QUESTION 5 1 points Save Answer An underwriter has determined its exposure for a household insurance policy and the risk factors associated with it. In order to assess the risk over time, the underwriter: O A. Must agree the conclusions with the potential policyholder O B. Has a duty to compare the premium with similar risks in the market place O C. Has everything needed to cover the next five years O D. Must clearly define the claim events to be included in the policy QUESTION 6 1 points Save Answer An underwriter is concerned about moral hazards. Which of the following policy terms is aimed at reducing this kind of hazard? O A. An exclusion for nuclear hazards O B. A deductible applied to all claims O C. Cover for legal expenses O D. A cancellation conditionQUESTION 37 1 points Save Answer The insurance company in the above question is now considering four different potential reinsurance contracts Which of these contracts would have benefitted them the most in the previous year based on the same claims data? Policy EML (k) Claims (k) W 300 80 40 20 X 500 400 100 Y 150 40 Z 200 20 20 O A. Quota share 25% for all claims O B. Surplus with retention 300k O C. XOL excess 80k, per-claims limit of 200k O D. Stop loss with excess 550kQUESTION 24 1 points Save Answer An underwriter is considering terms for a business interruption policy. IWhich of the following is a key hazard for this type of insurance? '32:} A. The wage roll of the employees {:2- B. Terrorism events {22:- C. The value of the building i:- D. The availability of back-up headquarters QUESTION 25 1 points Save Answer A key function of an actuary within an insurance company is to: {:2- A. Collate data from the insurance industry in respect of bodily injury awards '32:} B. Set the nal pricing rates based on the insurer's costs and underwriting strategy QUESTION 16 1 points Save Answer Which of the following is in-line with the aims and function of the Financial Conduct Authority (FCA)? O A. The FCA focuses more on the most material risks to the integrity of the market O B. The FCA places restrictions on market competition O C. The FCA enforces the pricing of insurance policies in ways that maximise profits O D. The FCA provides a set of rigidly defined rules for how insurers should operate QUESTION 17 1 points Save Answer Which of the following might be a reason that an insurer would select the use of price comparison websites over brokers to sell their business? O A. They operate primarily in the London commercial insurance market O B. They are selling personal lines policies with standardised terms O C. They are intending to charge more than their competitors and draw on their brand reputation O D. They have recently launched a marketing campaign to offer targeted individualised productsQUESTION ZU An insurer uses the burning cost method to calc statements is most likely to be true? O A. The claims amounts display low volatility O B. The claims display a trend O C. They have taken on a number of new poli O D. They primarily sell liability insurance QUESTION 21 When estimating the expenses element of a mo expense? O A. Broker commission O B. IT costs O C. Claims handling costs O D. Insurance premium taxQUESTION 1 1 points Save Answer Firm X writes liabilityr insurance and rm Y writes personal household insurance. It is reasonable to assume that: compared to rm Y: firm X: C:- A. Is less likeli,r to sell through brokers B. Charges a lower risk premium for policies with the same average claims C. Relies more on competitive pricing than on customer relationships -::_:2- D. Holds higher claims reserves for past business QUESTION 2 1 points Save Answer During a lengthy hard market phase: what is an underwriter most likely to experience when considering the amount of risk cover provided relative to premium income? [2:- A. Both premium income and cover levels reducing in equal proportions C:- E5. The need to borrow additional capital to maintain its market share at the same premium '2 'I- C. Demand to reduce premiums whilst maintaining existing cover levels {:2- D. The ability to charge the same premium for more restricted risk coverage QUESTION 7 1 points Save Answer Which of the following policy terms is NOT aimed at ensuring the underwriter is able to measure and quantify their underlying risk? O A. A condition to name any drivers to be covered under the policy O B. A condition to report changes in circumstances O C. An exclusion for loss of value due to depreciation O D. An exclusion for work carried out off-site QUESTION 8 1 points Save Answer An underwriting is designing terms for a new motor policy. This is similar to existing policies, except that the drivers will install a telematics device in their car to track their location and measure the riskiness of their driving behaviour. Which of the following Principles of Business is likely to cause the biggest change in policy terms? O A. PRIN 6 (customers' interests) O B. PRIN 2 (skill, care, and diligence) O C. PRIN 7 (communication with clients) O D. PRIN 3 (management