Q 1. A deductible is also known as ________ .

a franchisee
a warranty
a representation
an excess
a declaration

UnAttempted

CORRECT ANSWER:

an excess

Explanation:

A deductible or excess is an amount which is deducted before paying any claim.

Q 2. Identify from the following, the statement which is incorrect regarding an Insurance policy.
The written words will be given less weightage than the printed words
The policy must be constituted in accordance with the ordinary laws of grammar.
The written words will be given more weightage than the printed words.
Most policy wordings are in standardized printed formats for consistency and efficiency
The insurance policy sets out the terms and conditions of the contract in a standard printed form

UnAttempted

CORRECT ANSWER:

The written words will be given less weightage than the printed words

Explanation:

The principles of construction in insurance contracts are the same as in the case of other contracts.

The written words will be given more effect than the printed words. Most policy wordings are in standardised printed formats for
consistency and efficiency. The insurance policy sets out the terms and conditions of the contract in a standard printed form.

The policy must be construed in accordance with the ordinary laws of grammar. The general rule is that the grammatical meaning of the
words used in the policy will be adopted.

Q 3. Identify from the following the components which does not constitute outgo for an insurance
company.
Claims
Dividend
Commission
Claims expenses
Management expenses

UnAttempted

CORRECT ANSWER:

Dividend

Explanation:

Dividends are not considered an expense, because they are a distribution of a firm's accumulated earnings.

For this reason, dividends never appear on an issuing entity's income statement as an expense. Instead, dividends are treated as a
distribution of the equity of a business.
Q 4. ________________ is not a promoter of Agriculture Insurance Company.
State Bank of India
NABARD
General Insurance Corporation of India
United India Insurance Company
The New India Assurance Company

UnAttempted

CORRECT ANSWER:

State Bank of India

Explanation:

The Agriculture Insurance Company of India Ltd. (AICL) opened for business in 2003. It was established in 2002 with the aim of
promoting crop insurance business and to protect farmers against crop losses suffered due to natural calamities.

The share capital is provided by GIC, NABARD and the 4 public sector insurers and is headquartered in New Delhi.

Q 5. ____________ would not be used to calculate book rate under the Pure premium method.
Census
Weather records
National Fire statistics
Agent Brokerage or commission
No. of death with category of disease

UnAttempted

CORRECT ANSWER:

Agent Brokerage or commission

Explanation:

Technical pricing or the book rate develops from the Pure Premium method and goes back to First Principles.

It relies on the insurer having quality statistical information, based on historical loss details and exposure information, collated at market
level or intra-company e.g. national fire statistics, weather records, crime statistics etc.

Q 6. _____________is not required to follow the direction & guidelines issued by IRDAI operational matters.
Share Broker
Insurance Agent
Insurer
Surveyor
Reinsurer

UnAttempted

CORRECT ANSWER:

Share Broker

Explanation:

IRDA is the authority to administer the Insurance Act and to regulate, promote and ensure orderly growth of the insurance industry.
Q 7. Identify the benefits which are not covered for an industrial employee under the Employees State
Insurance Policy.
Maternity Benefit
Property Damage
Medical Treatment
Sickness Benefit
Disablement Benefit

UnAttempted

CORRECT ANSWER:

Property Damage

Explanation:

The passing of the Employees State Insurance Act in 1948 introduced social insurance in India. The Act provides for Employees State
Insurance Corporation (ESIC), a statutory Corporation set up under the provision of the Act.

The scheme is applicable to industrial employees as defined in the Act.

Under the scheme a fund is maintained consisting of contributions from the employees, employers and the Government. From this fund
the following expenses are met:

Sickness benefit, maternity benefit, disablement benefit, dependence benefit (death) and medical treatment.
Establishment and maintenance of hospitals, dispensaries, etc. for the benefit of the insured persons and their families.
Administration of the Scheme.

Q 8. Identify the hazards which come from the features of the property itself, its location purpose, etc.
Moral Hazards
Physical Hazards
Financial hazards
Employee Hazards
Occupational hazards

UnAttempted

CORRECT ANSWER:

Physical Hazards

Explanation:

Physical hazards are the tangible factors that arise out of the nature of the risk itself. They will come from the features of the property /
risk itself, its location, purpose / activity etc.

