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ABC4 > Random Mix > Flashcards

Random Mix Flashcards

1
Q

The IBNER reserve covers

A

Shortfalls in the provisions in the outstanding claims reserves

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2
Q

Would the arbitration clause of a household policy apply when a policyholder is disputing the amount offered in settlement of a theft claim

A

Yes

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3
Q

When designing an IT-based claims management system it is important to

A

review existing claims procedures and practices

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4
Q

One benefit of using an IT-based claims handling system is that it

A

can help insurers to deal with foreseeable peaks in demand

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5
Q

an insured has comprehensive cover and is involved in an accident caused by a third party which principle applies?

A

Subrogation

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6
Q

Under the untraced drivers’ agreement, the Motor Insurance Bureau (MIB) will only consider claims for property damage where the vehicle that caused the damage is unidentified and

A

compensation has been paid for significant personal injury

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7
Q

The insurer’s position at the end of the financial year is shown in the:

A

Balance Sheet

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8
Q

Which non-adjudicative option of alternative dispute resolution is common place in personal injury cases and is where the parties come together round the table to discuss options to resolve the case?

A

Joint Settlement

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9
Q

What reserve is required by law and is designed to smooth fluctuations in loss ratios for certain classes of business

A

Equalisation Reserve

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10
Q

In relation to an insurer’s corporate claims strategy, the claims manager will be responsible for:

A

day to day implementation

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11
Q

Where would an insurer’s premium reserves, such as outstanding claims and incurred but not reported claims be disclosed?

A

The balance sheet - liability section.

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12
Q

Management accounts allow an insurance company to

A

plan, monitor and control the company’s operations.

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13
Q

What is the objective of reserving?

A

is to estimate the future costs of claims

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14
Q

The source of the largest outflow of money within an insurance company is managed by its:

A

Claims department

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15
Q

An unexpired risk reserve is ONLY needed where a loss is foreseen in relation to the

A

Unearned premium reserve

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16
Q

When implementing an insurer’s overall approach to claims management, a claims manager’s key tasks include

A

Being aware of current underwriting policies

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17
Q

In relation to a motor claim hard leakage can occur where:

A

salvage is retained by the insured after a total loss payment

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18
Q

Ex gratia payments should NOT be regarded as leakage because

A

they are authorised by the claims manager.

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19
Q

When setting up a new commercial property claim which of the following CANNOT be obtained from the insurer’s underwriting records?

A

Estimates & reserves!! ***

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20
Q

One of the disadvantages of using an IT-based claims handling system is

A

Upgrades may be needed overtime

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21
Q

A potential disadvantage of centralised claim settlement is a lack of

A

local contact for policyholders

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22
Q

Insurance companies are usually structured by:

A

function or division or a blend of both

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23
Q

Within a decentralised structure which claims settlements, if any, will have to be reported to the head office?

A

Very large claims

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24
Q

Brown’s Electricals Ltd is concerned about the impact on the business of a major fire or flood at their premises. They employ the services of ABC Consultants to develop a plan to ensure business continuity. What type of firm are ABC Consultants?

A

A disaster recovery company

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25
Q

What is the general expectation of the insured when designing an IT-based claims handling system

A

A quick response and a quick settlement.

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26
Q

One of the less tangible benefits of using IT in respect of claims handling is:

A

increased customer retention

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27
Q

Who is an independent person appointed by the insured to help them in the preparation and negotiation of their claim

A

Loss Assessor

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28
Q

Where the claims function is outsourced, how do insurers retain internal responsibility for compliance purposes?

A

Through regular audits of the outsourced company

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29
Q

The obligations that a motor insurer has under Part VI of the Road Traffic Act are:

A

statutory obligations

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30
Q

Under the untraced drivers’ agreement, the Motor Insurance Bureau (MIB) will only consider claims for property damage where the vehicle that caused the damage is unidentified and:

A

compensation has been paid for significant personal injury.

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31
Q

Under what circumstances will a commercial theft claim be only partially met by an insurer?

A

Where the value at risk exceeds the sum insured

32
Q

Under what circumstances can an insurer refuse to pay a commercial property damage claim?

A

Where there has been a breach of a material policy warranty

33
Q

After an insurer has paid for a total loss claim

A

the residual value of any property belongs to the insurer

34
Q

What is the MAIN benefit to insurers of using the replacement option when settling a glass claim?

A

Glaziers frequently offer discounts to insurers

35
Q

When checking the data integrity for motor claims, as part of the reserving process, which of the following could cause the final calculation of the claims reserve to be inaccurate?

