1. What was the proportion calculation in Case Study 12 for determining how much of the standing charges is covered through business operations?
a) Proportion = Total standing charges / Net profit
b) Proportion = Standing charges met from business operations / Total standing charges = 1.8 Cr / 3 Cr = 60%. So the claim shall be payable in proportion 1.8:3 or 18/3 = 60% of the assessed standing charges. This is because Rs.1.8 Cr was being met from the business and Rs.1.2 Cr was met through other resources
c) Proportion = Net loss / Sum insured
d) Proportion = Sum insured / Total assets
e) Proportion = ICOW / Total standing charges
2. What should the Recommendations section (last part) of the Survey Assessment Report contain?
a) Only the surveyor's fee invoice
b) The Survey report should end with clear recommendations to the insurers for the action to be taken on their part: confirm the loss (full or part) has occurred to the property held insured under the policy, the loss has been caused by an indemnifiable cause, the loss has occurred within policy period, and the loss location is the same as the insured location
c) The insured's future business projections
d) A list of documents still pending from the insured
e) Recommendations for renewal premium adjustment
3. Which of the following is an advantage of the Difference Basis over the Additions Basis?
a) It requires a detailed list of all standing charges to be maintained
b) Since there is no need to list out specified standing charges, the chance of inadvertently omitting any standing charge is eliminated
c) It results in higher claim settlements for the insured
d) It is the only basis accepted by courts in disputes
e) It provides a fixed indemnity amount regardless of actual loss
4. What is the New Business Clause designed to address in Consequential Loss insurance?
a) Policies issued to newly established businesses that have no prior trading history
b) Loss of Profits insurance sometimes effected on new business for which past annual results would not be available for comparison in case of loss in the first twelve months
c) Extension of coverage to new branches opened after the policy inception
d) Expansion of the indemnity period for new product lines
e) Cover for experimental or prototype products not yet in regular production
5. How are Internal Environment Factors defined in Chapter 2?
a) Factors that are only outside the Business organization
b) Factors that are only related to financial performance
c) Factors that are only related to government regulations
d) Factors that refer to anything within the Business organization and under the control of the Organization, whether tangible or intangible
e) Factors that are outside the control of management
6. Why did Minerva Universal's attempt to introduce consequential costs coverage in 1797 fail?
a) Lack of government support
b) High premium rates
c) Lack of accounting standards
d) No demand from businesses
e) Competition from other insurers
7. What is the example given about a pool of brick buildings for underwriting purposes?
a) A pool of brick buildings in city centers will produce 1% loss rate
b) A pool of brick buildings near the sea will produce 2% loss rate
c) A pool of brick buildings over 50 years old will produce 3% loss rate
d) A pool of brick buildings located no more than 5 miles from a fire station will produce a specified loss rate of say 1% of the value of the insured property
e) A pool of brick buildings with sprinklers will have zero loss rate
8. Under Condition (o) - Arbitration - what must happen if a dispute arises about the quantum to be paid under the MLOP policy?
a) The insured must immediately take the matter to a civil court
b) The dispute shall be independently referred to the decision of a sole Arbitrator, to be appointed in writing by the parties within 30 days, or to a panel of three Arbitrators if they cannot agree on a single arbitrator; the proceedings shall be under the Arbitration and Conciliation Act 1996
c) The insurer's decision on the quantum is final and binding
d) The insured must accept the insurer's offer or forfeit all claim rights
e) Disputes must be referred to the Insurance Regulatory Authority
9. What is Technological Risk defined as in Chapter 2?
a) Unforeseen changes in the manufacturing, delivery or distribution of a company's product or service
b) The risk of cyber attacks only
c) The risk of technology becoming obsolete only
d) The risk of poor internet connectivity only
e) The risk of technology budget overruns only
10. What should the Assessment Report contain as its first part (Introduction)?
a) Only the claim reference number and date of loss
b) Begin with a brief introduction of the claim and give a brief summary of the contents of the report so that anyone can get a fair idea of the contents of the Survey report
c) The final claim amount recommended for payment
d) The list of all documents submitted by the insured
e) The policy terms and conditions verbatim
