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Cert CII IF1 > IF1 Set 2 > Flashcards

IF1 Set 2 Flashcards

1
Q

Insurance is a mechanism for risk:
A. management
B. measurement
C. transfer
D. control

A

C. Transfer

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2
Q

Organisation linked with Risk Management

A

Association of Insurance and Risk Managers in Industry and Commerce (AIRMIC)

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3
Q

A building survey is used by insurers as a method of risk:
A. identification
B. analysis
C. control
D. management

A

A. Identification

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4
Q

What is the most effective method of risk control?
A. Financial control measures
B. Elimination
C. Reduction
D. Physical control measures

A

B. Elimination

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5
Q

Insurance is classified as a:
A. physical control measure
B. risk removal method
C. financial control measure
D. risk prevention method

A

C. Financial control measure

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6
Q

Betting on the Grand National is a:
A. pure risk
B. speculative risk
C. fundamental risk
D. particular risk

A

B. Speculative risk

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7
Q

Which of these risks is insurable?
A. A fundamental risk
B. A speculative risk
C. A non-financial risk
D. A pure risk

A

D. A pure risk

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8
Q

For a risk to be insurable it must be:
A. fortuitous
B. non-fortuitous
C. inevitable
D. deliberate

A

A. Fortuitous

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9
Q

A lightning strike is defined as a:
A. physical hazard and a peril
B. physical hazard
C. peril
D. moral hazard

A

C. Peril

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10
Q

An excess is a form of:
A. re-insurance
B. co-insurance
C. dual insurance
D. self-insurance

A

B. Co-insurance

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11
Q

Which of the following buyers of insurance may be exempt from compulsory insurance requirements?
A. Private individuals
B. Partnerships
C. Public bodies
D. Companies

A

C. Public bodies

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12
Q

A company wishing to transact insurance business must be authorised to do so by which body?
A. The ABI
B. The CII
C. The BIBA
D. The PRA

A

D. The PRA

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13
Q

Which type of insurance provider is owned by shareholders?
A. A proprietary company
B. A mutual company
C. Lloyd’s
D. A captive company

A

A. A proprietary company

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14
Q 
Which of these people accepts a risk on behalf of a syndicate in the Lloyd's market?
A. A broker
B. An underwriter
C. An insurer
D. A managing agent
A

B. An underwriter

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15
Q

Peter’s motor garage hands out brochures for Super Motor Car Insurance but they do not offer any advice on the insurance company’s products. Therefore they would be classified as:
A. a principal
B. an introducer appointed representative
C. an authorised person
D. an appointed representative

A

B. an introducer appointed representative

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16
Q

How can a non-Lloyd’s broker transact business in the Lloyd’s market?
A. Via an ‘Umbrella’ arrangement
B. Via a ‘sub-broker’
C. Only after complying with Lloyd’s separate code of conduct
D. Either directly or via a Lloyd’s broker

A

D. Either directly or via a Lloyd’s broker

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17
Q

What is the main activity of consolidators?
A. They offer centralised services such as training
B. They offer appointed representative status to members
C. They acquire brokerage firms
D. They make purchasing negotiations with insurers

A

C. They acquire brokerage firms

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18
Q 
An internet site which collects a set of quotations from a number of different providers is called:
A. a facilitator
B. an introducer
C. an aggregator
D. a consolidator
A

C. An aggregator

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19
Q 
When a reinsurer transfers a risk to another reinsurer, this is called:
A. co-insurance
B. retroceding
C. facultative reinsurance
D. underwriting
A

B. retroceding

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20
Q 
Jane has had an accident in her car and when she needs to call the insurance company to discuss her claim, she will probably speak to:
A. professional claims personnel
B. an underwriter
C. a loss adjuster
D. a risk manager
A

A. professional claims personnel

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21
Q 
The member of staff in an insurance company whose role it is to ensure that the firm abides by FCA rules, is called:
A. a risk manager
B. an FCA officer
C. a compliance officer
D. an actuary
A

C. a compliance officer

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22
Q 
If the essential elements of a contract are missing, the contract may be declared invalid from the beginning. The legal term for this is:
A. void ad infinitum
B. void ad litem
C. void ad idem
D. void ab initio
A

