IC01 Mock Test Sample 21
These IC01 Licentiate questions focus on reinsurance concepts such as facultative, excess of loss, retrocession, and ceding. They cover insurance fundamentals like insurable interest, contra proferentem, loss reserves, and conditions precedent and subsequent in contracts. Regulatory aspects include IRDA functions, Section 45 of the Insurance Act, and FDI limits in insurance. Topics also include brokers’ commissions, RTI, grievance redressal, and microinsurance rules. Risk management concepts such as risk retention, dynamic risk, and mis-selling are included. Additionally, marine insurance clauses, fire insurance claims, and policy participation types (with-profit vs non-participating) are addressed along with underwriting, policy validity, and claim principles.
Q1. Select the INCORRECT statement with reference to 'Reinsurance'.
A. In Facultative reinsurance a number of insurers agree to pool all premiums received and claims are paid from that pool.
B. Excess of loss is an arrangement wherein the reinsurer steps in only if there is a loss that exceeds the specified limit.
C. Excess of loss ratio treaties become operational when net claims ratios of the insurer exceed specified limits in a financial year.
D. Ceding is the term used when the primary insurer passes risk on to a reinsurer and the reinsurer accepts the business.
E. Retrocession occurs when a reinsurer reinsures with another reinsurer or insurance company.
Q2. ______ drafts the Institute of cargo clauses .
A. Newyork underwriters
B. London underwriters
C. Tokyo underwriters
D. Marine underwriters
E. India underwriters
Q3. Which of the following does not have an Insurable Interest?
A. Ownership
B. Bailee's responsibility for goods entrusted to him
C. Proposer's interest in the life of his friend
D. Contractor on the building being constructed by him
E. None of the above
Q4. Brokers are remunerated by way of _______ by the insurers or reinsurers.
A. Fixed monthly fees
B. Salaries
C. Commissions
D. Consultancy fees
E. None of the above
Q5. Insurance companies have _____________ in the subject matters that they have insured so they can insure these again with other insurance companies which forms the legal basis for reinsurance.
A. keen interest
B. insurable interest
C. high stakes
D. goodwill
E. compassion
Q6. Under Section 45 of the Insurance Act, what is the maximum time limit upto which a Policy of Life Insurance could be called in question?
A. Eight Years
B. Three Years
C. Two Years
D. Four Years
E. Six Years
Q7. RTI means ____________ .
A. Right to infrastructure
B. Right to information
C. Right to immunity
D. Right to intelligence
E. Right to inside information
Q8. What is a Loss Reserve?
A. Money kept in the bank to meet claim payments
B. Money kept aside for increase in loss ratio
C. Provision in the books of the Insurance Company to account for loss liability
D. Variation in Claim Payment from Surveyor Assessment
E. None of the above is correct
Q9. Which of the following statement(s) is/are FALSE with respect to Micro Insurance?
A. Micro Insurance can be done by both Life and Nonlife general insurers as per the tie ups
B. A life insurer can collect premium for issuing a policy covering both life and non life risks
C. A life insurer has to settle claims for non life policies issued by it
D. A non life insurer has to pass on the premium collected for policies covering life risks to the life insurer
E. None of the above
Q10. What does Contra Proferentem mean?
A. Contracts should always be interpreted in favour of the Insurer
B. Contracts should always be interpreted in favour of the Insured
C. In case of ambiguity in the contract, an interpretation that favours the party who did not draft the contract is preferred
D. The reasonable expectation of the customer is respected
E. Customer suggestions are always given first priority
Q11. When the person exposed to the risk determines that they are able to bear the loss associated with the risk, this is called as Risk ________ .
A. Reduction
B. Avoidance
C. Retention
D. Transfer
E. Prevention
Q12. Which of the following does not fall under the preview of IRDA?
A. Adequacy of premium rates
B. IT infrastructure of the insurer
C. Guidelines on investments done by insurer
D. Solvency limits of the insurer
E. Issuing licences to insurers
Q13. Fill in the blanks with appropriate options: Conditions Precedent to Liability are those ______ whereas Condition Subsequent are those ______.
A. which require the insured to disclose any material fact, to make sure the policy is valid; which require notification of changes while the policy is valid
B. which require notification of changes when the policy is valid; which require the insured to disclose any material facts to make sure the policy is valid
C. which require the insured to give notice of an event happening within a specified period of time and also comply with certain situations prior to the occurrence of the loss; which require a notification of changes while the policy is valid
D. which require the insured to disclose any material facts to make sure the policy is valid; which require the insured to give notice of an event happening within a specified period of time and also comply with certain situations prior to the occurrence of the loss
E. which require notification of changes while the policy is valid; Which require the insurer to give notice of any event happening
Q14. In which year the Foreign Direct Investment was allowed in insurance?
A. Year 1947
B. Year 1949
C. Year 2000
D. Year 2001
E. Year 2015
Q15. Which risk is associated with changes in consumer preferences?
A. Financial Risk
B. Non-financial Risk
C. Static Risk
D. Dynamic Risk
E. Catastrophic Risk
Q16. Choose the correct option which explains mis-selling.
A. Mis-selling is doing the right thing such as not lying or stealing but being honest
B. Mis-selling is not doing the right thing such as not lying or stealing but being honest
C. Mis-selling is when incorrect information is given to potential policyholders in an attempt to get them to buy insurance
D. Mis-selling is when correct information is given to potential policyholders in an attempt to get them to buy insurance
E. Mis-selling is not being customer centric and customer oriented
Q17. M/S Tilak had a fire at its warehouse last week but fortunately there was no damage at all. The company already has an effective fire insurance policy. Suggest if the company can claim the compensation for fire.
A. The company can claim 20% compensation
B. The company can claim 50% compensation
C. The company can claim 75% compensation
D. The company can claim full compensation
E. The company cannot claim any compensation
Q18. Choose the statement that does not relate to IRDAI’s grievance redressal mechanism.
A. To support the insurance industry with sector level data to enable data based and scientific decision-making including pricing and framing of business strategies
B. To facilitate an environment where the insured avails proper procedures and redressal mechanisms
C. To put in place regulations to address complaints efficiently and with speed
D. To empower consumers by educating them on grievance redressal mechanism
E. To oversee compliance and protection of policyholders’ interests
Q19. Judge the following statement: “Non-participating Policy holders’ premiums are lesser than the with-profits policy.”
A. Incorrect, Non-participating premiums are higher than with-profits
B. Incorrect, Non-participating premiums are lower than without-profits policies
C. Incorrect, Non-participating premiums are same as with-profits policies
D. Incorrect, Non-participating premiums are higher than without-profits policies
E. Correct, Non-participating premiums are lesser than with-profits policies
Q20. When does the real value of life assurance is experienced?
A. Payment of premium
B. Claim
C. Employment
D. Mortgage
E. Festive seasons