Q 9. ___________ factors may not be considered by a claim reserve using the Triangulation technique.
Inflation rate
Rebuilding cost
Medical Cost
Legal framework
Policyholder’s expected return

UnAttempted

CORRECT ANSWER:

Policyholder’s expected return

Explanation:
 The Triangulation or Chain Ladder technique is a simple operation to give an idea of the claims development in a risk or sub-class over a
number of years. The idea is to display and compare the development of claims from different years, using tables usually in the shape of
a triangle.

It must be emphasised that these are only mechanical calculations and do not take into consideration the fundamental changes that
might be happening to the drivers of the claims. These changes can be:

inflation rate
rebuilding costs
legal framework
court awards
medical costs etc.

Wherever possible, the reserver needs to make appropriate adjustments to compensate for these.

Q 10. What are Max Bupa, Apollo Munich and Star are called?
Reinsurance companies
Life insurance companies
General Insurance Companies
Composite insurance companies
Stand-alone Health insurance companies

UnAttempted

CORRECT ANSWER:

Stand-alone Health insurance companies

Explanation:

Health Insurance has always been seen by the Government as crucial, with the original proposition in 1998 being for the market to open
only for health insurance.

Companies like Max Bupa Health Insurance, Apollo Munich Health Insurance, Star Health and Allied Insurance Company Limited are
some of the companies specialise in and do only health insurance business.

Q 11. Identify the option which is not a reason why reinsurance is purchased.
Reinsurance stabilizes loss experience
Reinsurance increases underwriting capacity
Reinsurance provides catastrophe protections
Reinsurance may provide underwriting guidance
Reinsurance reduces the number of claims incurred

UnAttempted

CORRECT ANSWER:

Reinsurance reduces the number of claims incurred

Explanation:

'Reinsurance' is an arrangement whereby an insurer transfers a part of the risk to another insurer so that his share of a heavy loss is
reduced. It may be called as insurance of insurance.

Reinsurance is based on the same basic principle of insurance, i.e., to spread the losses of the 'few' over the 'many'.

Reinsurance does not reduce the number of claims incurred but reduces the risk on the insurer.
Q 12. The Launch Insurance coverage usually runs for a period of _________ .
4 months
6 months
12 months
9 months
10 months

UnAttempted

CORRECT ANSWER:

12 months

Explanation:

Launch insurance covers the period from the intentional ignition of the engines, until the satellite separates from the final stage of the
launch vehicle or until completion of the testing phase in orbit.

Typical coverage usually runs for a period of twelve months but is limited to 45–60 days in respect of testing phase in orbit.

Q 13. Read the below definition carefully and identify the term “other party” in this. “A contract of
insurance is an agreement whereby one party, in return for a consideration, undertakes to pay to
other party a sum of money, upon the happening of certain specified events.”
The insurer
The insured
The surveyor
The debtor
The creditor

UnAttempted

CORRECT ANSWER:

The insured

Explanation:

A contract of insurance is an agreement whereby -

A. one party – the insurer,

B. in return for a consideration – the premium,
C. undertakes to pay to the other party – the insured,
D. a sum of money (or its equivalent) – the claim upon the happening of certain specified events.

Q 14. Select the correct option and fill the blanks the in below statement. ‘The_____________ who drafts the
policy is primarily responsible for any ambiguities and they are interpreted against him.’
Agent
IRDAI
Insurer
Insured
Actuary

UnAttempted

CORRECT ANSWER:

Insurer
 Explanation:

Contra proferentum rule (which effectively says against the offering party) states that where contractual language is capable of two
alternative interpretations, it will be construed against the insurer who drafted the contract and in favour of the insured, who accepts the
wording.

This is because the insurer will have chosen the language used and should not be able to benefit from any ambiguity contained within it.

Q 15. Identify the two exclusions which almost all general insurance policies have.
Fire and Flood
Earthquakes and Flood
Nuclear Risks and War Risks
Riots, Strike and Terrorism
Dynamo clause and Reinstatement clause

UnAttempted

CORRECT ANSWER:

Nuclear Risks and War Risks

Explanation:

Most policies carry standard exclusions e.g. War Risks, Nuclear Risks, etc. Some, like the standard Fire policy also carry automatic
exclusions (earthquakes, spontaneous combustion, etc) which can, if necessary, be bought back as cover.