D. void ab initio

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23
Q 
If an insured decides they no longer wish to take out a payment protection insurance contract, how many days do they have to cancel without penalty?
A. 7 days
B. 14 days
C. 28 days
D. 30 days
A

D. 30 days

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24
Q 
Callum's car is destroyed by a fire. His insurance policy is automatically terminated as the subject matter of the policy no longer exists. This is called:
A. consideration
B. fulfilment
C. frustration
D. ratification
A

B. fulfilment

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25
Q 
Which one of the following arises where a person is entrusted with someone else’s goods and it becomes a requirement that they act in a certain way to protect the
property in an emergency? Agency by...
A. authority
B. consent
C. ratification
D. necessity
A

D. necessity

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26
Q 
The most usual way of creating an agency is by a legally enforceable agreement. This is called agency by:
A. consent
B. ratification
C. necessity
D. principal
A

A. consent

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27
Q 
Which of these is the duty of a principal to an agent?
A. Obedience
B. Remuneration
C. Accountability
D. Due care and skill
A

B. Remuneration

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28
Q 
When an agent has a TOBA agreement with a principal, this is called:
A. express authority
B. apparent authority
C. implied authority
D. agency authority
A

A. express authority

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29
Q 
Paul takes out car insurance on his car which means his car is:
A. the subject matter of the insurance
B. his financial interest
C. the subject matter of the contract
D. the insurer’s insurable interest
A

A. the subject matter of the insurance

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30
Q 
Which insurance principle includes the features of subject-matter, legal relationship and financial value?
A. Insurable interest
B. Utmost good faith
C. Offer and acceptance
D. Contribution
A

A. Insurable interest

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31
Q 
The case which illustrates the principle that an expectation of acquiring insurable interest at some time in the future may not create an insurable interest in general non-marine insurance is:
A. Currie v. Misa (1875)
B. Hyde v. Wrench (1840)
C. Lucena v. Craufurd (1806)
D. Castellian v. Preston (1883)
A

C. Lucena v. Craufurd (1806)

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32
Q

Mark wants to insure a car he is about buy. When must his insurable interest in the car exist in order for a valid insurance contract to be formed?
A. When he gets a quote from the insurers
B. When he completes a proposal form
C. At inception of the policy
D. When he makes a claim

A

C. At inception of the policy

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33
Q 
How can an insurer place a continuing duty of disclosure of material facts onto a customer?
A. Under a policy condition
B. Under common law
C. By agreement
D. By negotiation
A

A. Under a policy condition

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34
Q

Which kind of change in circumstance would a Public Liability insurer be particularly keen to know about?
A. Any change in the number of staff members
B. Any change in the business activities of the insured
C. Any storage of property at other premises
D. Any car accidents caused by employees

A

B. Any change in the business activities of the insured

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35
Q

Nichola’s policy has a clause which says that the insurers must give her 7 days’ notice of cancellation if she has breached her duty of good faith. Her insurers discover a
material fact which has not been disclosed but they ignore this for 30 days. Can they then contact her and cancel the policy?
A. No, because their delay means that they are stopped from enforcing their rights
B. No, because they must not have made sufficient enquiries before accepting the policy
C. Yes, they can cancel the policy ab initio
D. Yes, they can cancel the policy from 7 days after they found out about the breach

A

A. No, because their delay means that they are stopped from enforcing their rights

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36
Q 
If a proposer is not sure whether a fact is material, what does current practice suggest they should do?
A. Declare it to the insurer
B. Check the proposal form
C. Not declare it
D. Declare it when making a claim
A

A. Declare it to the insurer

37
Q

In which circumstance is an insurer unable to decline a claim payment?
A. Fraudulent misrepresentation by a commercial insurer
B. Innocent misrepresentation by a personal insurance customer
C. Fraudulent misrepresentation by a personal insurance customer
D. Misrepresentation by a commercial customer concerning something they ought to have known about

A

B. Innocent misrepresentation by a personal insurance customer

38
Q

When do insurers apply the doctrine of proximate cause?
A. If the cause of loss is straightforward
B. If there is a third party involved
C. If there is a chain of events leading to a loss
D. If the policy covers the peril that caused the loss

