IC45 Mock Test Sample 10
General Insurance Underwriting is the process of evaluating risks, determining insurability, and fixing appropriate premiums. Various rating methods such as class rating, individual rating, experience rating, and exposure rating are used to assess risks. Large and complex risks often require detailed inspections and audits before pricing decisions are made. Underwriting helps insurers remain competitive, profitable, and solvent while meeting customer needs. Product design, regulatory compliance, and profitability analysis are key functions within underwriting. Exposure measurement, premium rating methods, data mining, and de-tariffing support effective risk management. Break-even premium, policy classification, and compliance monitoring are essential elements of sound insurance operations.
Q1. Which rating is a tool to rate large complex risks where detailed inspection and audit are carried out?
a) Individual Risk Rating
b) Pure Premium Rate
c) Composite Rating
d) Experience Rating
Q2. Exposure measurement can be based on which of the following parameters?
a) Frequency
b) Severity
c) Extent of Concentration
d) All of the Above
Q3. In which method are risks with similar characteristics placed in the same class and charged the same rate?
a) Class Rating Method
b) Individual Rating Method
c) Both a and b
d) All of the Above
Q4. An ____________ can be defined as an insurance policy contract where specified risks are accepted against a predetermined premium.
a) Insurance Price
b) Insurance Product
c) Insurance Rate
d) Insurance Design
Q5. ____________________ is the process by which insurance companies develop policies according to policyholder requirements.
a) Insurance Product
b) Product Design
c) Rate
d) Pricing
Q6. _____________ refers to the process by which insurability of a risk is evaluated for acceptance or rejection.
a) Guarantor
b) Surety
c) Underwriting
d) Sustainer
Q7. Which approval system stipulates a specific period for the regulator to approve or disapprove rates?
a) Deemed Approval
b) Assume Approval
c) Conjecture Approval
d) Conceive Approval
Q8. How many ratios are commonly used to measure underwriting profitability?
a) One
b) Two
c) Three
d) Four
Q9. Which of the following is a disadvantage of the Experience Rating Method?
a) Changes in expanding and contracting limits during the experience period
b) Occurrence of loss is an uncommon event
c) Lack of policy information for each claim
d) All of the Above
Q10. Regulatory standards in India are primarily set through the ____________ guidelines.
a) File and Use
b) Fill and File
c) File and Upload
d) Download and File
Q11. Which of the following comes under Marine Risks?
a) Match Factories and Matches in Transit
b) Celluloid and Celluloid Articles Factories
c) Second-hand Machinery Against Breakage
d) Camphor Boiling Works
Q12. Which of the following is classified under Property and Casualty Underwriting?
a) Fire Underwriters
b) Life and Health Underwriters
c) Group Underwriters
d) Pension Underwriters
Q13. Rates are not the same as Premium.
a) True
b) False
c) Depends on Policy Type
d) Depends on Risk Category
Q14. Which underwriting processes are considered interdependent?
a) Selection of Risks and Policy Forms
b) Selection of Risks, Classification and Rating, and Policy Forms
c) Classification and Rating and Policy Forms
d) Policy Forms Only
Q15. Who is responsible for monitoring business activities and ensuring products comply with underwriting policy?
a) Agent
b) Appointed Actuary
c) Compliance Officer
d) Advocate
Q16. The concept where good risks subsidize bad risks to some degree is associated with which innovative rating program?
a) Rate Making
b) Regulatory Requirements
c) Data Mining
d) De-tariffing
Q17. Which method is also known as the Merit Rating Method?
a) Class Rating Method
b) Pure Risk Method
c) Loss Ratio Method
d) Individual Rating Method
Q18. Which premium rating method is commonly used in Group Mediclaim and Group Personal Accident Policies?
a) Retrospective Rating Method
b) Prospective Experience Rating Method
c) Schedule Rating Method
d) Exposure Rating Method
Q19. Why is underwriting important for insurers?
a) Helps determine premium, coverage terms, and discounts
b) Helps match customer needs with insurer standards
c) Helps insurers remain competitive, solvent, and profitable
d) All of the Above
Q20. The premium level at which an insurance company neither earns a profit nor incurs a loss is known as:
a) Net Premium
b) Gross Premium
c) Pure Premium
d) Break-even Premium
