Q 1. What term is used to describe business risks due to their potential for both loss and profit?

a) Speculative risks

b) Dynamic risks

c) Financial risks

d) Static risks

e) Operational risks

Report

Q 2. What type of risks arise from the changes occurring in various aspects of society?

a) Economic risks

b) Social risks

c) Dynamic risks

d) Environmental risks

e) Political risks

Report

Q 3. Which of the following is an example of a business risk ?

a) Winning a lottery

b) Sudden illness

c) Destruction of property by fire

d) Unexpected promotion

e) Finding a lost item

Report

Q 4. What is identified as the reward for uncertainty bearing in economic enterprises?

a) Loss

b) Progress

c) Innovation

d) Stability

e) Profit

Report

Q 5. what principle lies at the basis of the modern joint stock company?

a) Limited liability

b) Spreading risks over a wider field

c) Sole proprietorship

d) Partnership agreements

e) Profit maximization

Report

Q 6. Which of the following is an example of a pure risk ?

a) Economic recession

b) Market competition

c) Cyclone

d) Technological advancement

e) Social unrest

Report

Q 7. How can risks be managed ?

a) By avoiding them entirely

b) By ignoring their existence

c) By transferring them to others

d) By minimizing or eliminating them through better management techniques

e) By accepting them without taking any action

Report

Q 8. What is defined as "future uncertainty as regards financial loss" ?

a) Business profits

b) Economic fluctuations

c) Market competition

d) Business risks

e) Pure risks

Report

Q 9. What term is used to describe events outside human control or intervention?

a) Acts of God

b) Acts of Nature

c) Acts of Government

d) Acts of Humanity

e) Acts of Fate

Report

Q 10. In the example provided, a mutual fund scheme has certain operational costs. What additional expenditure is incurred for managing the scheme?

a) Fund Management Fees

b) Trustee Fees

c) Marketing and Distribution Expenses

d) All of the above

e) Rs.30,000/-

Report

Q 11. What term is used to describe the amount paid by individuals who are exposed to a risk to a common fund in the insurance business?

a) Pure profit

b) Pure premium

c) Administrative expense

d) Risk contribution

e) Loss payment

Report

Q 12. Which category of risk involves uncertainties related to consumer behavior and industrial unrest?

a) Technical risks

b) Social risks

c) Economic risks

d) Political risks

e) Environmental risks

Report

Q 13. In the example provided, what is the difference between the "pure premium" and the final rate of premium?

a) Rs.20/-

b) Rs.25/-

c) Rs.30/-

d) Rs.100/-

e) Rs.130/-

Report

Q 14. what factor influences the rate of contribution (premium) in insurance?

a) Future predictions

b) Type of vehicle

c) Geographical area

d) Population density

e) Government regulations

Report

Q 15. How are risks categorized in fire insurance?

a) According to the size of the property

b) According to the location of the property

c) According to the nature of occupancy

d) According to the age of the property

e) According to the market value of the property

Report

Q 16. What characteristic must a risk have to be considered insurable?

a) It must be a speculative risk

b) It must be a dynamic risk

c) It must involve wear and tear

d) It must involve a fortuitous or accidental element

e) It must involve inherent vice

Report

Q 17. What type of risk includes examples like inflation, tax policy, and competition?

a) Technical risks

b) Social risks

c) Economic risks

d) Political risks

e) Environmental risks

Report

Q 18. What characteristic must the loss caused by a risk have to be insurable?

a) It must be impossible to measure in terms of money

b) It must be of sentimental value

c) It must have intrinsic value

d) It must be measurable in terms of money

e) It must be agreed upon by experts

Report

Q 19. How are probabilities associated with events expressed?

a) As percentages only.

b) As fractions and percentages.

c) As decimals only.

d) As fractions only.

e) As whole numbers.

Report

Q 20. Before de-tariffing of business, who was responsible for fixing premium rates in Tariff classes of business?

a) Insurance companies.

b) Insurance Regulatory and Development Authority.

c) Insurance Information Bureau.

d) Tariff Advisory Committee.

e) Regulatory Authority.