A

C. If there is a chain of events leading to a loss

39
Q 
Which category of peril is not mentioned at all in a policy wording?
A. Insured perils
B. Excepted or excluded perils
C. Direct perils
D. Uninsured or unnamed perils
A

D. Uninsured or unnamed perils

40
Q 
The proximate cause of loss is always:
A. an insured peril
B. the dominant cause
C. the first cause
D. a named hazard
A

B. the dominant cause

41
Q 
Which of the following is an example of a benefit policy?
A. Personal accident
B. Motor
C. Home
D. Commercial package
A

A. Personal accident

42
Q

If an insurer offers a replacement item from a particular retailer to indemnify a policyholder for a loss and the policyholder refuses to accept the item offered, the insurer will usually:
A. refuse to settle the claim in any other way
B. pay the insured the amount they would have paid the retailer
C. repair the item instead
D. ask the policyholder to get a quote from another retailer

A

B. pay the insured the amount they would have paid the retailer

43
Q

In which situation is an insurer unlikely to offer replacement as a method of indemnity?
A. Car write offs where the car is less than a year old
B. Jewellery claims where an insurer can obtain a discount from a particular retailer
C. Car write offs where the car is more than a year old
D. Glass insurance where the insurer has an arrangement with a specialist company

A

C. Car write offs where the car is more than a year old

44
Q 
Luther's property is damaged by fire and his insurers offer to take responsibility for restoring it to its pre-loss condition. This method of indemnity is called:
A. reinstatement
B. retrieval
C. restoration
D. replacement
A

A. reinstatement

45
Q 
In which type of policy is the value of the subject matter of the insurance agreed from inception by the insurer and the insured?
A. A valued policy
B. A liability policy
C. An unvalued policy
D. A market value policy
A

A. A valued policy

46
Q 
The policy condition where the insurer makes an automatic allowance for uplift to the sum insured declared at the policy inception and the policyholder pays a premium based on a modest increase, is called:
A. day one reinstatement
B. the reinstatement memorandum
C. betterment
D. first loss
A

A. day one reinstatement

47
Q 
Manufacturers’ stock in trade insurance includes an indemnity for raw materials and, specifically:
A. labour
B. transport
C. handling costs
D. wear and tear
A

A. labour

48
Q 
Which type of claim settlement for household goods would usually be subject to a deduction for "wear and tear?"
A. Kitchen appliances
B. Clothing
C. Computer equipment
D. Electronics
A

B. Clothing

49
Q

Which type of cover has no stated limit of indemnity?
A. Third party injury under a motor policy
B. Insurance for farming stock
C. Pet insurance
D. Property insurance on a reinstatement basis

A

A. Third party injury under a motor policy

50
Q 
The average condition deals with which kind of issue:
A. deductibles
B. under-insurance
C. new for old
D. reinstatement
A

B. under-insurance

51
Q 
Which kind of policy cannot have an average condition?
A. Fire policies
B. Theft insurance
C. Household policies
D. Liability insurance
A

D. Liability insurance

52
Q 
What is the principle used when an insurer steps into the shoes of the insured to recover the amount paid to the insured, from a third party?
A. Liability
B. Contribution
C. Subrogation
D. Indemnity
A

C. Subrogation

53
Q

If an insurer does not have a contribution condition in their policy wording what must they do if the insured claims from them?
A. Pay the claim in full and recover from the other insurers
B. Pay the claim in full themselves
C. Pay only their proportion of the claim
D. Turn down the claim

A

A. Pay the claim in full and recover from the other insurers

54
Q

Carl and Jo run a business together. Their office has been flooded. When discussing making a claim they realise that they each have a policy covering this risk. Carl’s policy has a sum insured of £40,000. Jo’s is £20,000. Both policies are subject to average and the total value at risk is £80,000. The damage will cost £20,000 to repair.
How much will Jo’s insurer pay out on this occasion?
A. £5,000
B. £10,000
C. £15,000
D. £20,000

A

A. £5,000

55
Q 
Under common law, what must an insurer do before exercising its subrogation rights?
A. Indemnify the insured
B. Seek the permission of the insured
C. Check any market agreements in place
D. Indemnify the third party
A

