IC45 Mock Test Sample 4
General Insurance Underwriting involves evaluating risks, setting premiums, and ensuring sustainable insurance operations. Underwriters use rating methods such as exposure rating, schedule rating, and class rating to assess risks accurately. Regulatory frameworks govern pricing, policy wording, disclosures, and market conduct. Technology improves underwriting through fraud detection, workflow management, document processing, and risk analysis. Floating policies provide flexible coverage for movable assets, while declaration policies adjust premiums based on actual values. Concepts such as loss reserves, pure premium calculations, liability risks, and claims ratios help insurers maintain financial stability. Deregulation and globalization have increased competition, requiring insurers to adopt innovative underwriting practices.
Q1. With regards to floating policies, which of the given options is true?
a) Jewellery should be insured based on valuation by a professional jeweller
b) No depreciation is deducted and claims are settled on market value basis
c) In case of jewellery insurance, the sum insured is fixed based on declaration by the insured
d) When there is a loss, the sum insured is automatically paid
Q2. _______ is an example of Liability Risk.
a) Business continuity after loss due to fire
b) House damage as a result of fire
c) Loss of income during restoration period
d) Defective product lawsuit
Q3. Market regulation includes which of the following activities?
a) Training
b) Recruitment
c) Pricing
d) Both Training and Pricing
Q4. How can faulty information enter the insurance system?
a) Careless processing of information
b) Incomplete disclosure
c) Inappropriate rate structure
d) Both a and b
Q5. In the case of ______, the insurer can immediately use the ratings after filing.
a) File and Use Laws
b) Use and File Laws
c) Flex Rating Laws
d) Prior Approval Laws
Q6. Which rating approach determines premium by assessing exposure to loss independent of actual claims?
a) Risk Ratio Method
b) Loss Ratio Method
c) Retrospective Rating Method
d) Exposure Rating Method
Q7. Under IRDAI regulations, what must be clearly stated in a general insurance policy?
a) Record of previous claims
b) Details of previous policies
c) Sum Insured
d) All of the Above
Q8. What is the estimated amount an insurer expects to pay in the future for reported but unsettled losses?
a) Reserve Ratio
b) Loss Reserve
c) Regulatory Reserve
d) Surplus Reserve
Q9. Which of the following is a result of deregulation?
a) Competition reduced in the insurance sector
b) Insurance companies entered various financial markets
c) Banks and retailers entered the insurance market
d) Both b and c
Q10. Which of the following is an exclusion under marine insurance for transformers?
a) Breakage
b) Loss as a result of sunken cargo
c) Damage due to water
d) Both a and b
Q11. For every 1,000 cars insured at ₹7 lakh each, 5 are stolen annually. What is the pure premium per car?
a) ₹3,500
b) ₹4,500
c) ₹7,500
d) ₹12,500
Q12. Which sectors benefit from IT systems in the insurance industry?
a) Document and Image Management
b) Workflow Management
c) Bancassurance and Finance
d) All of the Above
Q13. A city has 1,000 bikes valued at ₹50,000 each, and 4 bikes are stolen annually. What is the pure premium per bike?
a) ₹100
b) ₹200
c) ₹300
d) ₹400
Q14. For completion of Form A (Questionnaire), Class of Insurance refers to:
a) Segment reporting list under IRDAI Accounts Regulations
b) Rating methodology used
c) Method of claim settlement
d) Both a and b
Q15. Which statement is associated with the Schedule Rating System?
a) It does not recognize characteristics not reflected in experience
b) It is a type of class rating method
c) It is used only for large exposures
d) It cannot be used for small entities
Q16. Which benefit can be achieved through technology-based underwriting?
a) Ethical Underwriting
b) Fraud Detection
c) Moral Hazard
d) Adverse Selection
Q17. Under a Fire Declaration Policy, refund of premium is subject to retention of ____ provisional premium.
a) 15%
b) 25%
c) 50%
d) 65%
Q18. Whenever the target claims ratio exceeds ___, the insurer needs to examine the risk at a budgeted level of underwriting loss.
a) 70%
b) 75%
c) 80%
d) 85%
Q19. Which of the following can be considered under Miscellaneous Insurance?
a) Motor Insurance
b) Fire Insurance
c) Cargo Insurance
d) Material Damage Insurance
Q20. Which documents are required for class-rated products?
a) Claim Form and Policy Wording
b) Proposal Form and Policy Wording
c) Claim Form, Proposal Form, and Sales Literature
d) All of the Above