Report

Q 21. What are the three important elements involved in the concept of insurance?

a) Risk, premium, and loss.

b) Subject-matter of insurance, peril, and financial loss.

c) Insurance company, insured, and policy.

d) Underwriting, rating, and claims processing.

e) None of the above.

Report

Q 22. What is the objective of insurance?

a) To generate profit for insurance companies.

b) To provide protection against financial losses caused by fortuitous events.

c) To spread risks among the few insureds.

d) To maximize claims processing efficiency.

e) None of the above.

Report

Q 23. What is underwriting in insurance?

a) The process of spreading risks over a group of insureds.

b) The process of assessing and accepting risks for insurance.

c) The process of processing insurance claims.

d) The process of marketing insurance policies.

e) None of the above.

Report

Q 24. What is the purpose of reinsurance in the insurance industry?

a) To increase the premium income of the primary insurer.

b) To reduce the number of claims processed by the insurer.

c) To transfer a part of the risk to another insurer and reduce the primary insurer's exposure to heavy losses.

d) To eliminate the need for insurance policies.

e) None of the above.

Report

Q 25. Which external factor might affect export sales ?

a) Labour problems such as strikes

b) Changes in exchange controls

c) Increase in market interest rates

d) Non-availability of raw materials

e) Decrease in consumer spending power due to recession

Report

Q 26. What is the broad sense of the term "risk"?

a) Exposure to danger

b) Chance of bad consequences

c) Exposure to mischance

d) Exposure to events which cannot be predicted with absolute certainty

e) Hazardous situations

Report

Q 27. What do individuals or organizations become exposed to through financial market transactions?

a) Political instability

b) Technological advancements

c) Economic fluctuations

d) Environmental regulations

e) Social changes

Report

Q 28. Which entities are included in the financial market?

a) Manufacturing companies

b) Government agencies

c) Educational institutions

d) Banks, non-banking finance companies, mutual funds, insurance companies, etc.

e) Healthcare organizations

Report

Q 29. What are some examples of risk factors that financial benefits are exposed to?

a) Technological advancements

b) Environmental conservation efforts

c) Imprudent management of funds and investment portfolio

d) Social welfare policies

e) Fiscal responsibility measures

Report

Q 30. Why are business risks generally considered less predictable?

a) They occur with precise regularity

b) They benefit society and the economy

c) They are covered by insurance policies

d) They do not occur with any precise degree of regularity

e) They are easily measurable by insurers

Report

Q 31. Why are business risks generally uninsurable?

a) Insurers lack sufficient knowledge of various factors affecting such losses

b) Business risks are predictable and manageable

c) Insurance policies are too expensive for businesses

d) Insurers do not want to cover these risks

e) Businesses prefer to manage risks themselves

Report

Q 32. Which of the following is a reason why insurance cover for business risks is not provided?

a) Insurers have a deep understanding of economic factors

b) Business risks occur with precise regularity

c) Insurers can accurately assess the risk involved

d) Providing such covers would inhibit economic progress

e) Businesses prefer insurance protection over risk management

Report

Q 33. How are business risks typically managed ?

a) Through insurance policies

b) By avoiding or controlling them through general and functional management strategies

c) By transferring them to insurers

d) By accepting them as inevitable

e) By investing in high-risk ventures

Report

Q 34. what would happen if insurance cover for business risks were provided?

a) Economic progress would be encouraged

b) Businesses would have better risk management practices

c) Insurers would have better knowledge of economic factors

d) Insured parties would rely on insurance protection rather than making efforts to avoid losses

e) Insurance premiums would decrease

Report

Q 35. why do enterprising businessmen or industrialists accept risks in their enterprises?

a) To ensure guaranteed profits

b) To avoid stagnation in economic development

c) To minimize overall economic progress

d) To discourage innovation and progress

e) To maximize losses

Report

Q 36. Which technique for controlling business risks involves proper planning of production, efficient operation of plant and equipment, and provision for adequate supply of raw materials?