A. Indemnify the insured

56
Q

Which case defined the relationship between subrogation and indemnity?
A. Lister v. Romford Ice and Cold Storage Ltd (1957)
B. Yorkshire Insurance Co. v. Nisbet Shipping Co. Ltd (1961)
C. Castellain v. Preston (1883)
D. North British and Mercantile v. Liverpool and London and Globe (1877)

A

C. Castellain v. Preston (1883)

57
Q 
Under common law, if a neighbour causes damage to your property, you are entitled to pursue compensation under:
A. tort
B. statute
C. contract
D. subrogation
A

A. tort

58
Q

What can the insured do if he wishes to keep an item that has been declared beyond economic repair?
A. He can keep it and receive a full settlement from the insurer
B. He can negotiate with the salvage company to buy back the item
C. He can negotiate with the insurer to have the salvage value deducted from the settlement
D. He cannot keep the item once it is beyond economic repair

A

C. He can negotiate with the insurer to have the salvage value deducted from the settlement

59
Q 
The ABI has a Memorandum of Understanding regarding the subrogation of which types of claims?
A. Household
B. Travel
C. Motor
D. Commercial
A

C. Motor

60
Q 
Which kind of policy is not subject to the rules that flow from the principle of indemnity and therefore does not allow an insurer to use their subrogation rights to
pursue damages against a third party?
A. Motor insurance
B. Commercial insurance
C. Benefit policies
D. Fire insurance
A

C. Benefit policies

61
Q 
Under the terms of the Riot (Damages) (Amendment) Regulations 2011, insurers may have rights of recovery against the police for riot damage within how many days of a riot?
A. 7 days
B. 14 days
C. 28 days
D. 42 days
A

D. 42 days

62
Q 
Which of the following is an example of a compulsory insurance for a private customer?
A. Contents
B. Health
C. Motor
D. Travel
A

C. Motor

63
Q 
For which of these occupations is professional indemnity insurance compulsory?
A. Solicitors
B. Police officers
C. Politicians
D. Beauticians
A

A. Solicitors

64
Q 
What is the standard market limit of indemnity for Employers’ Liability Insurance?
A. £5 million
B. £10 million
C. £15 million
D. £20 million
A

B. £10 million

65
Q

What does Employers’ Liability Insurance compensate employees for?
A. Professional negligence
B. Damage to personal possessions whilst as work
C. Litigation for negligence at work
D. Bodily injury arising out of and in the course of their employment

A

D. Bodily injury arising out of and in the course of their employment

66
Q

What level of Professional Indemnity Insurance does the Insurance Distribution Directive state must be held by insurance intermediaries?
A. £1 million per claim or £1.85 million in aggregate
B. £1 million or £1.5 million depending on size
C. €1 million per claim or €1.85 million in aggregate
D. €1 million or €1.5 million depending on size

A

C. €1,300,380 million per claim or €1,924,560 million in aggregate

67
Q 
With which Act is the ‘grey list’ associated with?
A. Insurance Act 2015
B. Deregulation Act 2015
C. Consumer Rights Act 2015
D. Equality Act 2010
A

C. Consumer Rights Act 2015

68
Q

What does the term ‘privity of contract’ mean?
A. The contract is not in the public domain
B. Anyone can enforce the contract
C. A person can only enforce a contract if they are party to it
D. A person who will benefit from the contract can enforce it

A

C. A person can only enforce a contract if they are party to it

69
Q 
Which of the following bodies is responsible for the stability and resolvability of systemically important financial institutions?
A. The PRA
B. The FPC
C. The FOS
D. The FCA
A

A. The PRA

70
Q 
As well as the prudential regulation of small firms, what other regulatory role does the FCA have?
A. Regulation of conduct
B. Regulation of performance
C. Regulation of ethics
D. Regulation of profit
A

A. Regulation of conduct

71
Q 
Who may carry out a controlled function in a regulated firm?
A. A regulated person
B. An approved person
C. An authorised person
D. A compliance person
A

B. An approved person

72
Q 
To gain authorisation from the PRA to transact business in the EU, a company must be operated by:
A. fit and proper persons
B. diligent persons
C. competent persons
D. controlled persons
A

