CII IF4 Flashcards
1
Q
When an insurance claim is made, who is responsible for proving the claim is valid? Select one: a. The insured. b. The insurer. c. The solicitor. d. The assessor.
A
b. The Insured
2
Q
What is the amount of a claim known as? Select one: a. Cost. b. Value. c. Liability. d. Quantum.
A
Quantum.
3
Q
When Patrick took out household insurance, there was a condition that he must fit an approved burglar alarm. He failed to do so and this came to light when he submitted a valid claim for a fire in his kitchen. How would the insurer treat the claim for the fire?
Select one:
a. They would pay the claim for the fire.
b. They would pay the claim but the amount paid would be subject to a ‘limit of liability’.
c. They would cancel the policy from outset and not pay the claim for the fire.
d. They would pay the claim for the fire but this would be subject to ‘averaging’.
A
a. They would pay the claim for the fire.
4
Q
A comprehensive private car policy has a voluntary excess of £250 and a compulsory excess of £500. In the event of a claim for £1,250 accidental damage, how much will the insured have to pay? Select one: a. £1,250. b. £500. c. £250. d. £750.
A
d. £750
5
Q
Under what circumstance might an insurance claim be subject to the principle of ‘averaging’?
Select one:
a. Where the peril is insured by more than one insurer.
b. Where facts have been misrepresented by the insured.
c. Where a warranty has not been met by the insured.
d. Where there is under-insurance.
A
d. Where there is under-insurance.
6
Q
Under common law, the insured has a duty to:
Select one:
a. take all reasonable steps to minimise the loss.
b. report all incidents to the local police authority.
c. maintain a record of all elements of the loss.
d. declare the full value of the subject matter of the insurance.
A
take all reasonable steps to minimise the loss.
7
Q
In which part of the insurance policy would the policyholder's express duties usually be detailed? Select one: a. Policy schedule. b. Policy warranties. c. Policy summary. d. Policy conditions.
A
Policy conditions.
8
Q
With household insurance policies, within what timescale is the policyholder normally required to notify the insurer of a claim? Select one: a. Promptly. b. Five working days after the event. c. Seven working days after the event. d. Next working day after the event.
A
Promptly.
9
Q
Who will normally be involved in a large and complex claim? Select one: a. An engineer. b. A loss adjuster. c. A risk surveyor. d. A loss assessor.
A
A loss adjuster.
10
Q
What type of expert may be used to estimate rebuilding costs, as part of the claims investigation process? Select one: a. Accountant. b. Lawyer. c. Mechanical engineer. d. Surveyor.
A
Surveyor.
11
Q
A fire at John's premises caused damage to a water pipe with resultant water damage to the building and contents below. What is the proximate cause of the loss? Select one: a. Flood. b. Accidental damage. c. Fire. d. Escape of water.
A
Fire.
12
Q
To establish the proximate cause of a loss and determine policy liability, the insurer will:
Select one:
a. check that all conditions and warranties have been complied with.
b. look at whether the insured has taken all reasonable steps to minimise the loss.
c. check that the value of the loss is reasonable.
d. look at the relationship between the peril and the loss.
A
look at the relationship between the peril and the loss.
13
Q
What is the minimum level of private motor insurance required to comply with UK motoring legislation? Select one: a. Third party only. b. Road Traffic Act only. c. Third party, fire and theft only. d. Comprehensive.
A
Road Traffic Act only.
14
Q
How does cover offered by a commercial vehicle policy typically differ from a private motor insurance policy?
Select one:
a. It is unlikely to allow use of the vehicle for social, domestic or pleasure purposes.
b. There is unlikely to be a limit on third party damage cover.
c. It is unlikely to cover personal effects.
d. There are likely to be no restrictions placed on driving other cars.
A
It is unlikely to cover personal effects.
15
Q
Which buildings insurance peril often has an exclusion if the property is unoccupied? Select one: a. Flood. b. Impact. c. Explosion. d. Escape of water.
A
Escape of water.
16
Q
Commercial property insurance will often include cover against theft. What is the best definition of a ‘first loss’ basis of cover?
Select one:
a. The maximum amount payable during a period of insurance.
b. An amount limited to the market value of the subject matter.
c. An amount payable after deductions for wear and tear.
d. An amount that is less than the total value of the subject matter.
A
An amount that is less than the total value of the subject matter.
17
Q
Under a theft policy, what is a common extension? Select one: a. Fire and explosion. b. Cash and bank notes. c. New for old cover. d. Temporary removal.
A
Temporary removal.
18
Q
Commercial property insurance will often provide cover against the loss or theft of money held on commercial premises. What type of loss is NOT typically covered by a standard money policy? Select one: a. Theft of postage stamps. b. Theft of credit cards. c. Theft of currency notes. d. Theft of cheques.
A
Theft of credit cards.
19
Q
What type of insurance would cover a company against the costs arising out of the need to take action in the courts or to defend an action brought against them? Select one: a. Theft insurance. b. Employers' liability insurance. c. Legal expenses insurance. d. Business interruption insurance.
A
Legal expenses insurance.
20
Q
A business interruption policy typically insures gross profits and:
Select one:
a. the costs of any criminal prosecution defence.
b. wages.
c. the cost of raw materials.
d. liability resulting from the employer’s negligence.
A
wages.
21
Q
What is the minimum sum insured required by law under an employers’ liability insurance policy? Select one: a. £2.5 million. b. £1 million. c. £5 million. d. £10 million.
A
c. £5 million.
22
Q
A benefit policy is a contract to pay:
Select one:
a. all monies within a defined period.
b. a loss over a specified indemnity period.
c. a sum of money should a defined event occur.
d. a sum of money equivalent to an agreed value.
A
c. a sum of money should a defined event occur.
23
Q
A personal accident and sickness policy will typically make payments for sickness where disablement arises:
Select one:
a. from sickness or disease which lasts at least one month.
b. due only to sickness which lasts 6 months or more.
c. from sickness or disease and prevents the insured from following their usual occupation.
d. due only to sickness requiring hospitalisation.