and control)QUESTION 14 1 points Save Answer An insurer has acquired a competitor which operates within the same local market to increase its share of the market. What are the main things the insurer will need to implement to make the acquisition successful? O A. Consider differences in organisational culture and allow time for employees to settle O B. Allow the acquisition to develop its own corporate strategy and business targets in isolation O C. Consider differences in legislation and tax structure O D. Focus on control of costs to measure the performance of the new business QUESTION 15 1 points Save Answer What tactics might an insurer employ in order to detect financial crime? O A. Use forensic claim scene investigators for claims involving known professional enablers O B. Establish extra checks and monitoring of vulnerable and minority customers for exploitation O C. Make use of information from the UK Bodily Injury Awards Survey O D. Have a well-defined policy regarding hospitality and gifts overseen by the compliance teamQUESTION 36 1 points Save Answer An insurance company is considering a potential reinsurance surplus treaty for a particular book of business. Last year, claims were made on four policies. Below is information about these claims. What can you say about the claims experience last year? Policy EML (k) Claims (k) W 300 80 40 20 X 500 400 100 Y 150 40 Z 200 20 20 O A. These are all examples of attritional claims O B. The total claims amount was less than half of the total EML O C. A surplus RI treaty with retention 300k would only cede risk on two of these policies O D. A surplus RI treaty with retention 300k would cede 40% of its claims for policy XQUESTION 3 1 points Save Answer An underwriter is setting rating factors for a motor insurance policy. Which of the following pieces of information will the policyholder be asked in order to set the premium rate? {:2- A. The name of their previous insurer if} B. How often they indicate before changing lanes on a motorway 2': C. Their gender {:2- D. The make and model of their car QUESTION 4 1 points Save Answer Insurers X and Y are both operating in a softening market. While insurer X is running a protable aocount. insurerY has been taking heavy losses and is running lot.r on working capital. Which option is insurer Y most likelyr to take? A. Take on more customers " :. B. Increase prices C. Relax underwriting requirements .- D. Pull out. of the market QUESTION 40 1 points Save Answer A number of new reinsurers have begun to enter the market. Which of the following statements is most likely to be true: O A. Existing reinsurers currently have a low capacity for risk O B. There has been a recent series of large catastrophe events C. Insurers currently hold the balance of negotiating power D. Reinsurance profits will soon decreaseQUESTION 33 1 points Save Answer An insurer's claims team receives a report of an asbestosis claim from an employer's liability claim. The timeline for this type of claim is likely to look like: O A. A short paying out period O B. A long IBNR period O C. A small OS reserve once reported O D. Overall settlement achieved quickly QUESTION 34 1 points Save Answer What might an insurer do to diversify against risk accumulations? A. Sell more homogeneous risks O B. Offer a risk training programme to its underwriting staff O C. Keep track of policy locations and avoid over-selling in a particular region O D. Invest in assets in the same currency as the policiesQUESTION 22 1 points Save Answer Why might an insurer set a lower premium rate than their competitors? O A. Their investors require a higher return on capital O B. Their customers are more loyal due to better customer service O C. Their policy terms and conditions result in fewer physical hazards O D. They pay higher commission rates to their brokers QUESTION 23 1 points Save Answer An underwriter is considering how much risk there will be to a commercial property policy from an earthquake. This is an example of: O A. A high frequency, high severity event O B. A high frequency, low severity event O C. A low frequency, low severity event O D. A low frequency, high severity eventQUESTION 26 1 points Save Answer Below is a graph showing estimated claim values per year reported for an insurer selling professional liability policies. Based solely on this information, which of the following statements is most likely to be true? 180 160 140 120 100 Total value of claim (k) 8 8 82 O 2000 2005 2010 2015 2020 Year in which claim reported O A. There was a catastrophe event in 2010 which impacted multiple policies O B. There was a court decision in the year 2010 impacting amounts awarded to malpractice claimants O C. There has been a steady increase in inflation rates beginning in 2000QUESTION 18 1 points Save Answer What measure is typically used to indicate the size of an insurer's underlying risk for its book of business? O A. Reserving philosophy O B. Capital adequacy O C. Liquidity ratio O D. Total exposure QUESTION 19 1 points Save Answer