IC45 Mock Test Sample 8
General Insurance Underwriting is the process of evaluating risks, determining premiums, and deciding policy terms based on the probability and severity of losses. Underwriters consider factors such as staff capability, market conditions, inflation, and reinsurance availability while making decisions. Technology-based underwriting improves efficiency by shortening the sales cycle and enhancing risk management. Insurance products may be class-rated, customized, named-peril, or package policies. Regulatory requirements mandate product filings, fair pricing, and transparent documentation. Policy wordings can be modified through endorsements or riders. Profitability assessment, premium calculation, prospectus contents, and compliance reviews are essential elements of successful underwriting operations.
Q1. During underwriting, the underwriter has to judge the probability of operation of peril in relation to:
a) Time of the loss
b) Frequency of losses
c) Severity of losses
d) Both frequency and severity of losses
Q2. Which statement is correct with respect to customized insurance policies?
a) Registered insurance agents can also provide customized policies
b) A customized insurance policy is always an All Risk Policy
c) These are class-rated products
d) Pricing is generally linked to a similar ready-made risk
Q3. In class-rated products, which of the following is considered a package policy?
a) Burglary Insurance
b) Retail Health Insurance
c) Office Insurance
d) Both Retail Health Insurance and Office Insurance
Q4. Which system is considered a compromise between the Prior Approval System and the No-File System?
a) Flex Rating System
b) Use and File System
c) File and Use System
d) No File System
Q5. Which factor should be considered while making underwriting decisions?
a) Marketing Expenditure
b) Intermediaries and Commissions Offered
c) Capability of Staff
d) Both Marketing Expenditure and Capability of Staff
Q6. Which of the following can be a prime cause of underwriting loss?
a) Need for regulatory approval of rates
b) Lack of reinsurance availability
c) High inflation
d) Both lack of reinsurance availability and high inflation
Q7. Policy wordings can be changed or revised through:
a) Attaching Riders
b) Endorsements
c) Revising the complete policy wording
d) Both Riders and Endorsements
Q8. Which of the following is a benefit of technology-based underwriting?
a) Moral Hazard
b) Adverse Selection
c) Shortened Sales Cycle
d) Increased Claim Frequency
Q9. Under Prior Approval Laws:
a) Filing requirements are eliminated
b) Approval is required only for substantial rate changes
c) Rates must be filed and approved before use
d) Insurers can use rates immediately after filing
Q10. Which of the following is included in insurance documents?
a) Proposal Form
b) Statement of Vision of the Insurer
c) Code of Conduct of Insurance Agents
d) Both Proposal Form and Statement of Vision
Q11. In the Indian context, the insurance market is in the ______ stage.
a) Developing
b) Emerging
c) Growth
d) Maturity
Q12. While filing an insurance product with IRDAI, the insurer needs to justify:
a) Rate of the Product
b) Design of the Product
c) Amount of Premium Charged
d) All of the Above
Q13. Standard Fire and Special Perils Policy and Motor Comprehensive Insurance are examples of:
a) All Risks Cover
b) Named Peril Policy
c) Special Cover
d) Multi-Peril Policy
Q14. Who may act as a moderator and review product design, rates, and terms for logic and reasonableness?
a) Advocate
b) Compliance Officer
c) Agent
d) Appointed Actuary
Q15. Given Pure Premium = ₹50, Fixed Expenses = ₹13.75, Variable Expense Factor = 10%, Profit & Contingency Factor = 5%, the rate per unit exposure will be:
a) ₹65.00
b) ₹70.00
c) ₹75.00
d) ₹80.00
Q16. Which of the following is NOT likely to be the responsibility of the Insured’s Lawyer?
a) Ensuring documents use unambiguous language
b) Explaining the scope of cover clearly
c) Ensuring policy documents are of an agreed size
d) Ensuring proposal forms request material information
Q17. Insurance companies are regulated in all the following areas EXCEPT:
a) Sales Practices and Consumer Protection
b) Rate Regulation
c) Number of Policies Sold
d) Formation and Licensing of Insurers
Q18. Estimation of underwriting profitability begins with determination of:
a) Earned Premium
b) Written Premium
c) Both are the same
d) Net Premium
Q19. Which of the following is included in the contents of a prospectus?
a) Insured Details
b) Property Details
c) Extent of Insurance Cover
d) Bank Details
Q20. If rates are based on non-insurance technical data, the insurer should:
a) Defend the logic used to estimate claim costs
b) Demonstrate reinsurance market rates only
c) Show variation from current market rates only
d) Ignore historical claims experience data