A
c. from sickness or disease and prevents the insured from following their usual occupation.
24
Q
With sickness insurance, what is a ‘franchise’?
Select one:
a. It is the minimum period of time the insured must have been in employment before a claim can be considered under the policy.
b. It is the maximum duration that benefits are payable for.
c. It is the maximum amount of benefit that is payable under the policy.
d. It is a period of time or financial threshold below which a policy would not provide an indemnity.
A
d. It is a period of time or financial threshold below which a policy would not provide an indemnity.
25
```
What is typically the maximum number of weeks a personal accident insurance will pay for temporary total disablement?
Select one:
a. 104.
b. 26.
c. 52.
d. 100.
```
a. 104. chapter reference 2J3
26
```
Within an insurance company, which role is most likely to decide whether submitted claims are genuine or fraudulent?
Select one:
a. Claims handler.
b. Underwriter.
c. Customer services manager.
d. Accounts manager.
```
a. Claims handler. chapter reference 3A
27
When dealing with claims, an insurer will look to ensure high levels of customer satisfaction by:
Select one:
a. offering a third-party resolution service for unresolved complaints.
b. setting out clear service standards.
c. following relevant FCA rules and guidance.
d. ensuring all claims are dealt within a set timescale.
b. setting out clear service standards.
| chapter reference 3B
28
A road traffic accident occurred when the insured, Mr Jones, and a third party, Mr Smith, both jumped amber traffic lights, resulting in a collision. In practice, if Mr Smith only had third party insurance, who is he most likely to present his claim to and what is the most likely outcome in this case?
Select one:
a. His own insurer and he would be unlikely to receive full compensation.
b. His own insurer and he would be likely to receive full compensation.
c. Mr Jones and he would be unlikely to receive full compensation.
d. Mr Jones's insurer and he would be unlikely to receive full compensation.
c. Mr Jones and he would be unlikely to receive full compensation.
chapter reference 3C
29
What is the primary objective of claims reserving?
Select one:
a. To meet the FCA's solvency requirements.
b. To provide information for inclusion in the annual accounts.
c. To estimate the future cost of claims.
d. To ensure the insurance company can remain profitable.
c. To estimate the future cost of claims.
| chapter reference 3D
30
Which organisation takes the lead on fraud prevention for the insurance industry in the UK?
Select one:
a. Crimestoppers.
b. The Association of British Insurers.
c. The Insurance Fraud Bureau.
d. The Commercial Fraud Lawyers Association.
c. The Insurance Fraud Bureau.
| chapter reference 3E1
31
Which database contains details of all total loss and theft motor claims?
Select one:
a. Motor Insurance Database [MID].
b. Motor Insurance Anti-Fraud and Theft Register [MIAFTR 2].
c. Claims and Underwriting Exchange [CUE].
d. Driver and Vehicle Licensing Agency [DVLA].
b. Motor Insurance Anti-Fraud and Theft Register [MIAFTR 2].
chapter reference 3E1
32
Which client is an insurer most likely to investigate further for potential fraud?
Select one:
a. Paul, who has recently added accidental damage cover to his household policy and is making a claim for accidental damage to his hall, stairs and landing carpet.
b. Liz, who is increasing the sum insured on her building policy to account for a new extension that has just been built.
c. Oscar, who sustained a head injury at work and is struggling to remember the details of his personal accident claim.
d. Jacquie, who wishes to increase her third party fire and theft insurance to comprehensive and subsequently makes a claim for windscreen damage.
a. Paul, who has recently added accidental damage cover to his household policy and is making a claim for accidental damage to his hall, stairs and landing carpet.
chapter reference 3E2
33
When dealing with an insurance claim where there has been a fraudulent act or omission, the view of the Financial Ombudsman Service is that the insurer:
Select one:
a. can decline the claim and any subsequent claims on the basis that fraudulent claimants must not be allowed to believe that they have nothing to lose by making a fraudulent claim.
b. can decline the claim in full as the contract terms have been breached, irrespective of the impact on the insurer’s ultimate liability.
c. must pay the claim but may apply a reasonable deduction reflecting the severity of the act.
d. must pay the claim in full if the act makes no difference to the insurer’s ultimate liability.
d. must pay the claim in full if the act makes no difference to the insurer’s ultimate liability. chapter reference 3E3
34
```
Under the rules contained in the Insurance: Conduct of Business Sourcebook, for how long should firms retain non-advice records?
Select one:
a. For 3 years.
b. For as long as is relevant.
c. For a reasonable period of time.
d. For 6 years.
```
b. For as long as is relevant.
| chapter reference 3F1
35
```
Under the Insurance Act 2015, who is required to make a fair presentation of a risk to an insurer?
Select one:
a. Consumers and charitable trusts only.
b. Commercial customers.
c. Consumers.
d. All customers.
```
b. Commercial customers.
| chapter reference 3F3
36
The Financial Ombudsman Service deals with unresolved complaints. To be eligible, the guidance states that a small business must employ fewer than:
Select one:
a. 10 persons and have a turnover of no more than £3 million.
b. 50 persons and have a turnover of less than £3 million.
c. 50 persons and have a turnover of less than £6.5 million.
d. 10 persons and have a turnover of no more than €2 million.
c. 50 persons and have a turnover of less than £6.5 million.
chapter reference 3G1A
37
If Max has had a complaint upheld by the Financial Ombudsman Service for £15,000, he:
Select one:
a. does not need to accept the award but it is binding on the insurer.
b. does not need to accept the award but if not, he is unable to pursue a claim through the courts instead.
c. must accept the award but he is still able to pursue a claim for a higher amount through the courts instead.
d. must accept the award and it is also binding on the insurer.
a. does not need to accept the award but it is binding on the insurer.
chapter reference 3G1A
38
A dispute over a claim has gone to arbitration which found in favour of the insurer. If the insured still disputes the facts, what options, if any, would they have to pursue the matter further?
