IC45 Mock Test Sample 2
General Insurance Underwriting involves evaluating risks, setting premiums, and ensuring that insurance products remain financially sustainable. Underwriters use rating methods such as class rating, individual rating, and experience rating to assess risk accurately. Regulatory oversight by IRDAI ensures fair pricing, consumer protection, and proper product design. Important underwriting tools include warranties, cover notes, risk classification, and retention management. Innovations such as data mining support risk-based underwriting and improved decision-making. Floating policies provide flexibility for movable assets, while experience rating relies on historical claims data. Effective market conduct supervision, sound underwriting practices, and regulatory compliance help maintain stability and trust in the insurance industry.
Q1. The type of insurance that does not indemnify the pure loss, but ex ante agrees to make a payment upon the happening of a triggering event is called ______ .
a) Term Insurance
b) General Insurance
c) Paramedic Insurance
d) Parametric Insurance
Q2. When should the class rating method be applied?
a) When factors causing losses cannot be identified
b) When factors causing losses cannot be quantified
c) When statistics on factors causing loss are not accurate
d) When statistics on these factors are available and accurate
Q3. Which is/are the major concerns regulators face relating to rate making?
a) There are no proper traditional ways of classifying risks
b) Rates should not be inadequate, excessive, or unfairly discriminatory
c) Rates will be considered excessive
d) Both a and b
Q4. Which of these can be categorized as an Individual Rated product?
a) Packaged or customized products
b) Internal tariff rated products
c) Exposure rated products
d) Both a and b
Q5. Which policy can be underwritten by the operating office without approval from the controlling office?
a) Householders Policy
b) Industrial All Risk Insurance
c) Products Liability Insurance
d) Public Liability Insurance
Q6. Warranties are special conditions based on the statements made by the ______ .
a) Underwriter
b) Insurer
c) Insured
d) Broker
Q7. Which of the following factors is considered as a decision based on the underwriting approaches of the company?
a) Management Expense Ratio
b) Lines of Business to be Written
c) Competitiveness of Rating
d) All of the Above
Q8. Who regulates the insurance sector in India?
a) LIC
b) SEBI
c) IRDA
d) RBI
Q9. _____ is a temporary document evidencing receipt of premium and acceptance of risk pending policy issuance.
a) Renewal Notice
b) Terms and Conditions
c) Endorsements
d) Cover Note
Q10. Any communication received from a policyholder shall be responded to within ____ days of its receipt.
a) 5 Days
b) 10 Days
c) 15 Days
d) 30 Days
Q11. In a certain state, all insurance rates must be approved before use. This type of rating law is called _____.
a) Flex Rating
b) No Filing Required
c) File and Use
d) Prior Approval
Q12. In which of the following is the regulator NOT concerned when considering product evaluation?
a) Pricing
b) Design of Product
c) Definition of Product
d) Resourcing of Underwriting Personnel
Q13. The risk of ‘Fireworks Factories and Premises’ is classified under which class of insurance?
a) Miscellaneous
b) Hazard
c) Personal
d) Fire
Q14. What will a comparison of written premium and earned premium indicate?
a) Average Product Life
b) Product Penetration
c) Dynamism of the Insurer in Premium Growth
d) Regulatory Hurdles
Q15. Which innovative rating program enables an insurer to shift from rule-based to risk-based underwriting and rating?
a) De-tariffing
b) Rate Making
c) Data Mining
d) Regulatory Requirements
Q16. Which rating factor is associated with Personal Automobile Insurance?
a) Class of the Driver
b) Accident History
c) Occupation Class Code
d) Limit of Liability
Q17. Select the true statement regarding Floating Policies.
a) Floating Policies are valid for 5 years and renewable for another 5 years
b) No depreciation is deducted and claims are settled on market value basis
c) Floating Policies can also be used for medical insurance
d) In case of jewellery insurance, the sum insured is fixed based on declaration by the insured
Q18. The ideal amount of retention a company can have for any risk normally depends on factors like -
a) Type and Cost of Reinsurance
b) Classification of Risk
c) Concentration of Risks and Geographical Location
d) All of the Above
Q19. The prime goal of market conduct supervision of insurance business is -
a) To stop insurers from investing in stocks
b) To increase insurer profitability
c) To ensure severe competition in the insurance sector
d) To make certain that members of insurance and reinsurance professions are qualified and competent
Q20. What is/are the disadvantages of the experience rating system?
a) There are no incentives for loss reduction
b) It depends on completeness and credibility of historical data
c) It is far less accurate than manual rating
d) Both b and c