A. fit and proper persons

73
Q 
Which two bodies must include in their annual reports an account of how they have coordinated during the year?
A. The FCA and the FPC
B. The PRA and the FCA
C. The FPC and the FOS
D. The PRA and the FPC
A

B. The PRA and the FCA

74
Q 
Under ICOBS, how long is the cooling-off period for a retail customer for most general insurance contracts?
A. 7 days
B. 14 days
C. 21 days
D. 28 days
A

B. 14 days

75
Q 
Which body is primarily concerned with serious crime prevention and the recovery of the proceeds of crime?
A. NCA
B. POCA
C. FCA
D. FOS
A

A. NCA

76
Q 
The process of creating a series of transactions to conceal the origin of money is called:
A. concealment
B. legitimising
C. layering
D. integration
A

C. layering

77
Q 
Which legislation made it a specific criminal offence to fail to disclose that someone else is engaged in money laundering?
A. The Data Protection Act 1998
B. The Criminal Justice Act 1993
C. The Proceeds of Crime Act 2002
D. The Money Laundering Regulations 1993
A

C. The Proceeds of Crime Act 2002

78
Q 
Which legislation made it a criminal offence to tip off a person suspected of money laundering?
A. The Criminal Justice Act 1993
B. Proceeds of Crime Act 2002
C. The Money Laundering Regulations 2017
D. The Data Protection Act 1998
A

A. The Criminal Justice Act 1993

79
Q 
For how long must client verification records be kept?
A. 2 years
B. 5 years
C. 7 years
D. 10 years
A

B. 5 years

80
Q 
For firms advising on insurance, the FCA requires that records of training and competence are kept for at least:
A. 3 years
B. 5 years
C. 6 years
D. 10 years
A

A. 3 years

81
Q 
Which of these is classed as personal data, rather than as sensitive personal data?
A. Ethnic origin
B. Address
C. Membership of a trade union
D. Political opinions
A

B. Address

82
Q

Data processing has to be with the data subject’s consent or necessary for a defined purpose. Which of these is not a defined purpose?
A. The administration of justice
B. The protection of the vital interests of the data subject
C. Entering into a contract
D. Obtaining data for re-sale

A

D. Obtaining data for re-sale

83
Q 
To whom can an individual apply if they believe their details have been used in contravention of the Data Protection Act 1998?
A. The Complaints Commissioner
B. The Data Commissioner
C. The Information Commissioner
D. The Police Commissioner
A

C. The Information Commissioner

84
Q

Which one of the CII’s five central principles in its Code of Ethics focuses specifically on equality and diversity?
A. Highest ethical standards and integrity
B. The best interests of each client
C. Treating people fairly
D. High standard of service

A

C. Treating people fairly

85
Q

What expectation does the FCA have in relation to an employee’s level of competence at work?
A. The employee’s competence with be appropriate to the nature of the business
B. The employee will be an expert in their field
C. The employee has achieved a pre-defined set of qualifications for their role
D. The employee’s skills are suitable for the job undertaken

A

A. The employee’s competence with be appropriate to the nature of the business

86
Q 
What level of claim is protected by the FSCS for non-compulsory insurance compensation?
A. 50%
B. 75%
C. 90%
D. 100%
A

C. 90%

87
Q

One of the FCA definitions of an eligible complainant is:
A. A charity with an annual income of less than £6.5 million
B. A business with a group annual turnover of less than £2 million
C. A partnership which employs fewer than 20 persons
D. A trust with net asset value of less than £3 million

A

A. A charity with an annual income of less than £6.5 million

88
Q 
What is the time limit within which the FCA expects that a complaint will be resolved?
A. 4 weeks
B. 8 weeks
C. 10 weeks
D. 12 weeks
A

B. 8 weeks

89
Q

Which of the followings statements relating to the FOS is TRUE?
A. The insurer can reject the Ombudsman’s decision
B. The insured can reject the Ombudsman’s decision
C. The maximum financial award the FOS can make is £100,000
D. It is concerned with commercial insurances for larger enterprises

A

B. The insured can reject the Ombudsman’s decision

Cert CII IF1 (2 decks)

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