Select one:
a. None.
b. The tribunal decision is binding but there is an appeal process that may be followed.
c. The tribunal decision is not binding and they may pursue actions through the courts.
d. The tribunal decision is not binding and they may pursue actions through the Financial Ombudsman Service.
a. None.
| chapter reference 3G1B
39
In addition to adjudication, what are the other two adjudicative options for resolving claim disputes?
Select one:
a. Mediation and reconciliation.
b. Arbitration and reconciliation.
c. By expert resolution and mediation.
d. Arbitration and by expert determination.
d. Arbitration and by expert determination.
| chapter reference 3G2A
40
Beth has submitted a claim on a policy to her insurer which she believes has taken too long to finalise. Under the FCA's fair treatment of customers, what outcome is this most likely to have breached?
Select one:
a. Outcome 3: consumers are provided with clear information and are kept appropriately informed before, during and after the point of sale.
b. Outcome 2: products and services marketed and sold in the retail market are designed to meet the needs of identified consumer groups and are targeted accordingly.
c. Outcome 4: Where consumers receive advice, the advice is suitable and takes account of their circumstances.
d. Outcome 6: consumers do not face unreasonable post-sale barriers.
d. Outcome 6: consumers do not face unreasonable post-sale barriers.
chapter reference 3H1
41
```
In motor insurance, what is the 'claim form' called?
Select one:
a. A motor incident report form.
b. A motor report form.
c. An accident report form.
d. A vehicle incident report form.
```
c. An accident report form.
| chapter reference 4A1
42
```
Under a household policy, contents are regarded as either durable goods or consumer goods. What is an example of consumer goods?
Select one:
a. Freezers.
b. Clothing.
c. Dishwashers.
d. Vacuum Cleaners.
```
b. Clothing.
| chapter reference 4A3A
43
The indemnity sum for the loss or damage to a building is calculated as the cost of repair or:
Select one:
a. reinstatement at the time of loss less an allowance for betterment.
b. reinstatement at the time of loss plus an allowance for betterment.
c. replacement at the time of loss.
d. replacement at the time of loss without adjustment.
a. reinstatement at the time of loss less an allowance for betterment.
chapter reference 4A3B
44
```
What type of insurance policy is LEAST likely to be subject to fraudulent claims?
Select one:
a. Extended warranty.
b. Travel.
c. Motor.
d. Household.
```
a. Extended warranty.
| chapter reference 4A5
45
```
What type of claim is dealt with under a property insurance policy?
Select one:
a. Legal expenses.
b. Public liability.
c. Glass.
d. Business interruption.
```
c. Glass.
| chapter reference 4B
46
```
Who is responsible for payment of the loss adjuster's costs?
Select one:
a. The insured.
b. The insurer.
c. The broker.
d. The assessor.
```
b. The insurer.
| chapter reference 4B1A
47
```
Who would usually arrange repairs for a glass claim?
Select one:
a. A loss adjuster.
b. An engineer.
c. An approved repairer.
d. A surveyor.
```
c. An approved repairer.
| chapter reference 4B1D
48
With employers' liability insurance, what will a successful claim have to demonstrate?
Select one:
a. The employer has been negligent.
b. The loss occurred on the employer's premises.
c. An injury only has been sustained.
d. The event resulting in the claim occurred during normal working hours, not whilst working overtime.
a. The employer has been negligent.
| chapter reference 4B3
49
```
On what basis are public liability policies written?
Select one:
a. On a losses-occurring basis.
b. On a claims-made basis.
c. On a claims-reported basis.
d. On a losses-made basis.
```
a. On a losses-occurring basis.
| chapter reference 4B3
50
A consumer has been told by the legal helpline offered under her policy that it is unable to help her. This is because she requires advice on:
Select one:
a. whether she might be able to make a claim under her insurance policy.
b. her legal rights.
c. whether she might be able to defend a claim being made against her.
d. how she should word a contract that she needs for business purposes.
d. how she should word a contract that she needs for business purposes.
chapter reference 4C1
51
```
Many motor insurers use an approved repairer. What is LEAST likely to be a benefit to them of doing so?
Select one:
a. Cost.
b. Speed of claims reporting.
c. Convenience.
d. Competence of repairers.
```
b. Speed of claims reporting.
| chapter reference 4C2
52
What types of claims does the Low Value Personal Injury Pre-action Protocol deal with?
Select one:
a. Road traffic accident, Employers' Liability, and Public Liability personal injury claims only.
b. Road traffic accident, Employers' Liability, and all Public Liability personal injury and property claims.
c. Employers' Liability and Public Liability personal injury claims only.
d. Road traffic accident and Public Liability personal injury claims only.
a. Road traffic accident, Employers' Liability, and Public Liability personal injury claims only.
chapter reference 4D2
53
```
What is the maximum limit for personal injury claims to be processed via the MOJ Portal?
Select one:
a. £10,000.
b. £15,000.
c. £20,000.
d. £25,000.
```
d. £25,000.
| chapter reference 4D2
54
```
The use of Information Technology in claims handling must take account of two characteristics of insurance claims. These are volume and:
Select one:
a. quantum.
b. ambiguity.
c. value.
d. complexity.
```
d. complexity.
| chapter reference 5A2
55
In what way may the use of Information Technology [IT] cause a possible adverse cash flow effect?
Select one:
a. Claims may be dealt with on the basis of assumption rather than judgement.
b. Reinsurance recoveries may not be as fast as claims payments.
c. Productivity at the insurance company may increase.
d. The IT system may be difficult to operate.
b. Reinsurance recoveries may not be as fast as claims payments.
chapter reference 5A4B
56
What does an insurer need to take into account under GDPR, when considering its online marketing?
Select one:
a. There is no need to retain records relating to how consent was given.
b. People have to positively give their consent to opt-in to marketing.
c. All types of personal data are treated equally.
d. It may 'pre-tick' a person's consent to receive marketing.
b. People have to positively give their consent to opt-in to marketing.
chapter reference 5A5
57
```
Using a skilled resource from outside the company is called:
Select one:
a. resourcing.
b. outsourcing.
c. decentralising.
d. delegating.