a) Diversification

b) Market research

c) Functional management

d) Geographic location

e) Economic enterprise

Report

Q 37. what is an important feature of modern economic enterprise for controlling business risks?

a) Stagnation

b) Diversification

c) Concentration

d) Limitation

e) Centralization

Report

Q 38. How can diversification be achieved?

a) By focusing on a single product

b) By limiting geographical locations

c) By dealing with a few large customers

d) By concentrating on one area of the world

e) By producing and marketing a wide diversity of products or operating on a global scale

Report

Q 39. What does the institution of the modern joint stock company allow?

a) Limited investment opportunities

b) Small-scale manufacturing operations

c) Concentration of risks in a few shareholders

d) Large-scale manufacturing operations with losses spread over a large number of shareholders

e) Direct control of business operations by shareholders

Report

Q 40. How can risks be spread over a period of time?

a) By concentrating investments in a single period

b) By avoiding reserve funds

c) By creating reserve funds to be utilized in bad trading conditions

d) By investing only in joint stock companies

e) By ignoring fluctuations in economic conditions

Report

Q 41. why is the reduction and elimination of risks important?

a) To increase competition among businesses

b) To maximize potential losses

c) To protect the interests of individual businesses

d) To enhance economic prosperity of the nation

e) To promote social unrest

Report

Q 42. what distinguishes pure risks from speculative risks?

a) Pure risks result in losses, while speculative risks may result in either loss or profit.

b) Pure risks are caused by human behavior, while speculative risks are caused by natural events.

c) Pure risks are predictable, while speculative risks are unpredictable.

d) Pure risks are avoidable, while speculative risks are unavoidable.

e) Pure risks occur independently of dynamic risks, while speculative risks are influenced by dynamic factors.

Report

Q 43. How are pure risks distinguished from dynamic risks?

a) Pure risks are avoidable, while dynamic risks are unavoidable.

b) Pure risks are caused by changes in the economy, while dynamic risks are caused by human behavior.

c) Pure risks result in losses independently of dynamic risks, while dynamic risks occur due to changes in the economy.

d) Pure risks are predictable, while dynamic risks are unpredictable.

e) Pure risks occur due to negligence or dishonesty, while dynamic risks occur due to natural events.

Report

Q 44. what distinguishes pure risks or static risks from other types of risks?

a) Pure risks occur with a degree of regularity and are generally predictable based on past experience and statistical techniques.

b) Pure risks occur randomly and are unpredictable.

c) Pure risks are always avoidable.

d) Pure risks are always covered by insurance policies.

e) Pure risks always result in profit.

Report

Q 45. what are the components that make up the final rate of premium in the insurance business?

a) Only loss payments

b) Loss payments and loss expenses

c) Loss payments, loss expenses, and agency commission

d) Loss payments, loss expenses, agency commission, and expenses of management

e) Loss payments, loss expenses, agency commission, expenses of management, and margin for reserves for unexpected heavy losses

Report

Q 46. suggest about the relationship between the degree of hazard and the premium charged in insurance?

a) There is no relationship between the degree of hazard and the premium charged.

b) The degree of hazard has a minimal impact on the premium charged.

c) The degree of hazard determines the premium charged; properties with higher hazards attract higher premiums.

d) The degree of hazard is inversely proportional to the premium charged.

e) The degree of hazard is directly proportional to the premium charged.

Report

Q 47. Why is classification of various types of property necessary in insurance?

a) To increase administrative complexity

b) To confuse policyholders

c) To minimize the impact of hazards

d) To fix the rate of premium on a fair and equitable basis

e) To reduce the amount of claims

Report

Q 48. why is a system of classification of risks adopted in insurance?

a) To confuse policyholders

b) To increase administrative complexity

c) To minimize the impact of hazards

d) To facilitate proper assessment of common hazards and reasonable forecast of future losses

e) To reduce the amount of claims

Report

Q 49. why are private cars further sub-divided based on the cubic capacity of the engine?

a) To confuse policyholders

b) To increase administrative complexity

c) To minimize the impact of hazards

d) To facilitate proper assessment of accident potential and determine the premium

e) To reduce the amount of claims

Report

Q 50. What principle is adopted in assessing the premium for insurance?