In addition, the underwriter may wish to apply specific exclusions e.g. the policy will not cover certain buildings owned by the insurer.

Q 16. Identify the correct statement from the following with regards to Exposure.
It is the measurement of historical risk
It is the measurement of frequency of risk
It is the measurement of expected premium
It is the measurement of how big a risk is
It is the measurement of expected claim amount

UnAttempted

CORRECT ANSWER:

It is the measurement of how big a risk is

Explanation:

Exposure is the measurement of how big a risk is.

Q 17. What is that maximum amount called, when an insurer decides to retain a certain maximum amount
due to any given risk or class of risk?
Custody
Deductible
Retention
Holding
Trusteeship

UnAttempted

CORRECT ANSWER:

Retention
 Explanation:

When an insurer decides that on any given risk or class of risk, he will retain a certain maximum amount. This amount held is called
retention.

Q 18. Which of the following policy protects the interests of contractors and principals in respect of civil
engineering projects like buildings, bridges, tunnels, etc.?
Stock Spoilage Insurance
Deterioration of Stock (DOS) Insurance Policy
Contractors All Risks (CAR) Policy
Contractors Plant & Machinery (CPM) Policy
Machinery Loss of Profits (MLOP)Insurance Policy

UnAttempted

CORRECT ANSWER:

Contractors All Risks (CAR) Policy

Explanation:

Contractors All Risks (C.A.R.) Policy is designed to protect the interests of contractors and principals in respect of civil engineering
projects, like buildings, bridges, tunnels, etc.

The policy provides an “All Risk” cover. Every risk is covered which is not specifically excluded. This means that almost any sudden and
unforeseen loss or damage occurring during the period of insurance to the property insured on the construction site is indemnified.

Q 19. In Property insurance the term ‘Average’ means underinsurance. What does the term ‘Particular
Average’ means in Marine?
Loss
Excess
Uncertainty
Arithmetic Mean
Maritime Peril

UnAttempted

CORRECT ANSWER:

Loss

Explanation:

In Marine Insurance, Particular Average means partial losses. They occur when there is a total loss of part of the goods covered, e.g., a
consignment may consist of 100 packages of which 5 packages may be lost completely.

Another way in which particular average loss occurs is when there is damage to the goods.

Q 20. Identify the correct formula from below options.

Pure Premium = Total pf Losses incurred per Year * Number of Units Exposure
Pure Premium = Minimum Amount of Losses Incurred per Year * Number of Units of Exposure
Pure Premium = Minimum Amount of Losses Incurred per Year / Number of Units of Exposure
Pure Premium = Total Amount of Losses Incurred per week * Number of Units of Exposure
Pure Premium = Total Amount of Losses Incurred per Year / Number of Units of Exposure

UnAttempted

CORRECT ANSWER:
 Pure Premium = Total Amount of Losses Incurred per Year / Number of Units of Exposure

Explanation:

Pure premium rating method reflects the expected losses. It is a calculation of the pure cost of, say, property or liability insurance
protection. This is without any loading for the insurance company's expenses, premium taxes, contingencies and profit margins.

The pure premium is calculated as follows:

Pure Premium = Total Amount of Losses Incurred per Year / Number of Units of Exposure

Q 21. Which of the following is not a correct statement with regards to an Incurred But not Reported
(IBNR) reserve?
It is difficult to quantify the IBNR reserve
It is a premium reserve
It is a reserve for outstanding claims that have been incurred
It protects against the unknown claims
This reserve may cover increases on original estimates for open claims

UnAttempted

CORRECT ANSWER:

It is a premium reserve

Explanation:

Every insurer will have claims that, for some reason or other, have not yet been reported and the insurer does not know about. The term
for this is IBNR i.e. these are claims that have been Incurred But Not Reported.

This is one of the main problem areas for general insurers. It is relatively easy to make a reasonable assessment of claims that have been
reported.

At the very minimum, an insurer can apply an average cost for the class of business for any claim arising. The next difficulty arises when
the insurer has to speculate what might happen in the future.

Another claims factor which may be included in the IBNR reserve is the provision made for any increase on the original estimate for open
claims.