```
b. outsourcing.
| chapter reference 5C1
58
```
Whose job is it to negotiate a settlement within the terms of a policy, that is fair to both the insured and the insurer?
Select one:
a. Loss manager.
b. Loss assessor.
c. Loss adjuster.
d. Loss adviser.
```
c. Loss adjuster.
| chapter reference 5C2
59
```
In the event of a business interruption claim, who may be appointed to ensure business continuity?
Select one:
a. A disaster recovery company.
b. A loss assessor.
c. A surveyor.
d. An outsourcing company.
```
a. A disaster recovery company.
| chapter reference 5C3
60
When a claim is settled by reinstatement, who is ultimately responsible for ensuring that the work is carried out?
Select one:
a. The insurer.
b. The insured.
c. The loss adjuster.
d. The company undertaking the reinstatement.
a. The insurer.
| chapter reference 6A4
61
```
The payment of money, paying for repairs and replacement are all types of:
Select one:
a. reserving.
b. settlement options.
c. claims recoveries.
d. market agreements.
```
b. settlement options.
| chapter reference 6A5
62
How does factor or flag reserving operate when reserving on individual policies?
Select one:
a. It applies a standard monetary reserve to each claim of a certain type.
b. Detailed costings to repair, replace or identify the reserve required are obtained, but these exclude any claims to be settled on a split liability basis.
c. Detailed costings to repair, replace or identify the reserve required are obtained.
d. Detailed costings to repair, replace or identify the reserve required are obtained, but these exclude third party liability costs.
a. It applies a standard monetary reserve to each claim of a certain type.
chapter reference 6B2
63
```
What is a claim payment made by an insurer as a gesture of goodwill known as?
Select one:
a. Without admission payment.
b. Ex liability payment.
c. Without prejudice payment.
d. Ex gratia payment.
```
d. Ex gratia payment.
| chapter reference 6C
64
How is the value of any salvage determined when the insured wants to retain it?
Select one:
a. By the insurer.
b. By agreement between the insurer and the insured.
c. By a professional valuation obtained by the insured.
d. By reference to standard tables.
b. By agreement between the insurer and the insured.
| chapter reference 6E
65
```
What is the name of the clause which states that the insured will act as their own insurer for the difference between the actual and declared values?
Select one:
a. The difference clause.
b. The declaration clause.
c. The average clause.
d. The self insurance clause.
```
c. The average clause.
| chapter reference 6F
66
```
Emma insures the building of her retail premises for £150,000 with no inflation protection. She has a serious fire loss and the value of the building at the time of the loss was £200,000. If the claims cost is £60,000, how much will her insurers pay, ignoring any excess?
Select one:
a. £150,000.
b. £50,000.
c. £60,000.
d. £45,000.
```
d. £45,000.
| chapter reference 6F
67
Where a motor accident is caused by an uninsured or untraced driver, which organisation works to compensate the victims?
Select one:
a. Claims and Underwriting exchange.
b. Motor Insurance Anti-Fraud and Theft Register.
c. Driver and Vehicle Licensing Agency.
d. Motor Insurers' Bureau.
d. Motor Insurers' Bureau.
| chapter reference 6I
68
With the uninsured drivers' agreement, the Motor Insurers' Bureau will compensate victims where certain conditions are met. What is NOT one of these conditions?
Select one:
a. Compensation must be for property damage, death or bodily injury.
b. The vehicle and the motorist must be identified.
c. Damages for third party personal injury must be limited to £500,000.
d. The at-fault motorist must not have a motor insurance policy in force.
c. Damages for third party personal injury must be limited to £500,000.
chapter reference 6I2
69
```
How much is the excess, if any, applied by the Motor Insurers' Bureau for property damage caused by unidentified third parties?
Select one:
a. £1,000.
b. There is no excess applied.
c. £400.
d. £300.
```
c. £400.
| chapter reference 6I3
70
```
Which department of an insurance company has the largest outflow of money?
Select one:
a. Outsourcing department.
b. Marketing department.
c. Human Resources department.
d. Claims department.
```
d. Claims department.
| chapter reference 7 Introduction
71
```
The three operational areas that a claims manager will typically be responsible for are:
Select one:
a. personnel, compliance, strategy.
b. service, complaints, staff.
c. strategy, cost, staff.
d. strategy, compliance, cost.
```
c. strategy, cost, staff.
| chapter reference 7A
72
In the context of managing the claims process, what is leakage?
Select one:
a. Reducing profits as a result of higher than expected claims.
b. A reduction in reserves in order to meet claims.
c. Unavoidable expenses not directly associated with the payment of claims.
d. An overspend in settlement of a claim which can be avoided.
d. An overspend in settlement of a claim which can be avoided.
chapter reference 7B
73
```
Under the Financial Services Act 2012, which body is responsible for regulating the market conduct of authorised firms?
Select one:
a. Bank of England.
b. Prudential Regulation Authority.
c. FCA.
d. Financial Policy Committee.
```
c. FCA.
| chapter reference 7C1
74
The terms of which Act require a company to produce annual accounts?
Select one:
a. Financial Services and Markets Act 2000.
b. Companies Act 1985.
c. Financial Services Act 2012.
d. Insurance Companies Act 2006.
b. Companies Act 1985.
| chapter reference 7C2
75
```
Management accounts enable an insurer to manage its key operations. How are these LEAST likely to be used by an insurer?
Select one:
a. To determine asset valuations.
b. To help monitor resources.
c. To assist with planning.
d. To control company operations.
```
a. To determine asset valuations.
| chapter reference 7C3
76
Under the principle of 'indemnity', if Mia has made a claim on her household insurance policy:
Select one:
a. her insurer must ensure that she is returned to the same financial position she had before the loss.
b. she must show that there is a direct link between the loss and a peril insured under her policy.
c. her insurer must check that she disclosed all the relevant facts when she proposed for the insurance.
d. she must allow the insurer to pursue any claims against third parties.
a. her insurer must ensure that she is returned to the same financial position she had before the loss.
chapter reference 1A
77
With a property insurance claim, the:
Select one:
a. insured must prove that an insured peril arose only.
b. insurer must prove the amount of the loss only.
c. insured must prove that an insured peril arose and the amount of the loss.
d. insurer must prove that an insured peril arose and the amount of the loss.
c. insured must prove that an insured peril arose and the amount of the loss.
chapter reference 1A
78
```
Joseph takes out a comprehensive motor policy with an excess of £500 for each and every claim. If he has an accident causing damage costing £1,250, how much will his insurer pay?
