LM1

Question 1

What is a fortuitous event?

Answer 1

To be insurable - must be an accident or unexpected

Question 2

What is a fundamental risk?

Answer 2

Large amounts of people effected

Question 3

What is a speculative risk?

Answer 3

Non insurance - gambling

Question 4

What is a particular risk?

Answer 4

Doesn’t happen to everyone

Question 5

What is a pure risk?

Answer 5

The possibility exists - example travelling on a plane

Question 6

Risk is assessed in two ways, what are they?

Answer 6

Frequency and severity

Question 7

What is the subject matter of insurance?

Answer 7

The thing that is insured

Question 8

What is a peril?

Answer 8

An event like fire or break in, what gives rise to a loss

Question 9

What is insurance?

Answer 9

A risk transfer mechanism

Question 10

What is facultative insurance?

Answer 10

Reinsurance purchased by an insurer for a single risk or a defined package of risks

Question 11

What is primary and secondary insurance?

Answer 11

Primary insurance pays first i.e. your medical bills, however secondary insurance pays some or all costs left after the primary has What is paid

Question 12

What does Cedent mean?

Answer 12

A party who passes the financial obligation for potential losses to the insurer

Question 13

What are PNI Clubs?

Answer 13

protection and indemnity - Provides cover to shipowners

Question 14

What is the financial ombudsman service?

Answer 14

Settle complaints between consumers and businesses

Question 15

What does the international underwriting association do?

Answer 15

Protect and strengthen business environments for its members

Question 16

What is a managing agent?

Answer 16

Organisations that have been given authority on behalf of the insurer to accept risk, issuing and handling claims

Question 17

What does a members agent do?

Answer 17

Advise their clients on advantages and disadvantages of investing in the Lloyds market

Question 18

What does the council of Lloyds do?

Answer 18

They are responsible for the management and supervision of the market

Question 19

What is pooling of a risk?

Answer 19

Its when the losses of the few are met by the contribution of many

Question 20

What is subrogation?

Answer 20

Following payment the insurer takes over the insureds right to recover payments from third party’s responsible for the loss

Question 21

What does proximate cause mean?

Answer 21

The cause of the lost is straightforward and there is no need to investigate for a long period

Question 22

When must key information be disclosed to the insured?

Answer 22

During the proposal stage

Question 23

What is risk perception?

Answer 23

Probability combined with likelihood of a risk occurring

Question 24

How much of a non compulsory insurance claim with the FS comp scheme pay if the insurer becomes insolvent?

Answer 24

90% of the claim

Question 25

What does a company can be wound up mean?

Answer 25

This can be the ultimate action when a company fails to meet FCA requirements

Question 26

Who does an appointed representative usually act on behalf of?

Answer 26

An intermediary

Question 27

Who usually contacts underwriters on a firm order?

Answer 27

The broker

Question 28

What is a firm order?

Answer 28

An offer made by or on behalf of an insured to an insurer to enter into a contract

Question 29

Death in service usually amounts to how many lump sum payments?

Answer 29

Two to four

Question 30

Which insurance sector is most likely to have a waiting period?

Answer 30

Marine

Question 31

What is an example of contingency insurance?

Answer 31

Death and disgrace

Question 32

What is covered under midstream insurance?

Answer 32

Pipelines

Question 33

What is the principle between supply and demand?

Answer 33

The price of the commodity and the quantity traded

Question 34

Major catastrophe effects the insurance life cycle in what way?

Answer 34

It shortens it

Question 35

When the price of goods or services change the impact on the demand for them is known as?

Answer 35

Elasticity

Question 36

What is a main reason insurers leave the market?

Answer 36

Large loss suffered

Question 37

What does captive insurance mean?

Answer 37

Solely writes business for sister companies within the same group

Question 38

What does contract certainty mean?

Answer 38

To ensure all parties are fully aware of the coverage and terms

Question 39

What is the number of members in the council of Lloyds?

Answer 39

9

Question 40

The maximum financial reward for FOS is?

Answer 40

£375,000

Question 41

What act does whistle blowing fall under?

Answer 41

Public interest disclosure act

Question 42

What is the maximum sentence for money laundering?

Answer 42

14 years

Question 43

What is the maximum amount of time verification records can be stored for?

Answer 43

5 years

Question 44

What happens when there is a serious breach of Lloyds/FCA rules?

Answer 44

Action is taken by Lloyds and the FCA

Question 45

How many high level principles, concerning placement with subscription markets have been issued?

Answer 45

5

Question 46

What is the body responsible for enforcement of data protection requirements?

Answer 46

Information commissioners office

Question 47

What proportion of business written in the London market is from UK based insureds?

Answer 47

25%

Question 48

What type of insurance covers risks of predetermined class of business?

Answer 48

Treaty

Question 49

Applying for insurance/paying premium is an example of which stage of money laundering?

Answer 49

Placement

Question 50

Within syndicates underwriters are employed by?

Answer 50

Managing agents

Question 51

What is the organisations issued high level principles, concerning placement of business with subscription markets?

Answer 51

BIPAR ( European Federation of insurance and financial intermediaries)

Question 52

What is the body responsible for identifying emerging risks?

Answer 52

Financial policy committee

Question 53

A new Lloyds insurance broker wishing to offer independent advice must receive approval from which body?

Answer 53

FCA

Question 54

What is the body responsible for promoting interests of the London market?

Answer 54

International underwriting association of London

Question 55

Management structure and rules by which Lloyds are governed by which body?

Answer 55

Acts of parliament

Question 56

Solvencies II main purpose?

Answer 56

Make insurers more capable of withstanding shocks

Question 57

What is a corporate offence under money laundering?

Answer 57

Failing to prevent bribery

Question 58

Surplus lines status for businesses in USA?

Answer 58

Local or admitted markets cannot accept the risk without asking first

Question 59

Which body is responsible for the implementation/admit of international sanctions in effect in the UK?

Answer 59

HM treasury

Question 60

Which body maintains claims for Lloyds only?

Answer 60

Xchanging

Question 61

What is a benefit of law of large numbers?

Answer 61

Assists insurers to make reliable claim payment predictions

Question 62

How does a broker usually place complex risks within the London market?

Answer 62

Electronic placing systems and direct communication