IC01 Mock Test Sample 14
These questions cover core insurance concepts such as risk management techniques like retention and transfer, and reinsurance arrangements including proportional and surplus treaties. Key principles like insurable interest, hazards, perils, and pure risks are highlighted. The role of cover notes, underinsurance clause, and depreciation in policies is also tested. Regulatory aspects include Insurance Ombudsman and relevant Acts like Companies Act. Concepts such as IBNR claims, earned premium, and prediction using the law of large numbers are included. Practical understanding of contracts, complaints handling, and identification of risks versus non-risks forms an important part of these insurance fundamentals.
1. Retention and transfer are mainly ________ techniques.
- risk financing
- risk avoidance
- risk transfer
- risk planning
- risk reducing
2. In a Surplus Treaty, the risk and losses are shared between the Insurer and the Reinsurer ________________.
- Non Proportionally
- In the Proportion of Surplus to Retention
- In the Proportion of Retention to Surplus
- In a fixed percentage
- Equally
3. In which of the following lines of business, Insurable Interest need not exist at the time of loss?
- Life Insurance
- Marine Insurance
- Motor Insurance
- Property Insurance
- All of the above
4. Cover Notes are ________ .
- temporary documents issued for property insurance as a proof of insurance cover
- meant for giving fire insurance cover for stocks of a company at different locations
- given when the insurance policy has been finalised and given
- issued for motor policies as a proof that the Motor Vehicle Act has been compiled with
- None of the above
5. Choose the correct option from the following which explains the concept of insurance.
- Insurance is a process of retaining the risk
- Insurance is a process of increasing the risk
- Insurance is a process of ignoring the risks
- Insurance is a process of transferring the risk
- Insurance is a process of avoiding the risk
6. Identify the type of hazard in this example.
- Physical Hazard
- Political hazards
- Geographical hazards
- Moral hazards
- Loss hazards
7. Choose the risks that a Risk manager should identify.
- Neither Pure nor Speculative risk
- Just Speculative risks
- Both Pure and Speculative risks
- Just Pure risks
- No risk at all
8. Identify the situation that does not involve a risk.
- There is likelihood of a burglary tomorrow
- The cargo ship may not reach the harbour
- Madhav could fall ill tomorrow
- It is likely to rain tomorrow
- The sun is not likely to rise in the east tomorrow
9. Identify the claim payments made during the current year (other than current events).
- Claims that are outstanding
- IBNR reserve
- Claims for events that will never occur
- Claims for events that will occur in future
- Claims for events that have occurred in the previous year
10. Which of the following is not a Peril?
- Fire
- Proximity to water bodies
- Terrorism
- Riot
- All of the above
11. Which of the following Policies has an underinsurance Clause?
- Health Insurance
- Fire Insurance
- Motor Insurance
- Liability Insurance
- None of the above
12. Which of the following Acts deals with Directors' Liability?
- Motor Vehicles Act
- Companies Act
- Employee Compensation Act
- Mental Healthcare Act
- None of the above
13. Micro Insurance is meant for ________ .
- small families
- people who work in small companies
- people with low income
- NRIs living abroad
- All of the above
14. Complete the statement regarding prediction of future losses.
- always incorrect as statistical laws do not work
- likely to be closer to the actual outcome when adequately large amount of data is studied
- perfect as it is based on statistical law
- always incorrect due to new forces
- accurate as it is based on physical law
15. Difference between Net premium and Net earned premium.
- Half of net premium
- Reserve for unearned premium at year end - Reserve for unearned premium at the starting of the year
- Reserve for unearned premium at year end + Reserve for unearned premium at the starting of the year
- Reserve for unearned premium at year end
- Reserve for unearned premium at the starting of the year
16. In a Proportional treaty ___________________________.
- both premium and claims are proportionately shared
- nothing is proportionately shared
- just the commission is proportionately shared
- just the premium is proportionately shared
- just the claims are proportionately shared
17. Which of the following statements is INCORRECT with reference to complaints to insurance Ombudsman?
- Any delay in settlement of claim
- Any partial or total repudiation of claims
- Non-issuance of any insurance document after receipt of premium
- Any dispute on legal construction of policy wordings
- Cases where redressal amount is less than Rs 10 lakhs
18. Which of the following is not an element of a Contract?
- Consensus Ad Idem
- Consideration
- Competence
- Free Consent
- Lawful Object
19. Which of the following is not a Risk?
- Property
- Flood
- Liability
- Life Insurance
- None of the above
20. In which of the following Policies is Depreciation applicable?
- Fire Insurance Policies without Reinstatement Clause
- Life Insurance Policies
- Motor Insurance Policies with Zero Depreciation Clause
- Liability Policies
- All of the above