Select one:
a. £750.
b. £250.
c. £1,250.
d. £500.
```
a. £750.
| chapter reference 1B
79
```
Which clause states that in the case of under-insurance the amount paid will be reduced in proportion to the amount of under-insurance?
Select one:
a. Average.
b. Subrogation.
c. Insurable interest.
d. Contribution.
```
a. Average.
| chapter reference 1B
80
If a condition precedent to liability is breached, how will the insurer react to a connected claim?
Select one:
a. Impose an additional excess and pay the claim.
b. Repudiate the claim and cancel the policy from the date of breach of the condition.
c. Repudiate the claim but keep the contract in force.
d. Charge an additional premium and pay the claim.
c. Repudiate the claim but keep the contract in force.
| chapter reference 1B
81
How is an implied duty imposed under an insurance policy?
Select one:
a. By endorsing the policy specifically.
b. By statute law.
c. By common law.
d. In the general policy wording by the Insurer.
c. By common law.
| chapter reference 1C1
82
Lynne has a household policy. One night there are high storm conditions and some slates are blown off her roof. What is the first action Lynne should take?
Select one:
a. Move into hotel accommodation.
b. Arrange for the roof to be secured immediately.
c. Obtain estimates for the repairs.
d. Appoint a loss assessor.
b. Arrange for the roof to be secured immediately.
| chapter reference 1C1
83
```
When making a claim, what type of insurance will normally require the insured to confirm that they have informed the police and taken steps to avoid a recurrence?
Select one:
a. Household insurance.
b. Motor insurance.
c. Theft insurance.
d. Packaged commercial insurance.
```
c. Theft insurance.
| chapter reference 1C2
84
Under a first notification of loss process, what is usually the first step of the claims process?
Select one:
a. The insured completes a claim form.
b. The insured notifies the police of any loss.
c. The insured notifies their broker of any loss.
d. The insured calls the insurer's claims line.
d. The insured calls the insurer's claims line.
| chapter reference 1D1
85
```
If an insurer asks an insured to attend a medical appointment with a doctor, what type of claim is this most likely to be connected with?
Select one:
a. A personal injury claim.
b. A liability claim.
c. A fire claim.
d. A theft claim.
```
a. A personal injury claim.
| chapter reference 1D3
86
Steve is on holiday and his wallet is stolen. To whom must he report the theft to support the claim under his travel policy?
Select one:
a. His local police when he arrives home.
b. The police in the locality of the theft.
c. His travel agents.
d. His hotel owners.
b. The police in the locality of the theft.
| chapter reference 1D3
87
```
When a claim is made on an insurance policy, the insurer will seek to establish the dominant cause for the loss before deciding whether the claim is valid. This is known as the principle of:
Select one:
a. insurable interest.
b. proximate cause.
c. utmost good faith.
d. indemnity.
```
b. proximate cause.
| chapter reference 1E
88
```
Under the Road Traffic Act 1988, what amount of cover is required in respect of death of third parties?
Select one:
a. £10 million.
b. Unlimited.
c. £1.2 million.
d. £5 million.
```
b. Unlimited.
| chapter reference 2A1A
89
```
What type of peril will a standard comprehensive personal motor insurance policy usually provide cover for?
Select one:
a. War and contractual liability.
b. Punctures.
c. Loss of use.
d. Fire and explosion.
```
d. Fire and explosion.
| chapter reference 2A1D-F
90
```
Under which type of motor insurance policy is loss or damage whilst loading and unloading a typical feature in the cover provided?
Select one:
a. Motorcycle.
b. Commercial vehicle.
c. Private car.
d. Motor trade.
```
b. Commercial vehicle.
| chapter reference 2A3
91
```
What CANNOT normally be insured as an extension under a household policy?
Select one:
a. Domestic animals.
b. Moped licensed for road use.
c. Small craft.
d. Legal expenses.
```
b. Moped licensed for road use.
| chapter reference 2B2
92
How does gadget insurance differ from a typical household policy?
Select one:
a. Cover is restricted to just theft.
b. Cover is restricted to just mobile phones.
c. They have limited or no exclusions.
d. Cover can be arranged on a month by month basis.
d. Cover can be arranged on a month by month basis.
| chapter reference 2C
93
```
Ahmed insures his property under a standard fire policy. In addition to fire and limited explosion cover, what other peril would be covered under his basic policy?
Select one:
a. Impact.
b. Storm and flood.
c. Lightning.
d. Accidental damage.
```
c. Lightning.
| chapter reference 2G1
94
Jane has a standard legal expenses policy. If her claim was rejected, this is most likely to be because the claim was for:
Select one:
a. the defence costs for an alleged patent breach.
b. a fine resulting from a breach of Health and Safety legislation.
c. the defence costs for a claim for unfair dismissal by an employee.
d. uninsured loss recovery following a motor claim.
b. a fine resulting from a breach of Health and Safety legislation.
chapter reference 2H1
95
Creditor insurance provides cover for:
Select one:
a. bad debts following insolvency of a debtor.
b. fraudulent transactions following loss of credit or bank cards.
c. identity theft following loss of credit card.
d. the insured's inability to continue credit instalment payments in the event of redundancy or unemployment.
d. the insured's inability to continue credit instalment payments in the event of redundancy or unemployment.
chapter reference 2H3
96
Under the Employers' Liability [Compulsory Insurance] Act 1969, what must be displayed as proof of the insurance at the insured's premises or otherwise made available electronically to employees?
Select one:
a. Copy of the policy conditions and exclusions.
b. Copy of the policy schedule.
c. Copy of the latest policy premium receipt.
d. Certificate of insurance.
d. Certificate of insurance.
| chapter reference 2I1
97
How is the limit of indemnity typically applied to a public liability policy?
