Insurance Institutions: Concepts and Practices

Which of the following best describes the process of underwriting in insurance institutions?

• Accepting liability in return for premiums

• Investing in the stock market

• Providing loans to customers

• Selling insurance policies to banks

Why do insurance institutions use actuarial services when setting premiums?

• To predict the likelihood of future claims using statistical and probability scenarios

• To advertise their products

• To train new employees

• To negotiate with banks

What is the main purpose of professional indemnity insurance?

• To cover medical expenses

• To cover the cost of defending litigation and potential damages for claims of negligence

• To pay out on the death of the insured

• To protect against theft of personal possessions

A policy that pays out a lump sum if the insured survives to the end of the policy term and also has a large investment element is called:

• Term assurance policy

• Whole of life policy

• Endowment policy

• Accident, sickness and unemployment cover

What does the term "collateral" refer to in the context of money market instruments and the Bank of England?

• An asset accepted as security for a loan

• A type of insurance policy

• A government regulation

• A form of customer identification

What is the main focus of investment banks when acting on the "sell side"?

• Creation, promotion, analysis, and sale of securities for fees or underwriting and research services

• Accepting deposits from individuals

• Providing travel insurance to customers

• Offering mobile phone services

What does the process of settlement in financial markets involve?

• Transfer of ownership of the security and transfer of cash consideration

• Issuing new shares to the public

• Auditing company accounts

• Setting interest rates

What is the main role of central banks as described in the text?

• To provide loans to individuals

• To act as ‘lender of last resort’ and control inflation

• To manage stock exchanges

• To process payment instructions

Which institution is responsible for providing price stability for the currency by controlling inflation?

• Payment institutions

• Commercial banks

• Central banks

• Investment banks

Which of the following is NOT a function of payment institutions as described in the text?

• Providing and executing payment services

• Allowing for the movement of cash payments

• Issuing currency notes and coins

• Enabling cash to be placed in and withdrawn from accounts