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WorksheetsIF1 Review 1
Total questions: 26
Worksheet time: 13mins
By paying their premium, someone who has insured their motor car is said to have:
confirmed the peril with the insurer.
insured the contingency with the insurer.
transferred the risk to the insurer.
re-insured the risk to the insurer.
Someone who buys contents insurance is most likely to:
have plenty of savings.
have a limited disposable income
have few personal possessions.
be risk-averse
If a motor insurance policy requires the car to be kept in a garage at night, this is an example of risk:
reporting.
control.
analysis.
identification.
As a risk, the theft of mobile phones and the unauthorised use of them is regarded as:
low frequency, high severity.
ow frequency, low severity.
high frequency, low severity.
high frequency, high severity.
An old thatched cottage catches fire after being struck by lightning. What is most likely to be regarded as being the hazard in this example?
The age of the property.
Being struck by lightning.
The fire.
The thatched roof.
A pure risk is one where there is:
a possibility of a gain or break-even, but not a loss.
a possibility of a loss or break-even, but not a gain.
only the possibility of break-even.
the possibility of gain or loss, but not break-even.
What type of risk does a typical insurance policy provide insurance cover against?
Pure risks.
Risks with no insurable interest.
Deliberate acts.
Non-financial risks.
What must a risk be in order to be insurable?
Inevitable.
Avoidable.
Fortuitous
Deliberate.
The ability of underwriters to be able to quote an appropriate premium is based on the concept of:
speculation.
fairness.
equity.
homogeneous exposures.
What is the primary function of insurance?
To reduce dependency on the State.
To act as a risk transfer mechanism.
o provide high levels of jobs and employment
To invest funds to support the economy.
Insurers typically accumulate money due to the delay between premiums being collected and when claims are made. What is this known as?
Profit reserve.
Underwriting reserve.
Premium reserve.
Claims reserve.
Insurance is based on the principle that the losses of the few are met by the contributions of the many. This depends on two main factors:
physical and moral hazard.
large numbers and equitable premiums.
frequency and severity.
peril and hazard.
In pooling risks, what do equitable premiums ensure?
Investment returns can be achieved.
A reasonable return can be made to shareholders.
Business planning is more predictable.
The premiums paid by policyholders are fair.
Men are statistically more likely to have a car accident. Under the Equality Act 2010 [Amendment] Regulations 2012, insurers:
must charge men a higher premium for a comparable risk.
may charge men a higher premium for a comparable risk.
must charge the same premium for men and women for a comparable risk.
may charge women a higher premium for a comparable risk.
When insurance is written on a co-insurance basis with more than one insurer, each insurer['s]:
will require a premium directly from the policyholder.
policy may have different terms.
will issue a separate insurance policy.
will pay a proportion of any claim, usually to the lead office.
What is the term used when two or more policies insure the same risk?
Shared insurance
Self-insurance.
Co-insurance.
Dual insurance
A business has property insurance of £2m. If it chooses to cover the first £250,000 from its own resources, this amount is known as the insured's:
self-insurance limit.
levy.
self-fund limit.
retention.
The major item of insurance expenditure for most private individuals will tend to be:
household buildings and contents insurance.
personal accident insurance.
travel insurance.
motor insurance.
Which regulator ensures that UK insurance companies have adequate solvency levels?
FCA.
Bank of England
HM Treasury.
PRA.
Who historically provided the financial backing for the Lloyd's market?
Lloyd's syndicates.
Lloyd's Names.
Lloyd's brokers.
Lloyd's underwriters.
An intermediary that provides advice but does NOT need to be directly authorised by the UK regulator is a[n]:
consolidator.
aggregator.
appointed representative.
insurance broker.
What best describes the main type of insurance risks dealt with in the London Market?
Public body risks.
Complex or large worldwide risks.
Mutual indemnity risks.
Standard UK based risks.
The expression 'broker', is widely used within the insurance market. A firm that uses this term in its title
usually provides independent advice.
must be qualified and approved by the British Insurance Brokers Association.
usually acts as the agent of only one insurer.
must be regulated and approved by Lloyd's.
An insurance intermediary that is able to collect premiums, write cover notes for motor insurance and agree insurance within defined limits is said to have:
a restricted licence.
captive insurance status.
tied status.
delegated authority.
What do aggregators generally provide?
A comparison of a range of insurers.
A restricted advice service.
An independent advice service.
A comparison of all available insurers.
An insurer that buys reinsurance is known as the:
ceding office.
lead insurer.
reassurer.
reassured.