Select one:
a. A limit to any one occurrence only applies.
b. A limit per occurrence and in the aggregate.
c. A limit to any one claim, unlimited in any one year applies.
d. A limit to any one claim applies with one automatic reinstatement.
b. A limit per occurrence and in the aggregate.
| chapter reference 2I2
98
Jake has just taken out a benefit policy to cover his needs. What type of policy is he most likely to have taken out?
Select one:
a. Public liability policy.
b. Employers' liability policy.
c. Personal accident and sickness policy.
d. Business interruption policy.
c. Personal accident and sickness policy. chapter reference 2J
99
```
Under what circumstances might an annuity be paid as a result of a claim on a personal accident insurance policy?
Select one:
a. Injury.
b. Accident.
c. Death.
d. Permanent total disability.
```
d. Permanent total disability. chapter reference 2J1
100
If Usain has had a claim declined on his personal accident and sickness insurance, what is the most likely reason for this?
Select one:
a. His claim was for loss of sight in one eye, which would not be covered.
b. He was unable to work through temporary total disablement.
c. He made a claim on his policy after only 29 days from inception.
d. It resulted from a pre-existing condition.
d. It resulted from a pre-existing condition. chapter reference 2J3A
101
```
The avoidable overpayment of claims is known as:
Select one:
a. reserving.
b. leakage.
c. recovery.
d. fraud.
```
b. leakage.
| chapter reference 3A
102
Where a third party makes a claim as a result of a motoring accident, legally this would be made against the:
Select one:
a. insured, insurer and any insurance broker jointly.
b. insurer.
c. insured and insurer jointly.
d. insured.
d. insured.
| chapter reference 3C
103
Who is the second party of a motor insurance claim?
Select one:
a. The insured.
b. The owner of vehicle hit by the insured.
c. The garage where the damaged vehicle is being repaired.
d. The insurer.
d. The insurer.
| chapter reference 3C
104
```
Why must an insurer maintain accurate reserves?
Select one:
a. To earn more investment income.
b. To pay fraudulent claims.
c. To pay a dividend to shareholders.
d. To meet present and future claims.
```
d. To meet present and future claims.
| chapter reference 3D
105
Which reserves are required by law and are designed to smooth fluctuations in loss ratios for certain classes of business?
Select one:
a. Outstanding claims reserves.
b. Incurred but not enough reported reserves.
c. Equalisation reserves.
d. Catastrophe reserves.
c. Equalisation reserves.
| chapter reference 3D4
106
```
Which type of claim is most likely to use re-opened claims reserves?
Select one:
a. Creditor insurance claims.
b. Property all risks claims.
c. Personal injury claims.
d. Household claims.
```
c. Personal injury claims.
| chapter reference 3D4
107
Under the Claims and Underwriting Exchange database, what types of information can an insurer check?
Select one:
a. Household, motor and personal injury claims for individuals.
b. Details of all registered vehicles in the UK and their related insurance details.
c. Details of total loss and theft claims for commercial businesses.
d. Motor claims for individuals only.
a. Household, motor and personal injury claims for individuals.
chapter reference 3E1
108
```
Which register was set up by the insurance industry and the art world in response to an increase in art theft?
Select one:
a. Art Insurance Database.
b. Art Claim and Underwriting Exchange.
c. Art Fraud and Theft Register.
d. Art Loss Register.
```
d. Art Loss Register.
| chapter reference 3E1
109
```
If fraudulent claims are not detected, what is the likely outcome for the insurer?
Select one:
a. Crime detection rates will increase.
b. Claims costs will decrease.
c. Profits will be increased.
d. Profits will be reduced.
```
d. Profits will be reduced.
| chapter reference 3E3
110
What type of claimants do the Insurance: Conduct of Business Sourcebook rules on claims handling apply to?
Select one:
a. Neither consumers or customers.
b. Commercial customers only.
c. Consumers only.
d. Both consumers and commercial customers.
d. Both consumers and commercial customers.
| chapter reference 3F1
111
What is the main purpose of the Insurance Act 2015?
Select one:
a. To introduce the pre-contractual duty of disclosure [and the effect of misrepresentations at that stage] to consumer insurance contracts.
b. To change the definitions of a consumer and a non-consumer.
c. To apply rules to aspects such as initial disclosure and dealing with fraudulent claims to non-consumer products as well as consumer products.
d. To bring non-consumer insurance contracts within the scope of the Financial Ombudsman Scheme.
c. To apply rules to aspects such as initial disclosure and dealing with fraudulent claims to non-consumer products as well as consumer products.
chapter reference 3F3
112
An insured has breached a relatively minor warranty on a non-consumer insurance policy. Under the Insurance Act 2015, if the insured subsequently made good this breach, what would the position be?
Select one:
a. The insurer is always discharged from their liability from inception [known as ab initio].
b. The insurer can cancel the policy from outset and retain the premiums paid.
c. The insurer is irreversibly discharged from any liability under the policy from the date of the breach.
d. The insurer is discharged from any liability under the policy from the date of the breach. If the insured repaired the breach at a later date, the insurer’s liability would start again from the date the breach was repaired.
d. The insurer is discharged from any liability under the policy from the date of the breach. If the insured repaired the breach at a later date, the insurer’s liability would start again from the date the breach was repaired. chapter reference 3F3B
113
Jilly has a complaint about the advice she received from her insurance broker, who advised her to take out a policy with GGH Insurance. Jilly must complain:
Select one:
a. directly to the FCA.
b. in the first instance to her insurance broker.
c. in the first instance to GGH Insurance.
d. directly to the Financial Ombudsman Service.
b. in the first instance to her insurance broker. chapter reference 3G1A
114
```
Who is bound, if anyone, by the decisions made by the Financial Ombudsman?
Select one:
a. Both the insurer and the insured.
b. Insurer only.
c. Insured only.
d. Neither party.