Q 22. Read the given situation carefully and identify the type of insurance required. The insured has
invited visitors to his office. One of his employees has negligently left a large box in the passage
where a visitor bangs in and fractures his ankle.
Fire Insurance
Liability Insurance
Fidelity Insurance
Motor Insurance
Accidental Insurance

UnAttempted

CORRECT ANSWER:

Liability Insurance

Q 23. _____________ is critical for long term underwriting profit.

Commission rate
Analytical
Hedging rate
Financing rate
Both technical rate and book rate

UnAttempted
 CORRECT ANSWER:

Both technical rate and book rate

Explanation:

Technical rate and book rate are critical for long term underwriting profit.

Q 24. Which among the following is the policy where cover is particularly formed for the old aircrafts, as
such aircrafts are generally in poor condition and are insured for low amounts and the premium for
which would also be very low?
Aircraft hull policy
Aviation Hull Total Loss Only
Depositors’ Foreign Coverage
War Risks Insurance
Airline General Third Party Liability Insurance

UnAttempted

CORRECT ANSWER:

Aviation Hull Total Loss Only

Explanation:

‘Aviation Hull Total Loss Only’ cover has been devised to take care of total loss of an aircraft. This cover is particularly formed for the old
aircrafts, as such aircrafts are generally in poor condition and are insured for low amounts and the premium for which would also be very
low.

The proportion of partial losses to total losses in case of such an aircraft is very inadequate.

Q 25. Which of the following statement is incorrect with regards to the pure premium rating method?
It is a method for calculation of book rate
It reflects the expected losses
It is used to calculate pure premium in case of property or liability insurance protections
It is without any loading for the insurance company’s expenses, premium taxes, contingencies and profit
margins
Pure premium = Total amount of losses incurred per year/ no. of units of exposures

UnAttempted

CORRECT ANSWER:

It is a method for calculation of book rate

Explanation:

Pure premium rating method reflects the expected losses. It is a calculation of the pure cost of, say, property or liability insurance
protection. This is without any loading for the insurance company's expenses, premium taxes, contingencies and profit margins. The
pure premium is calculated as follows:

Pure Premium = Total Amount of Losses Incurred per Year/ Number of Units of Exposure

Q 26. Burglary insurance is a major business in which of the following classes of general insurance?
Primary
Secondary
Ordinary
 Special
Miscellaneous

UnAttempted

CORRECT ANSWER:

Miscellaneous

Explanation:

Burglary insurance is a major business in the miscellaneous class of insurance. The policy is available to commercial establishments,
factories, godowns, shops etc.

Property in any form, including cash, in the business premises can be covered.

Q 27. What does AOA mean?

Any One Accident
Any One Occurrence
Accident Over Accident
Any Occurrence Accident
Accident Occurrence Authority

UnAttempted

CORRECT ANSWER:

Any One Accident

Explanation:

The insured has to select limits of indemnity

any one accident (A.O.A.) and any one year (A.O.Y.) (policy period) in the ratio of 1:1, 1:2, 1:3 or 1:4.

Example; A.O.A. Rs.10 lacs, A.O.Y. Rs.10 lacs or Rs.20 lacs or Rs.30 lacs or Rs.40 lacs

Q 28. Mr. Nihar wants to buy the Contractor’s All risk (C.A.R) insurance policy for their new project.
Identify the expense (s) that may be optional as insurance project cost under the C.A.R. insurance
policy. Material cost – INR 20 crores Labour cost – 30% of Material cost Lease for equipments – INR 5
crores Freight – INR 0.80 crores Tender deposit (refundable) – INR 0.2 crore Government duties &
taxes – INR 0.9 crores
Labour cost
Material cost
Freight charges
Tender deposits (refundable)
Government duties & taxes

UnAttempted

CORRECT ANSWER:

Government duties & taxes

Explanation:

This policy is designed to protect the interests of contractors and principals in respect of civil engineering projects, like buildings,
bridges, tunnels, etc.
 The policy provides an “All Risk” cover. Every risk is covered which is not specifically excluded. This means that almost any sudden and
unforeseen loss or damage occurring during the period of insurance to the property insured on the construction site is indemnified.

Sum insured is required by the policy to be equal to the estimated completely erected value of the contract works inclusive of materials,
wages, construction costs, freight, customs duties and items supplied by the principal.

Q 29. _____________ is not an element of a contract.

