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WorksheetsRisk Management
Total questions: 39
Worksheet time: 20mins
Which of the following are examples of risk financing methods?
Risk retention and risk transfer
Risk mitigation and risk avoidance
Risk transfer and risk tolerance
None of the options are correct
Who are the primary players in the insurance industry?
Clients, brokers, and banks
Clients, insurance companies, and agents
Policyholders, analysts, and underwriters
None of the answers provided are correct
What does the term ‘Captive Insurer’ refer to?
A company that insures only third-party risks
An insurer restricted by its owners
An insurance firm owned by a parent to insure its own risks
All answers listed are correct
Which of the following is NOT typically included under personal insurance policies?
Household contents and buildings
Private car insurance
Overseas travel coverage
Industrial machinery breakdown
Which of the following is NOT part of standard commercial insurance coverage?
Yachts for personal leisure
Business insurance bundles
Industrial machine protection
Technology equipment coverage
What are ‘Statutory Classes’ of insurance?
Policies covering government-owned property
Insurance types that are mandated by law
Policies with long-term legal protections
None of the options listed is true
What does the term ‘Indemnity Limit’ refer to in insurance?
The amount of coverage that can be purchased
The maximum amount payable by the insurer
The value of the asset being insured
All options listed are accurate
What is a ‘Deductible’ or ‘Excess’ in insurance terms?
The amount not paid by the insurer when a claim arises
A fee paid by the insurer at the start of the policy
A contribution made by the insurance broker
The amount reimbursed to the insured after a loss
In reinsurance, who is referred to as the cedant?
The insurer that gives part of its risk to another
The reinsurer that assumes large risks
The underwriter who manages limits
All listed statements are true
What is the definition of Treaty Reinsurance?
Risk is chosen and accepted on a case-by-case basis
A reinsurer agrees to accept a whole group of risks
The reinsurer and insurer both select individual risks
None of the answers provided apply
Who among the following is NOT a key component of the reinsurance sector?
Independent reinsurers
Primary insurance firms
Local insurance agents
Lloyd’s of London
What task is mainly assigned to a Third-Party Administrator (TPA)?
Premium collection
Underwriting assessments
Claims administration
All options are equally applicable
Is a captive insurance company truly independent from its owner?
No, it is owned and controlled by the parent firm
Possibly, if it is regulated differently
Yes, it acts independently
All choices could be correct
Is achieving cost efficiency a benefit of forming a captive insurer?
Sometimes
No
Yes
All the listed responses could apply
What is a key benefit of using captive insurance?
Data centralisation across group entities
Financial incentive for loss prevention
Direct access to reinsurance markets
All answers are correct
Which combination represents core functions within a captive insurance operation?
Risk, Audit, Compliance, Sales
Operations, Marketing, HR, Legal
Finance, Actuarial, Compliance, Operations
Compliance, Risk, Internal Audit, Actuarial
Which item is NOT required when setting up a captive insurance company?
Staff recruitment plan
Forecasted Statement of Comprehensive Income
Forecasted Statement of Financial Position
Risk coverage strategy
Which of these is NOT a type of captive insurer?
Pure captive
Rental captive
Discretionary mutual fund
Cell captive
Which of these are considered Capital Market risk financing tools?
Insurance-linked securities (ILS)
Derivative contracts linked
Backup capital arrangements for catastrophes
All mentioned options are included
Which of the following fall under insurance derivatives?
Catastrophe bonds
Weather-linked swaps and options
Interest rate hedges
Loan guarantees
What is the value of an insurance option based on?
Exchange rate changes
Actual insurable losses
Derivative index ratios
None of these options
Which is NOT an example of contingent capital?
Market-based standby loans
Equity-triggered catastrophe notes
Surplus notes issued in advance
Hybrid mutual insurance pools
Which is NOT classified as part of Alternative Risk Transfer (ART)
Weather-linked contracts
Finite insurance policies
Contingent loan mechanisms
Basic fire insurance policy
Who is involved in distributing insurance products to clients?
Insurance product designers
Licensed intermediaries
Third-party claims processors
None of these apply
Who ensures that international insurance programs align with each country’s rules?
Insurance carriers
Insurance intermediaries
Policyholders
All parties play a role
Why can’t global insurance programs be identical across all countries?
Each jurisdiction has its own legal requirements
Cultural expectations affect insurance design
Pricing varies across regions
All of the answers apply
In insurance terms, how is a Protected Cell Company (PCC) classified?
An insurance broker
A traditional reinsurer
A licensed insurer with distinct risk cells
A policyholder-owned co-op
What is the primary role of an insurance broker?
To manage claims on behalf of insurers
To provide legal advice on insurance matters
To act as an intermediary between clients and insurers
To underwrite insurance policies
What does the term ‘Reinsurance’ refer to?
Insurance for property damage only
Insurance that covers personal liabilities
None of the above
Insurance purchased by an insurer to mitigate risk
Which of the following is a common type of life insurance?
Term life insurance
Property insurance
Liability insurance
Health insurance
What is the primary purpose of a reinsurance treaty?
To manage claims processing
To insure against natural disasters
To transfer risk from one insurer to another
To provide coverage for personal liabilities
What is the primary function of a reinsurance broker?
To facilitate the transfer of risk between insurers
To manage claims for policyholders
To underwrite new insurance policies
To provide legal representation for insurers
What does the term ‘Excess of Loss’ reinsurance mean?
Reinsurance that covers losses above a certain threshold
Reinsurance that is purchased by the insured directly
Reinsurance that covers all losses without limit
Reinsurance that applies only to specific types of risks
What is the primary role of a claims adjuster in the insurance process?
To assess and evaluate insurance claims
To sell insurance policies to clients
To provide legal advice on claims
To manage the underwriting process
What does the term ‘Moral Hazard’ refer to in insurance?
The risk of loss from operational failures
The risk of loss due to market fluctuations
The risk associated with natural disasters
The risk of loss due to dishonest behavior
Which of the following is a common type of property insurance?
Health insurance
Life insurance
Homeowners insurance
Liability insurance
Which of the following best describes the term ‘Underwriting’ in insurance?
The marketing of insurance products to clients
The legal framework governing insurance contracts
The act of paying out claims to policyholders
The process of evaluating risk and determining coverage
What is the main purpose of a captive insurance company?
To provide insurance to third parties
To insure the risks of its parent company
To act as a reinsurance provider
To manage investment portfolios
Which of the following is a key advantage of using reinsurance?
Increased capital requirements
Higher premiums for policyholders
Reduced regulatory oversight
Enhanced risk management capabilities