```
b. Insurer only.
| chapter reference 3G1A
115
Alternative dispute resolution is most commonly used:
Select one:
a. by the insured as an alternative to using the Financial Ombudsman Service.
b. to resolve third party disputes without having to go to court.
c. as part of the preliminary actions that must be taken prior to taking subsequent legal action.
d. where the relevant insurance contract does not have an arbitration clause.
b. to resolve third party disputes without having to go to court.
chapter reference 3G2
116
```
Peter has a comprehensive private motor policy and has a claim against a liable third party. Which policy condition would the insurer apply to recover their outlay?
Select one:
a. Indemnity.
b. Contribution.
c. Subrogation.
d. Reinstatement.
```
c. Subrogation.
| chapter reference 4A1
117
Under the claims notification condition on a private car policy, what type of accidents does the insured have to report?
Select one:
a. Those involving third party injury only.
b. Those where the third party has intimated that there will be a claim.
c. Those involving injury to an occupant of the insured's car only.
d. All accidents.
d. All accidents.
| chapter reference 4A1
118
```
A claim is submitted for a fatality under a personal accident policy. What key document must be provided as well as the claim form?
Select one:
a. Birth certificate.
b. Insurance certificate.
c. Police report.
d. Death certificate.
```
d. Death certificate.
| chapter reference 4A2
119
Megan has had her mobile phone and belongings stolen from her locked hotel room whilst on holiday in Spain. What would she need to do to successfully claim on her travel insurance policy?
Select one:
a. Provide proof of purchase for the items and show that she notified local police at the time of the loss only.
b. Provide proof of purchase for the items, show that she notified local police at the time of the loss and that she also notified British police on her return.
c. Provide proof that she notified both local police at the time of the loss and also notified British police on her return only.
d. Provide proof of purchase for the items only.
a. Provide proof of purchase for the items and show that she notified local police at the time of the loss only.
chapter reference 4A4
120
How is a claim usually notified under an extended warranty policy?
Select one:
a. By telephone to the retailer who sold the product to the insured.
b. By completing a claim form on the insurer's website.
c. By telephone to a recommended repairer.
d. By telephone to the issuing company.
d. By telephone to the issuing company. chapter reference 4A5
121
```
In the event of a large and complicated fire claim, who is the insurer likely to appoint to investigate the loss and prepare a settlement figure?
Select one:
a. Risk manager.
b. Loss assessor.
c. Loss adjuster.
d. Approved repairer.
```
c. Loss adjuster.
| chapter reference 4B1A
122
```
The condition under a business interruption [BI] policy that there must be a property policy indemnifying the insured before the BI policy can operate is called the:
Select one:
a. express claims condition.
b. indemnity condition.
c. property damage proviso.
d. contribution condition.
```
c. property damage proviso.
| chapter reference 4B2B
123
```
What type of policy is most often written on a claims-made basis?
Select one:
a. Professional indemnity.
b. Public liability.
c. Employers' liability.
d. Products liability.
```
a. Professional indemnity.
| chapter reference 4B3
124
An insurer appoints approved repairers because they:
Select one:
a. provide nationwide locations and because they are often accessible 24/7.
b. reduce costs and improve quality.
c. reduce costs only.
d. provide nationwide locations.
b. reduce costs and improve quality.
| chapter reference 4C2
125
Jane has a comprehensive motor policy with a voluntary excess of £250. She is involved in a no-fault collision with a third party. Who could she use to claim this excess back from the responsible third party?
Select one:
a. Approved repairers administration office.
b. Uninsured loss recovery service.
c. Motor policy helpline.
d. Claims handler from the insurer's claims department.
b. Uninsured loss recovery service.
| chapter reference 4C3
126
When a third party claimant has been injured and makes a claim, the liability insurer is likely to:
Select one:
a. offer an initial 'ex gratia' payment to allow the third party to arrange medical treatment or therapy.
b. offer the third party medical rehabilitation only.
c. look to minimise its potential costs by providing immediate private medical care.
d. offer the third party rehabilitation which could include medical, vocational, or qualitative help.
d. offer the third party rehabilitation which could include medical, vocational, or qualitative help.
chapter reference 4C6
127
```
Which of these is NOT a pre-action protocol under the Civil Procedure Rules?
Select one:
a. Property damage.
b. Professional negligence.
c. Defamation.
d. Personal injury.
```
a. Property damage.
| chapter reference 4D
128
```
What type of claims are dealt with under the Claims Portal?
Select one:
a. Third party property damage claims.
b. Third party personal injury claims.
c. Motor Insurers' Bureau claims.
d. Accidental damage claims.
```
b. Third party personal injury claims.
| chapter reference 4D2
129
What is the main function of an insurer's claims system?
Select one:
a. To satisfy the insurer's external auditors.
b. To comply with the regulatory environment set by the FCA.
c. To provide an efficient means of recording and processing claims.
d. To act as a back up system for the policy administration system.
c. To provide an efficient means of recording and processing claims.
chapter reference 5A1
130
An insurance company has a business structure which is described as 'divisional' but where all claims are handled centrally. A disadvantage of having a centralised claims settlement method in this structure is that:
Select one:
a. it makes it difficult to co-ordinate between the different locations.
b. it is likely to reduce the contact between policyholders and local staff, which could impact negatively on customer retention.
c. the lack of local knowledge out-weighs the benefits of centralised underwriting.
d. it will always make the claims settlement process longer and potentially more expensive.
b. it is likely to reduce the contact between policyholders and local staff, which could impact negatively on customer retention.
chapter reference 5B2
131
An insurer outsources the rehabilitation services that they provide to some claimants. What is most likely to be their reason for doing so?
Select one:
a. It improves their control of the service provided and reduces claim costs.
b. It enables them to access specialist services and reduces claim costs.
c. It transfers the responsibility for doing so.
d. It reduces their regulatory costs and will improve their solvency ratio.
b. It enables them to access specialist services and reduces claim costs.
chapter reference 5C1
132
```
Specialists that ensure business continuity in the event of an interruption to the normal flow of business are called:
Select one:
a. business continuity companies.
b. disaster recovery companies.
c. business support companies.
d. outsourcing companies.