a) The principle of dynamic risk assessment

b) The principle of speculative risk assessment

c) The principle of classifying risks and assessing premiums so that each class of risk is self-supporting

d) The principle of random risk assessment

e) The principle of avoiding risk assessment

Report

Q 51. What is an example of a risk that is considered insurable?

a) Wear and tear on property

b) Accidental damage to motor vehicles

c) Speculative investment in the stock market

d) Dynamic changes in the economy

e) Inherent vice in perishable commodities

Report

Q 52. Which of the following assets can typically be insured for their intrinsic value?

a) Ancestral property with sentimental value

b) Antiques with no market value

c) Works of art with subjective value

d) Buildings, machinery, stocks, and household contents

e) Personal belongings with emotional attachment

Report

Q 53. How is the loss payable in liability insurance typically determined?

a) By the sentimental value to the insured

b) By the economic value of the property

c) By the amount of monetary compensation awarded at law

d) By the specific sum insured

e) By the reference to the earning capacity of the insured

Report

Q 54. why would a personal accident policy typically exclude death or disablement caused by intentional self-injury or suicide?

a) Because intentional self-injury or suicide is not covered by the Indian Penal Code

b) Because intentional self-injury or suicide is not considered a financial loss

c) Because intentional self-injury or suicide is contrary to public policy

d) Because intentional self-injury or suicide is not considered a risk

e) Because intentional self-injury or suicide is covered by professional indemnity

Report

Q 55. Why is professional indemnity insurance typically limited to protecting against claims for professional negligence and not for professional misconduct or malpractice?

a) Because professional misconduct or malpractice is not covered by the Indian Penal Code

b) Because professional misconduct or malpractice is not considered a risk

c) Because professional misconduct or malpractice is covered by personal accident policies

d) Because professional misconduct or malpractice is contrary to public policy

e) Because professional misconduct or malpractice is covered by motor vehicle insurance policies

Report

Q 56. What numerical values are assigned to events in probability theory?

a) Events with higher likelihood are assigned values between 1 and 100.

b) Impossible events are assigned a value of 1 and inevitable events a value of 0.

c) Events with higher likelihood are assigned values closer to 100.

d) Impossible events are assigned a value of 0 and inevitable events a value of 1.

e) Events with higher likelihood are assigned values between 0 and 1.

Report

Q 57. Why are war and kindred risks and nuclear risks typically excluded from property insurance policies on land?

a) Because these risks are covered by personal accident policies

b) Because these risks are not considered catastrophic

c) Because loss or damage caused by these risks is considered to be beyond the capacity of commercial insurance

d) Because these risks are not considered high catastrophic losses

e) Because these risks are covered by professional indemnity insurance

Report

Q 58. Under what circumstances can goods in transit by sea or air be covered against war and kindred risks?

a) Goods in transit by sea or air are always covered against war and kindred risks

b) Goods in transit by sea or air are never covered against war and kindred risks

c) Goods in transit by sea or air can be covered against war and kindred risks if the cargo is of low value

d) Goods in transit by sea or air can be covered against war and kindred risks because they are considered low catastrophic risks

e) Goods in transit by sea or air can be covered against war and kindred risks because the catastrophic element on land risks is not present in sea or air transit

Report

Q 59. what factors must insurers take into account when adjusting premium rates?

a) Traffic density and road conditions only.

b) Road conditions, traffic density, population, and enforcement of traffic regulations.

c) Population and pedestrian density.

d) Sudden increases in the number of vehicles and laxity in the enforcement of traffic regulations.

e) Road conditions, traffic density, and population only.

