IC45 Mock Test Sample 7
General Insurance Underwriting involves risk assessment, premium determination, policy structuring, and regulatory compliance. Underwriters use tools such as proposal forms, warranties, deductibles, experience rating, exposure rating, and generic rating to evaluate and price risks. Reinsurance expands underwriting capacity and helps manage large exposures. Regulators focus on fair, adequate, and non-discriminatory rates while ensuring customer protection. Reserves such as unearned premium reserves and loss reserves are maintained to meet future obligations. Technology, including data mining and software solutions, supports underwriting decisions. Marine insurance warranties, floating policies, group insurance rating methods, and planned underwriting losses are important concepts in insurance operations.
Q1. ______ is an example of an Express Warranty in Marine Insurance.
a) The ship should not deviate from its normal course of journey
b) The ship under voyage must be seaworthy at commencement of voyage
c) The venture of voyage should be legal
d) The sailing of the ship will be conducted with armed guards
Q2. As per IRDAI, which of the following can be classified as a Large Risk?
a) Liability insurance of ₹25 crore or more per event
b) Liability insurance of ₹50 crore or more per event
c) Liability insurance of ₹75 crore or more per event
d) Liability insurance of ₹100 crore or more per event
Q3. Information on _______ is most likely to be sought in a proposal form.
a) Detailed description of risk
b) Matters not material to the risk
c) Personal hobbies unrelated to insurance
d) Marketing preferences of the proposer
Q4. Why is an Unearned Premium Reserve considered an insurer’s liability?
a) It represents unpaid claims only
b) It relates to premiums received for future coverage obligations
c) It represents investment income
d) It reflects reinsurance recoveries only
Q5. If an insured cannot declare separate stock values for each godown but can declare the total stock value, which policy may be used?
a) Stock Storage Policy
b) First Loss Policy
c) Package Policy
d) Fire Floating Policy
Q6. Which system represents a compromise between the Prior Approval system and the No-File system?
a) Use and File System
b) Flex Rating Regulations
c) File and Use Laws
d) All of the Above
Q7. Which premium rating method is commonly used in Group Mediclaim and Group Personal Accident policies?
a) Exposure Rating Method
b) Retrospective Rating Method
c) Prospective Experience Rating Method
d) Schedule Rating Method
Q8. Reinsurance is an essential part of underwriting because it enables insurers to:
a) Expand underwriting capacity
b) Eliminate all claims
c) Avoid regulatory requirements
d) Guarantee profits
Q9. Data mining software can be used for:
a) Taxation analysis
b) Rate making
c) Regulatory trend analysis
d) All of the Above
Q10. A percentage deductible of 10% means:
a) Insurer pays 10% of premium in claim
b) Premium increases by 10% after claim
c) Insured bears 10% of the loss amount
d) Insurer bears only 10% of the loss amount
Q11. The third step in selection and implementation of a software solution is:
a) Rating of Vendors
b) Evaluating Vendor Competence
c) Evaluating Ease of Implementation
d) Evaluating Available Solutions
Q12. Most non-life insurance covers are written on a _________ basis.
a) Monthly
b) Six-Monthly
c) Yearly
d) Five-Yearly
Q13. Under which underwriting process can an underwriter modify forms with warranties, clauses, and special conditions?
a) Retention and Reinsurance
b) Policy Forms
c) Classification and Rating
d) Selection of Risks
Q14. What is Planned Underwriting Loss?
a) Loss due to reduced customers
b) Loss due to regulatory burden
c) Loss due to current expenses exceeding built-in margins
d) Loss due to excessive profits
Q15. When extra hazardous risks are referred to the controlling office, which detail should be provided?
a) Solvency Ratio of Operating Office
b) Risk Inspection Report and Additional Questionnaires
c) Completed Claim Form
d) Marketing Plan for the Risk
Q16. What is a major concern of regulators regarding rate making?
a) Rates should not be inadequate
b) Rates should not be excessive
c) Rates should not be unfairly discriminatory
d) All of the Above
Q17. With respect to Generic Rating, which statement is correct?
a) It is based on analysis of exposure by the underwriter
b) It is based on individual experience
c) It applies to risks of the same class or category
d) It is based solely on claim frequency
Q18. _______ is the first step in Experience Rating.
a) Trend and Level Losses
b) Assemble Data
c) Estimate Future Possibilities
d) Apply Loss Development
Q19. A straight deductible of ₹5,000 means that _______.
a) Insurer pays all losses up to ₹5,000
b) Premium increases by ₹5,000 after claim
c) Insurer charges ₹5,000 for every claim filed
d) Losses below ₹5,000 are not paid by the insurer
Q20. Issuance of a certificate by the Principal Officer / Designated Officer confirms that:
a) Product documents are technically sound and fair to both insurer and customer
b) Premium contains no loading element
c) Premium charged is the lowest possible
d) Product is necessarily class rated
