1
Which of the following is a key characteristic of insurance?
It transfers risk from the insured to the insurer
It eliminates all risks entirely
It guarantees a profit for the insured
It only covers high-risk individuals
The process of identifying, analyzing, and responding to risk is known as:
Risk management
Premium financing
Asset management
Underwriting
Which of the following is NOT an example of a non-insurance method of risk management?
Risk avoidance
Risk retention
Risk transfer through insurance
Risk reduction
Reinsurance is used primarily to:
Decrease the policyholder’s premium
Transfer risk between insurance companies
Increase the financial risk for insurers
Provide customer support services
Which government body is primarily responsible for regulating the insurance industry in India?
SEBI
RBI
IRDAI
NABARD
Business ethics in the insurance industry are vital for:
Achieving quick profits
Ensuring transparent and fair dealings with policyholders
Avoiding compliance with legal regulations
Reducing competition in the market
In life insurance, the term "premium" refers to:
The coverage limit
The fee paid by the insured to the insurer
The commission earned by an agent
The policyholder’s health record
Which of the following is NOT a basic element of life insurance?
Premium payment
Claim settlement
Loss of physical assets
Death benefits
Life insurance underwriting evaluates the policyholder's:
Wealth status
Investment portfolio
Health and life expectancy
Marketing strategies
10
What is the main function of distribution channels in insurance?
Selling policies to customers
Collecting customer feedback
Conducting legal proceedings
Managing investment portfolios
11
In life insurance claims management, the first step is typically:
Premium payment
Filing a claim
Issuing the policy
Conducting underwriting
12
General insurance is primarily concerned with:
Protecting financial assets
Protecting against the risk of premature death
Offering long-term investment solutions
Health management
13
Fire insurance, which protects against damage to property, is an example of:
Life insurance
Health insurance
General insurance
Credit insurance
14
Which of the following statements is true about general insurance claims?
They only cover personal injury
They are settled based on loss or damage to property or assets
They are not affected by the cause of loss
They are long-term contracts like life insurance
15
________ refers to the regular payment made by the policyholder to maintain coverage under the
insurance policy.
Premium
Claim
Dividend
Deductible
16
The primary purpose of ________ is to spread the financial risk of an insurer by transferring part of
the risk to another insurer.
Underwriting
Reinsurance
Premium collection
Claims settlement
17
________ insurance provides coverage against financial loss from damage to a vehicle due to
accidents, theft, or natural disasters.
Marine
Home
Auto
Travel
18
General insurance policies typically cover long-term risks such as life and health.
True
False
19
Reinsurance involves transferring risk from one insurance company to another to reduce the
potential for financial loss.
True
False
20
Risk retention is a non-insurance method of managing risk where the individual or company assumes
the financial consequences of a loss.
True
False
Assignment: 2
Instructions:
Assignment 2 is based on the following text/paragraph of case study/situational exercise etc. You
first need to read this text and then answer the following MCMR i.e. Multiple choice multiple
response questions.
Select compulsory TWO OPTIONS for each MCMR question Not More than Two OR Not Less than
Two.
Number of Questions: 5
Each question carries 2 Mark
All Five Questions are Mandatory.
Attempts: 1
By the close of 2000, insurance companies initiated a new Commercial Property Insurance plan. The
three coverages include loss to the un-destroyed section of a construction, demolition charges, and
high building costs. In the quest to understand risk management and commercial property
insurance, one should understand the risks in society, the relationship between risk and insurance,
risk management tools, and the legal principles of risk and insurance. Some of the risks in society
due to natural disasters like Hurricane offer valuable lessons concerning the practice of acquiring
and sustaining efficient insurance coverage in addition to the necessity of correctly approximating
insurable ideals for real property assets. Other risks in the society that are covered by Commercial
Property Insurance include risks of theft and fire. Commercial Property Insurance is conducted by
different businesses such as manufacturers, retailers, and non-profit making organizations, just to
mention a few. Risk management denotes a planned advance to dealing with uncertainties that
entail the identification, examination, and economical administration of the risks that threaten
property and gaining capability of an enterprise. It is evident that a relationship exists between risk
and insurance, for whereas risks signify the exposure to misfortunes, insurance denotes a swap of a
particular loss (premium) to another party (insurer) who sucks up all or a section of the negative
impacts exposed to misfortunes. Despite organizations having witnessed the recent occurrences of
disasters that bring about loss of possessions, most of them still underinsure their property.
Insurable value approximations could be low due to several causes like failure to comprehend the
uncertainties that a property is exposed to during its existence. Other causes include confusion
concerning insurance policy conditions, wrongly developed or obsolete value computations brought
about by rising costs of building, increasing market values, and modifications in construction codes.
Unsophisticated risk management tools give room for certification, while sophisticated tools present
a visual demonstration of risks and are capable of amassing risks into a rational depiction.
2 What are the two coverages included in the new Commercial Property Insurance plan initiated by
insurance companies by the close of 2000?
Loss to the undestroyed section of a construction
Theft coverage
Demolition charges
Renovation charges
3 Which of the following are risks covered by Commercial Property Insurance?
risk of theft
risk of fire
risk of market fluctuations
risk of hurricanes
4 What does risk management involve in the context of commercial property insurance?
identification of risk
examination of risk
purchasing new property
purchasing used furnitures
5 What is the relationship between risk and insurance?
Risks signify the exposure to misfortunes
Risks involve increasing market values
Insurance requires no exchange of premiums
Insurance denotes the swap of a particular loss to another party
6 Why insurance is so important in life?
Risks are uncertain
Financial security is a must
Banks are giving less interest
Political instability in economy