Report

Q 60. What condition must be met for an insurer to offer insurance against a particular type of risk?

a) The risk must be covered by personal accident policies

b) The risk must be independently exposed to risk

c) The risk must not be catastrophic

d) There must be a large number of exposure units that are sufficiently alike and independently exposed to risk

e) The risk must be covered by professional indemnity insurance

Report

Q 61. What is an example of a risk related to production as outlined?

a) Decrease in consumer spending power

b) Changes in exchange controls

c) Labour problems such as strikes or work to rule tactics

d) Increase in market interest rates

e) Changes in fashion and consumer preferences

Report

Q 62. How is the "mathematical value" of a risk determined?

a) By using past loss experience and expressing it as a percentage of the total value of the insured property

b) By using mathematical formulas to calculate the potential loss of the insured property

c) By using past loss experience and expressing it as a fixed amount per unit of the insured property

d) By using past loss experience and expressing it as a percentage of the total number of insured units

e) By using past loss experience and expressing it as a percentage of the total number of claims filed

Report

Q 63. What principle allows insurers to predict or forecast future losses accurately?

a) The principle of causation

b) The principle of compensation

c) The principle of large numbers or the law of probability

d) The principle of indemnity

e) The principle of insurable interest

Report

Q 64. How does the law of probability enable insurers to estimate or forecast future loss experience?

a) By analyzing the past loss experience of a small number of instances

b) By examining the past loss experience of a large number of instances over a short period

c) By examining the past loss experience of a small number of instances over a long period

d) By analyzing the past loss experience of a large number of instances over a long period

e) By analyzing the past loss experience of a small number of instances over a short period

Report

Q 65. What role does statistics play in insurance operations?

a) Statistics are used to calculate premiums in life insurance only.

b) Statistics help estimate premiums and revise them based on loss experience in general insurance.

c) Statistics are not relevant in insurance operations.

d) Statistics are used to determine premiums in both life and general insurance.

e) Statistics are only used by the Tariff Advisory Committee.

Report

Q 66. What is the significance of having a large number of risks available for insurance?

a) It allows insurers to charge higher premiums.

b) It increases the likelihood of small volumes of business.

c) It ensures accurate estimates of underlying probability and reduces the difference between actual and estimated future losses.

d) It decreases the accuracy of probability estimates.

e) It reduces the need for historical data in underwriting.

Report

Q 67. Why is it challenging to determine the mathematical value of risks in general insurance?

a) Because life insurance presents difficulties in collecting statistical data.

b) Because insurers do not use statistical methods in general insurance.

c) Because it is not possible to obtain experience from a large number of similar cases exposed to the same hazard in general insurance.

d) Because risk measurement is not important in general insurance.

e) Because insurers do not use scientific methods in determining premiums in general insurance.

Report

Q 68. What does the insurance company rely on to predict the amount of losses that will occur?

a) Historical data and individual predictions

b) Premiums collected and expenses incurred

c) The accuracy of underwriting decisions

d) The frequency of claims filed

e) Historical data and assumptions about future events

Report

Q 69. Which factor might lead to a firm failing to sell its products at the planned price?

a) Increase in market interest rates

b) Reduced consumer spending power due to recession

c) Changes in exchange controls

d) Availability of raw materials

e) Increase in competitors' prices

Report

Q 70. What is a risk associated with working capital financing mentioned?

a) Changes in fashion and consumer preferences

b) Increase in market interest rates

c) Decrease in consumer spending power

d) Failure of debtors to settle their debts

e) Non-availability of raw materials

Report

IC S01 - Exam Principles and Practice of Insurance and Survey and Loss Assessment

IC S01 - Exam Principles and Practice of Insurance and Survey and Loss Assessment

Q 1. What term is used to describe business risks due to their potential for both loss and profit?

Q 2. What type of risks arise from the changes occurring in various aspects of society?

Q 3. Which of the following is an example of a business risk ?

Q 4. What is identified as the reward for uncertainty bearing in economic enterprises?

Q 5. what principle lies at the basis of the modern joint stock company?

Q 6. Which of the following is an example of a pure risk ?

Q 7. How can risks be managed ?

Q 8. What is defined as "future uncertainty as regards financial loss" ?

Q 9. What term is used to describe events outside human control or intervention?

Q 10. In the example provided, a mutual fund scheme has certain operational costs. What additional expenditure is incurred for managing the scheme?

Q 11. What term is used to describe the amount paid by individuals who are exposed to a risk to a common fund in the insurance business?