A set of data contains the following values: 2, 2, 2, 4, 5, 10, 24 What can you say about the average measures of centrality for this dataset? O A. The median is lower than the mode O B. The mode is 24 C. The mean average is 4 O D. The dataset displays a skewed 'tail"QUESTION 31 1 points Save Answer What requirements must a UK insurer meet under solvency II? O A. They must always hold capital in high-return investments O B. They must demonstrate adequate governance of capital and risk limits O C. They must make use of a customised internal capital model O D. They must consider all types of risk separately from each other QUESTION 32 1 points Save Answer A reserving actuary is using claims triangulation to estimate IBNR. What type of historical claims information are they most interested in? O A. The pattern of payments made O B. The number of claims settled by year O C. Changes in reserving policy O D. When the policy incepted for each reported claimQUESTION 35 1 points Save Answer When managing its capital, an insurer will aim to: O A. Hold an optimistic level of capital reserves O B. Aim to pay out on liabilities as early as possible O C. Manage its capital to allow it to take advantage of new growth opportunities O D. Keep all of its investments in liquid assetsQUESTION 12 1 points Save Answer Why would an underwriter typically have delegated authority to a specialist coverholder? O A. To maximise profitability and reduce reinsurance costs O B. To reduce its commission rates paid to intermediaries O C. To access more customers with a lower distribution cost O D. To comply with Financial Conduct Authority regulations QUESTION 13 1 points Save Answer In the UK the Prudential Regulation Authority (PRA)'s focus includes what? O A. The conduct and integrity of financial firms O B. Protection against market instability in the event of an insurer's failure O C. Treating customers with fairness and transparency O D. Determining financial adequacy requirements for brokersQUESTION 29 1 points Save Answer A key principle for the management of risk by an insurer is to: O A. Accumulate exposures to particular perils to make use of expertise O B. Pool risks in order to reduce the total claims volatility O C. Eliminate as much of its risks as possible O D. Rely on brokers to monitor the cost of claims QUESTION 30 1 points Save Answer Which of the following is part of the process an actuary will carry out when modelling claims distributions in order to set the risk premium? O A. Claim payments will be adjusted for inflation and risk trends O B. Claims distributions will be fitted to the total claims cost per policy O C. A competitive analysis will be done to determine profit margins O D. Data from all policies will be analysed together to provide the maximum number of claimsQUESTION 10 1 points Save Answer Upon investigating a claim, it is discovered that a customer has misrepresented their total sum insured. After some investigation, the insurer decides to rescale the claim and maintain the policy cover. Which of the following is most likely to be true? O A. The misrepresentation was small and opportunistic O B. The misrepresentation was unintentional O C. The policyholder had been mis-sold a policy O D. The misrepresentation was not relevant to the severity of the peril which caused the claim QUESTION 11 1 points Save Answer Within an insurance policy, which section details the monetary limits of the policy cover? O A. Memoranda O B. Operative clause O C. Schedule O D. Exclusions clauseQUESTION 27 1 points Save Answer The importance of effective liaison between the underwriter and the claims department regarding claims backlogs primarily relates to the: O A. Ongoing viability of loss ratio data O B. Need to treat customers fairly O C. Application of appropriate inflationary factors O D. Most appropriate allocation of claims codings QUESTION 28 1 points Save Answer Under GDPR, an insurer must: A. Confirm that a firm will store data safely before it sells on customer data O B. Maintain the data as it was originally entered O C. Keep hold of as much information as possible to assess customer demographics O D. Be transparent about what data will be used forQUESTION 38 1 points Save Answer A commercial property insurer is considering their exposure management options. Which of the following are they most likely to be considering? O A. Facultative Xol because they want to make use of the reinsurer's catastrophe expertise O B. Treaty quota share to speed up the processing of homogeneous policies O C. A stop loss contract because they are most concerned about exposure to individual large risks O D. Self-retention because they have underwritten many policies within the same geographical region QUESTION 39 1 points Save Answer Which of the following is NOT a key benefit of reinsurance: O A. Protection against low frequency high severity events O B. Reduction in exposure to credit risk O C. Increased financial stability and less volatile outgoings O D. Increased capacity and better use of capital