```
b. disaster recovery companies.
| chapter reference 5C3
133
```
Who will an insurer use to advise the maximum probable loss for a property risk?
Select one:
a. An engineer.
b. A surveyor.
c. An inspector.
d. An assessor.
```
b. A surveyor.
| chapter reference 5C4
134
```
Pierre has suffered a loss and the settlement of this is not likely to be straightforward. Who is he likely to appoint to prepare and negotiate a claim on his behalf?
Select one:
a. A loss adjuster.
b. A claims manager.
c. A loss assessor.
d. A risk manager.
```
c. A loss assessor.
| chapter reference 5C6
135
Steve suffered a loss on his buildings insurance when a storm blew over a garden wall. He has been asked to submit a quotation to repair it and for the builder to send the final invoice to the insurer direct. This type of claim settlement is known as:
Select one:
a. a cash settlement or payment of money.
b. paying for repairs.
c. replacement.
d. reinstatement.
b. paying for repairs.
| chapter reference 6A2
136
```
One of the methods used to project claims is known as the:
Select one:
a. Loss Projection.
b. Loss Ratio Reserving.
c. Loss Development Factor.
d. Loss Ratio Factor.
```
c. Loss Development Factor.
| chapter reference 6B1C
137
A policyholder failed to set the burglar alarm and the property was broken into and items were stolen. If setting the alarm was a warranty under the policy, what action is the insurer likely to take?
Select one:
a. It will pay the claim but limit the amount paid.
b. It will apply a compulsory excess.
c. It will apply an averaging clause.
d. It will repudiate the claim.
d. It will repudiate the claim.
| chapter reference 6C
138
Alex is completing a application form online to take out contents insurance. In doing so, he makes a guess that his contents are worth £20,000. If he suffered a loss of £28,000 and his contents should actually have been valued at £35,000, what action is the insurer most likely to take?
Select one:
a. They would pay the full £28,000 as it was an innocent mistake.
b. They would pay the £20,000 insured loss.
c. They would pay £16,000 of the amount claimed.
d. They would pay the £20,000 insured loss and refuse any future insurance cover.
c. They would pay £16,000 of the amount claimed.
| chapter reference 6F
139
```
The pro rata condition of average requires the sum insured to be what minimum percentage of the value at risk to avoid a penalty?
Select one:
a. 85%.
b. 100%.
c. 90%.
d. 75%.
```
b. 100%.
| chapter reference 6F
140
Under the ABI Personal Effects Contribution Agreement, how is the no-claims discount under a non-motor policy usually treated?
Select one:
a. It will usually be unaffected where a payment is made to another insurer under the agreement terms.
b. It will always be affected.
c. It will usually be unaffected where a payment made is under £5,000 in value.
d. It is not possible to say as each insurer will have their own terms.
a. It will usually be unaffected where a payment is made to another insurer under the agreement terms.
chapter reference 6G2
141
```
Under a property all-risks policy the insurers impose an excess of £1,000 for subsidence. With a claim for subsidence costing £4,250, what will the insurers pay to the insured?
Select one:
a. £4,250.
b. £3,250.
c. £5,250.
d. £1,000.
```
b. £3,250.
| chapter reference 6H
142
```
An insurance policy has a clause that indicates that claims below a certain amount will not be paid but claims above this amount will be met in full. This is known as a policy:
Select one:
a. sum insured.
b. excess.
c. franchise.
d. deductible.
```
c. franchise.
| chapter reference 6H
143
How is the Motor Insurers' Bureau funded?
Select one:
a. By a levy on all motor insurers.
b. Collected as a tax on each motor premium.
c. By government subsidy.
d. By a reinsurance pool funded by the Driver and Vehicle Licensing Agency.
a. By a levy on all motor insurers.
| chapter reference 6I
144
Nat was the victim of an accident where he was unable to trace the other driver. He submitted a claim to the Motor Insurers' Bureau [MIB] which was subsequently rejected. What further action, if any, could he take?
Select one:
a. He may complain to the FCA.
b. He may make a claim to an independent arbitrator.
c. The decision of MIB is final and binding so he is unable to take any further action.
d. He may complain to the Financial Ombudsman Service.
b. He may make a claim to an independent arbitrator.
| chapter reference 6I3
145
When determining a strategy for its claims management, senior management will want to focus on:
Select one:
a. compliance with FCA rules including the fair treatment of customers.
b. having trained and motivated claims staff.
c. the internal cost of running the claims department.
d. clear claims procedures, including reserving practices.
d. clear claims procedures, including reserving practices.
| chapter reference 7A1
146
```
Who has an overall responsibility for controlling costs for motor engineers, loss adjusters and solicitors?
Select one:
a. Underwriting manager.
b. Claims manager.
c. Financial director.
d. Credit control manager.
```
b. Claims manager.
| chapter reference 7A2
147
What is the difference between hard and soft leakage?
Select one:
a. Soft leakage is easier to quantity.
b. Soft leakage is always for a smaller amount.
c. Hard leakage is always for a smaller amount.
d. Hard leakage is easier to identify.
d. Hard leakage is easier to identify.
| chapter reference 7B
148
Which Act requires the Prudential Regulation Authority to consider financial stability in its regulation of authorised persons?
Select one:
a. The Insurance Companies Act 1982.
b. The Financial Services Act 2012.
c. The Insurance Companies Regulations 1994.
d. The Financial Services and Markets Act 2000.
b. The Financial Services Act 2012.
| chapter reference 7C1
149
```
The FCA regulates the conduct of all authorised firms and supervises firms based on a:
Select one:
a. three pillar system.
b. four principles system.
c. four pillar system.
d. three principles system.
```
a. three pillar system.
| chapter reference 7C1
150
What does the balance sheet of an insurance company show?
Select one:
a. The profit and loss of the company.
b. The risk management strategy.
c. The future strategy of the business.
d. The assets and liabilities of the company.
d. The assets and liabilities of the company.
| chapter reference 7C2
