim is presented from a member of the public for his wrongful arrest in a clothing store. Under the clothing store’s public and product liability policy, where would a claims handler first refer to
see if this claim is covered?

A. The attestation clause.
B. The operative clause.
C. The policy exclusions.
D. The policy extensions.

Answer 79

B

Question 80

An engineering company approaches an insurer for a public liability insurance quotation. The company derives 5% of its turnover from its work on offshore oil rigs. In these circumstances, on what basis is the insurer most likely to provide cover for the offshore work?

A. Apply a deductible.
B. Apply an inner‐limit.
C. Provide cover in full.
D. Exclude cover.

Answer 80

D

Question 81

An insurer receives a public liability proposal from a children’s nursery which is responsible for 10 children. What is the normal method of rating the premium in these circumstances?

A. Estimated wages.
B. Number of children.
C. Qualification of staff.
D. Square footage of the nursery

Answer 81

B

Question 82

A directors’ and officers’ liability policy is commonly extended to include which employees, if any?

A. None as it cannot be extended.
B. All employees.
C. Employees acting in a managerial or supervisory capacity only.
D. Employees acting in a technical capacity only.

Answer 82

C

Question 83

What is a de facto director?

A. One who always acts in a non‐executive capacity.
B. One who claims to act as a director but is not validly appointed.
C. One who does not claim to act as a director.
D. One who is validly appointed to the office.

Answer 83

B

Question 84

What percentage of a listed company’s main board should be independent non‐executive directors?

A. A minimum of 20%.
B. A maximum of 25%.
C. A minimum of 50%.
D. A maximum of 75%.

Answer 84

C

Question 85

Cover for directors’ and officers’ liability is usually arranged on the basis of a limit which is expressed as

A. any one loss.
B. any one occurrence.
C. a total aggregate of liability.
D. unlimited liability.

Answer 85

C

Question 86

When a company no longer trades, a run‐off directors’ and officers’ liability policy may continue to provide cover for up to the standard statutory minimum period of

A. two years.
B. four years.
C. six years.
D. eight years.

Answer 86

C

Question 87

Under a standard directors’ and officers’ liability policy, what does the discovery period condition refer to?

A. It allows the insured to pay a pre‐agreed premium so that for a set period after renewal, the
insured can notify claims occurring prior to expiration of the policy.
B. It allows the insured to report claims on a claims occurring basis.
C. It allows the insurer to refuse claims which are made and not reported within 10 days.
D. It allows the insurer to exclude liability for all claims in relation to non‐executive directors

Answer 87

A

Question 88

When assessing the risk posed by a company in the telecoms sector, what will a directors’ and officers’ liability underwriter be most concerned about?

A. The business activity.
B. The geographical location.
C. The staff turnover.
D. Unfair competitive practices.

Answer 88

D

Question 89

The rate that an underwriter will apply to achieve the premium for a directors’ and officers’ liability risk is most likely based upon the

A. estimated wages and salaries and geographical area of operation.
B. estimated wages and salaries and qualifications of the senior staff.
C. geographical area of operation and limit of indemnity chosen.
D. qualifications of the senior staff and limit of indemnity chosen.

Answer 89

C

Question 90

What are the implications under the Corporate Manslaughter and Corporate Homicide Act 2007 with regard to prosecution?

A. Individual directors cannot be prosecuted in their own right.
B. Individual directors can be prosecuted in their own right.
C. Organisations cannot be prosecuted in their own right.
D. Organisations can be prosecuted in their own right.

Answer 90

D

Question 91

A firm of solicitors operating as a limited liability partnership are reviewing its insurance needs for the next year. The firm determines it needs £7,000,000 professional indemnity cover for each and every claim. It purchases a policy which provides the minimum limit required by the Solicitors Regulation Authority. What additional limit of indemnity will the firm need in order to achieve its
cover requirement?

A. £2,000,000
B. £3,000,000
C. £4,000,000
D. £5,000,000

Answer 91

C

Question 92

Where a property valuer has been found negligent in his valuation of a property, to what extent in law would he be liable for damages to a lender?

A. The difference between the negligent valuation and the correct valuation only.
B. The difference between the negligent valuation and the correct valuation plus any subsequent
reduction in property values.
C. A refund of the valuation fee only.
D. A refund of the valuation fee plus any punitive damages.

Answer 92

A

Question 93

Which members of the medical profession are able to obtain professional indemnity insurance cover?

A. Dentists only.
B. Doctors and dentists only.
C. Doctors, nurses, and dentists only.
D. Doctors, nurses, dentists and practitioners of alternative medicine

Answer 93

D

Question 94

Under a professional indemnity policy, how is the limit of indemnity and defence costs typically arranged?

A. Always as a limit applicable to any one claim, inclusive of defence costs.
B. Always as a limit applicable to any one claim, excluding defence costs.
C. As an aggregate limit inclusive of defence costs.
D. As an occurrence limit exclusive of defence costs.