Q 12. Which category of risk involves uncertainties related to consumer behavior and industrial unrest?

Q 13. In the example provided, what is the difference between the "pure premium" and the final rate of premium?

Q 14. what factor influences the rate of contribution (premium) in insurance?

Q 15. How are risks categorized in fire insurance?

Q 16. What characteristic must a risk have to be considered insurable?

Q 17. What type of risk includes examples like inflation, tax policy, and competition?

Q 18. What characteristic must the loss caused by a risk have to be insurable?

Q 19. How are probabilities associated with events expressed?

Q 20. Before de-tariffing of business, who was responsible for fixing premium rates in Tariff classes of business?

Q 21. What are the three important elements involved in the concept of insurance?

Q 22. What is the objective of insurance?

Q 23. What is underwriting in insurance?

Q 24. What is the purpose of reinsurance in the insurance industry?

Q 25. Which external factor might affect export sales ?

Q 26. What is the broad sense of the term "risk"?

Q 27. What do individuals or organizations become exposed to through financial market transactions?

Q 28. Which entities are included in the financial market?

Q 29. What are some examples of risk factors that financial benefits are exposed to?

Q 30. Why are business risks generally considered less predictable?

Q 31. Why are business risks generally uninsurable?

Q 32. Which of the following is a reason why insurance cover for business risks is not provided?

Q 33. How are business risks typically managed ?

Q 34. what would happen if insurance cover for business risks were provided?

Q 35. why do enterprising businessmen or industrialists accept risks in their enterprises?

Q 36. Which technique for controlling business risks involves proper planning of production, efficient operation of plant and equipment, and provision for adequate supply of raw materials?

Q 37. what is an important feature of modern economic enterprise for controlling business risks?

Q 38. How can diversification be achieved?

Q 39. What does the institution of the modern joint stock company allow?

Q 40. How can risks be spread over a period of time?

Q 41. why is the reduction and elimination of risks important?

Q 42. what distinguishes pure risks from speculative risks?

Q 43. How are pure risks distinguished from dynamic risks?

Q 44. what distinguishes pure risks or static risks from other types of risks?

Q 45. what are the components that make up the final rate of premium in the insurance business?

Q 46. suggest about the relationship between the degree of hazard and the premium charged in insurance?

Q 47. Why is classification of various types of property necessary in insurance?

Q 48. why is a system of classification of risks adopted in insurance?

Q 49. why are private cars further sub-divided based on the cubic capacity of the engine?

Q 50. What principle is adopted in assessing the premium for insurance?

Q 51. What is an example of a risk that is considered insurable?

Q 52. Which of the following assets can typically be insured for their intrinsic value?

Q 53. How is the loss payable in liability insurance typically determined?

Q 54. why would a personal accident policy typically exclude death or disablement caused by intentional self-injury or suicide?

Q 55. Why is professional indemnity insurance typically limited to protecting against claims for professional negligence and not for professional misconduct or malpractice?

Q 56. What numerical values are assigned to events in probability theory?

Q 57. Why are war and kindred risks and nuclear risks typically excluded from property insurance policies on land?

Q 58. Under what circumstances can goods in transit by sea or air be covered against war and kindred risks?

Q 59. what factors must insurers take into account when adjusting premium rates?

Q 60. What condition must be met for an insurer to offer insurance against a particular type of risk?

Q 61. What is an example of a risk related to production as outlined?

Q 62. How is the "mathematical value" of a risk determined?

Q 63. What principle allows insurers to predict or forecast future losses accurately?

Q 64. How does the law of probability enable insurers to estimate or forecast future loss experience?

Q 65. What role does statistics play in insurance operations?

Q 66. What is the significance of having a large number of risks available for insurance?

Q 67. Why is it challenging to determine the mathematical value of risks in general insurance?

Q 68. What does the insurance company rely on to predict the amount of losses that will occur?

Q 69. Which factor might lead to a firm failing to sell its products at the planned price?

Q 70. What is a risk associated with working capital financing mentioned?

Jump to Question

Jump to Ques.