A

Processing backlogs

36
Q

One of the MAIN aims of market agreements is to:

A

promote good relations between insurers

37
Q

An ‘ex gratia’ payment is one which is made by:

A

the insurer, even though there is no policy liability

38
Q

The term ‘salvage’ means:

A

damaged property that is left after insurers have paid for a total loss

39
Q

The claims reserve for each accident year is calculated by:

A

multiplying the cumulative claims to date for that year by the development factors for the number of years which remain undeveloped

40
Q

Each of the following is a stated purpose of the ABI’s Personal Effects Contribution Agreement with the exception of?

A

Avoiding paying out claims under a specified limit

41
Q

Recovery of payments is most likely for

A

motor insurance

42
Q

Which principle of insurance is MOST likely to apply where an insured has comprehensive cover and is involved in an accident caused by a third party?

A

Subrogation

43
Q

Special damages are:

A

losses that can be quantified in monetary terms

44
Q

For which type of claim is completion of a claim form LEAST likely to be requested by insurers

A

Extended warranty

45
Q

The claims conditions in a typical travel policy require the insured to report what claim to another authority in addition to insurers?

A

Theft for personal belongings

46
Q

Helplines are often outsourced to specialist providers because:

A

savings can be made through economies of scale

47
Q

Which liability policy is USUALLY written on a losses occurring basis?

A

Public Liability

48
Q

Which liability policy is USUALLY written on a claims made basis?

A

Professional Indemnity

49
Q

For a business interruption claim to be valid, what other type of policy must also be in force?

A

Property Damage

50
Q

Which of the following is classified by insurers as a pecuniary class of insurance?

A

Legal Expenses

51
Q

The three “tracks” to which a case can be allocated under the Civil Procedure Rules are:

A

Small claims, fast track and multi- track.

52
Q

Which non-adjudicative option of alternative dispute resolution is common place in personal injury cases and is where the parties come together round the table to discuss options to resolve the case?

A

Joint Settlement

53
Q

A global claims reserve is

A

a reserve covering the whole book of business

54
Q

A claims department’s service standards must balance the need to treat the customer fairly, efficiently and sympathetically with the need to:

A

Only pay claims that are valid

55
Q

What is the maximum award that the Financial Ombudsman Service (FOS) can make which is binding on an insurer?

A

£350,000

56
Q

Under a motor policy, a third party may not be fully compensated for personal injuries where:

A

there is contributory negligence

57
Q

Which adjudicative option of alternative dispute resolution is required by statute in all disputes over construction contracts between policyholders and sub-contractors?

A

Adjudication

58
Q

All authorised insurers must comply with the claims handling standards set by the:

A

FCA

59
Q

Which of the benefits under a personal accident policy is often paid as an annuity?

A

Permanent Total Disablement

60
Q

What cover is typically included under a commercial vehicle policy?

A

Third Party Liability

61
Q

What is covered by creditor insurance?

A

The insured’s inability to make repayments due to redundancy

62
Q

What cover is usually combined with a basic public liability policy?

A

Product Liability Insurance

63
Q

What special peril can be added to a fire policy?

A

sprinkler leakage

64
Q

Hugh has a comprehensive motor cycle policy. Julie has a comprehensive private car policy. Which of the following is NOT covered by Hugh’s policy but will be covered by Julie’s?

A

Personal accident cover for the insured

65
Q

Helen’s car is insured on a third party only basis. What limit of indemnity will apply to any third party property damage claims?

A

£20,000,000

66
Q

Which of the following losses is covered by a comprehensive private car policy but NOT a policy arranged on a third party, fire and theft basis?

A

Theft of personal belongings of the insured

67
Q

Legal expenses cover is often offered as an optional extension to a:

A

Household Insurance Policy

68
Q

What is a deductible?

A

The insurance deductible is the amount of money you will pay in an insurance claim before the insurance coverage kicks in and the company starts paying you

69
Q

The term ‘quantum’ means the:

A

amount of a claim

70
Q

Thugs break into a factory and, finding nothing worth stealing, start a fire. The fire activates the sprinkler system causing water damage to some unburnt fixtures and fittings. What is the proximate cause of the water damage to the fixtures and fittings?

A

FIRE

71
Q

Who is NEVER used by an insurer as part of the claims investigation process for a personal injury claim?

A

Loss Assessor

72
Q

When a claim is notified, the insurer may have a responsibility to prove:

A

that an exclusion applies.

73
Q

Which of the following does NOT usually form part of claims conditions in a policy?

A

A requirement to ensure specified standards of security are met.

74
Q

One of the less tangible benefits of using IT in respect of claims handling is:

A

increased customer retention

75
Q

Sally has a comprehensive motor policy, with a £300 excess, for her car which is worth £2,500. Sally paid £6,000 for the car 3 years ago. The car is stolen from outside her house and her insurer offers £6,000 in settlement of her claim which she accepts and the claim file is closed. Calculate how much leakage, if any, has occurred on this claim?

A

£3800

ABC4 (6 decks)

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