Answer 94

C

Question 95

It is usual for professional indemnity policies to exclude

A. claimants’ costs.
B. defence fees.
C. financial losses.
D. liquidated damages

Answer 95

D

Question 96

Where within a professional indemnity policy does it state that cover is on a claims made basis?

A. General conditions.
B. Limit of liability.
C. Operative clause.
D. Recital clause.

Answer 96

C

Question 97

A manufacturing company has bought a firm of consulting engineers that has been trading for the last five years. When considering this acquisition, the underwriter will need in particular to consider the cover that the consulting engineers have bought for

A. employers’ liability.
B. product liability.
C. professional indemnity.
D. public liability.

Answer 97

C

Question 98

When considering a proposal for professional indemnity insurance, an underwriter is least likely to be interested in

A. employee behaviour.
B. employee wages.
C. previous claims history.
D. previous insurance history

Answer 98

B

Question 99

A surveyor contacts an insurer requesting a quotation for professional indemnity insurance. The proposal indicates that the surveyor also conducts property valuations. How will this affect the
insurer’s quotation?

A. An excess will automatically apply.
B. A premium loading will be applied with the normal rate for a surveyor.
C. A premium discount will be applied.
D. The limit of indemnity will always be reduced.

Answer 99

B

Question 100

The finance director of an architectural partnership has been made aware by the external auditor of a misappropriation of funds by an employee. Which insurance policy is most likely to contain an
extension to respond to any claim arising from these circumstances?

A. Directors’ and officers’ liability.
B. Employers’ liability.
C. Professional indemnity.
D. Public liability.

Answer 100

C

Question 101

A public liability underwriter is assessing a shopping centre risk. Although the centre is well maintained, there have been numerous slip and trip accidents. What element of hazard will the
underwriter be most concerned about?

A. Frequency.
B. Latency.
C. Severity.
D. Workplace

Answer 101

A

Question 102

A typical reason for a policyholder to purchase an admitted liability policy is to

A. always operate on a fully-insured basis solely within a home territory.
B. ensure that all claims can be considered under home legislation.
C. ensure their policy is fully licensed and compliant within their home territory.
D. overcome situations where the insurer is unlicensed to write business in a particular overseas
country.

Answer 102

C

Question 103

A child was injured in an accident at a horse-riding school. During the claims investigation it was established that the school was at fault and did NOT adhere to a policy condition. How is the public
liability insurer most likely to respond to the claim?

A. Decline the claim and keep the policy in force.
B. Decline the claim and void the policy immediately.
C. Pay the claim but not invite renewal.
D. Pay the claim and consider making a recovery against the insured for breach of contract

Answer 103

D

Question 104

When seeking to determine the likely claims cost for a new employers’ liability risk, which type of losses are most likely to be difficult for a liability underwriter to predict?

A. Catastrophe losses.
B. Frequency losses.
C. Latency losses.
D. Severity losses.

Answer 104

C

Question 105

Under the Health and Safety at Work etc. Act 1974, the duty of every employer to ensure the health, safety and welfare at work of all its employees is a duty based upon

A. either an absolute duty or so far as reasonably practicable.
B. an absolute duty only.
C. so far as reasonably practicable only.
D. strict liability.

Answer 105

A

Question 106

An employee was injured at work and has a valid claim against his employer, who has since ceased trading following insolvency. How is the employee most likely to be compensated for his injury?

A. An ex gratia payment from the employers’ liability insurer on risk at the time of the injury.
B. A payment from the employers’ liability insurer on risk at the time of the injury.
C. As an ordinary creditor in insolvency proceedings.
D. Under the Financial Services Compensation Scheme for statutory classes of insurance.

Answer 106

B

Question 107

Which Act amended part of the Health and Safety at Work etc, Act 1974 and allows more freedom for employer’s to defend employer’s liability claims?

A. Compensation Act 2006.
B. Corporate Manslaughter and Corporate Homicide Act 2007.
C. Disability Discrimination Act 1995.
D. Enterprise and Regulatory Reform Act 2013.

Answer 107

D

Question 108

When a liability underwriter is applying a specific exclusion to an employers’ liability insurance policy, it should only refer to a

A. specific type of disease.
B. particular type of injury.
C. particular activity of the employee.
D. specific activity of the employer.

Answer 108

D

Question 109

An employers’ duty to employ competent employees under Health and Safety at Work regulations, will relate to

A. any possible injuries the employee may cause.
B. any skills the employee has which can increase company profit.
C. the employee’s ability to earn commission and bonuses.
D. the employee’s technical knowledge.

Answer 109

A

Question 110

When rating a new employers’ liability risk why would the underwriter most likely be interested in the breakdown between manual and clerical employees’ wages?

A. Manual employees present a higher risk than clerical employees and different rates will be
applied.
B. Manual employees always earn higher salaries than clerical employees.
C. Clerical employees always earn higher salaries than manual employees.
D. Clerical employees present a higher moral hazard than manual employees and different rates will
be applied.

Answer 110

A

Question 111

A policyholder has incurred clean-up costs imposed by a regulatory authority following sudden and accidental pollution. How, if at all, would a standard UK public liability policy typically provide for
these costs?

A. As a collateral warranty.
B. As an exclusion and the costs would not be covered.
C. As an extension.
D. As a policy condition.

Answer 111

C

Question 112

Under a standard public liability policy, which three costs would NOT be covered in respect to damage under the Environmental Damage (Prevention and Remediation) Regulations 2009?

A. Compensatory, complementary and defence costs.
B. Mitigation, compensatory and complementary costs.
C. Mitigation, compensatory and defence costs.
D. Mitigation, complementary and defence costs.

Answer 112

B

Question 113

A claim is presented from a member of the public for his wrongful arrest in a clothing store. Under the clothing store’s public and product liability policy, where would a claims handler first refer to
see if this claim is covered?

A. The choice of law clause.
B. The operative clause.
C. The policy conditions.
D. The policy extensions.

Answer 113

B

Question 114

An engineering company approaches an insurer for a public liability insurance quotation. The company derives 40% of its turnover from its work on offshore oil rigs. In these circumstances,
under a standard policy wording, on what basis is the insurer most likely to offer cover for this risk?

A. Offer cover but apply a specific increased deductible for the offshore work.
B. Offer cover subject to the insured arranging reinsurance.
C. Offer cover for the whole risk.
D. Offer cover subject to suitable employee travel insurance being in place.

Answer 114

A

Question 115

An insurer receives a public liability proposal from a children’s nursery which is responsible for 10 children. What is the most likely alternative method to turnover of rating the premium in these
circumstances?

A. Estimated wages.
B. Number of children.
C. Qualification of staff.
D. Seating capacity of the nursery

Answer 115

B

Question 116

Why would it be important for a merchant bank to consider purchasing a higher limit of indemnity

for public liability insurance?
A. The aggregate limit of indemnity may be inadequate if there is a high frequency of claims during the period of insurance.
B. Visitors may be high earners whose loss of income and ongoing care costs could exceed the limit of indemnity.
C. In the event of an armed robbery, there is the potential for a significant number of employees to submit claims for stress.
D. Defence costs are always provided within the limit of indemnity and will always reduce the limit of indemnity available for damages awarded.

Answer 116

B

Question 117

What are the main reasons that capacity has reduced and premiums have increased recently within the Directors’ & Officers’ (D&O) insurance market?

A. A number of insurers have exited the market due to sizeable losses.
B. Due to increased regulation imposed by the Financial Conduct Authority only certain insurers are now permitted to underwrite D&O insurance.
C. All non-executive directors have to arrange their own individual policies to cover all directorships held.
D. D&O insurance cover is compulsory for all listed companies which has reduced the availability in
the market.

Answer 117

A

Question 118

A manufacturing company has purchased a firm of consulting design engineers that have been trading for the last five years. The manufacturing company notify their liability insurers of this on a
mid-term basis. As a consequence, the liability underwriter will assess, in particular, the cover previously purchased by the consulting design engineers for

A. employers’ liability.
B. product liability.
C. professional indemnity.
D. public liability.

Answer 118

C

Question 119

Where a property surveyor acted for a lender and was subsequently found negligent in his valuation of a property, what damages in law would he be liable for?

A. The difference between the negligent valuation and the correct valuation only.
B. The difference between the negligent valuation and the correct valuation plus any subsequent
reduction in property values.
C. A refund of the valuation fee only.
D. A refund of the valuation fee plus any liquidated damages.

Answer 119

A

Question 120

Under the Companies Act 2006, to what extent, if at all, are accountants able to limit their financial liability for audit work?

A. They are able to limit their liability by agreement.
B. They are able to limit their liability up to a limit of £3,000,000.
C. They are able to limit their liability up to a limit of £5,000,000.
D. They are not able to limit their liability in any circumstances.

Answer 120

A

Question 121

It is usual for professional indemnity policies to exclude

A. claimants’ costs and war risks.
B. defence costs and sonic bangs.
C. financial losses and pollution.
D. liquidated damages and liability for bodily injury

Answer 121

D

Question 122

What are two common bases for rating a professional indemnity risk?

A. Amount of indemnity and gross fees.
B. Geographical areas of operation and jurisdiction to be covered.
C. Turnover and gross assets.
D. Wages and salaries.

Answer 122

A

Question 123

A professional will always be deemed to have been negligent, if they

A. have not exercised the exceptional ability expected of a specialist in their profession.
B. have not followed all of the strict codes of conduct imposed by their governing bodies.
C. cannot demonstrate that they hold official qualifications.
D. have not exercised the prudence and skill as would be expected from an average member of their
profession.

Answer 123

D