Legality
Offer
Consideration
Insurability
Acceptance

UnAttempted

CORRECT ANSWER:

Insurability

Explanation:

The usual rules of contract law govern the contracts of insurance. Specific elements of insurance contract are:

Offer and acceptance

Consideration
Legality (illegal contracts are void) and being capable of performance
Agreement (the consent of the parties is necessary for a contract to be enforceable)
Contractual capacity (certain persons e.g. minors, cannot be party to a contract)
An intention to create a legal relationship
No intention to commit fraud

The absence of one or more of these will make the contract void, voidable or unenforceable.

Q 30. Identify from below, the item which is not covered under the Deterioration of stock policy.
Eggs
Fruits
Cheese
Sea foods
Dairy products

UnAttempted

CORRECT ANSWER:

Eggs

Explanation:

The policy known as Deterioration of Stock Insurance or Stock spoilage insurance is a form of consequential loss cover granted in the
Engineering Department for stocks contained in large cold stores.

The cover is against the risk of deterioration / putrefaction and contamination following breakdown of the refrigeration plant and
machinery, a claim for which is admissible in terms of the concurrent Machinery Breakdown Policy.

There are two different forms of this policy - one in respect of stocks of fish, prawns, frog legs and other types of sea foods, fruits,
cheese, provisions and other Dairy products, etc., the other form of policy is exclusively meant for the contents of Potato Cold Storage.

Q 31. Identify the prerequisite to become a direct broker.

Minimum age of 21
Pass NCFM module
Pass AFMI exam
Licensed by IRDAI regulation
 Licensed by National Insurance Academy

UnAttempted

CORRECT ANSWER:

Licensed by IRDAI regulation

Explanation:

Brokers can be Direct Broker, Reinsurance Broker or Composite Broker (doing both Direct and Reinsurance broking). They need to be
licensed by IRDA as per Broking Regulations.

Q 32. ______________ is not considered by XYZ Health and Allied Insurance Company Ltd.’s underwriter while
calculating risk part of proposed insurance.
Age
Lifestyle
Family history
Quality of resident
History of illness

UnAttempted

CORRECT ANSWER:

Quality of resident

Explanation:

Health insurer’s underwriter may consider the following aspects in a proposal before deciding on the risk:

age
family history
lifestyle
current health

Q 33. A 15 year old movie actor approached an insurer for signing insurance contract as he wants to buy
Health insurance. However, insurer said that contract is void. Discuss the reason for the same.
Drunker
Minor
Hide material facts
A person who lacks mental capacity
Person with intention to commit fraud

UnAttempted

CORRECT ANSWER:

Minor

Explanation:

As per the rules of the Insurance Contract, certain persons e.g. minors, cannot be party to a contract.

Q 34. The Operative Clause is also known as ______ .

Preamble
Policy Condition
 Policy clause
Insuring clause
Heading

UnAttempted

CORRECT ANSWER:

Insuring clause

Q 35. ______ policy provides cover for loss of gross profit due to stoppage of production.
Consequential Loss policy
Loss Recovery policy
Long Term policy
Reinstatement Value policy
Declaration policy

UnAttempted

CORRECT ANSWER:

Consequential Loss policy

Q 36. In Motor Insurance, 'Form A' covers ________ .

Act Liability only
Act Liability and Own Damage Losses
Own damage losses only
Third party losses only
Own damage losses and Third party losses

UnAttempted

CORRECT ANSWER:

Act Liability only

Q 37. Which of the following is not a part of the fundamentals of a contract ?

Consent of the parties
Offer and Acceptance
Written agreement
Legality and being capable of performance
None of the above

UnAttempted

CORRECT ANSWER:

Written agreement

Explanation:

A contract does not necessarily have to be in writing.

Q 38. What is the claim loading applied to a policy known as ?

Claim Minus
Claim Load
Claim Malus
Claim Fides
Claim Bonus

UnAttempted

CORRECT ANSWER:
 Claim Malus

Explanation:
Sometimes insurers load the premiums as per a published schedule when the claims experience is bad. Such loading of premium when
the claims experience is poor is known as Loading / Malus.

Q 39. The Motor Vehicles Act was enacted in the year _______ .
1937
1938
1939
1940
1941

UnAttempted

CORRECT ANSWER:

1939

Q 40. A subrogation claim is recovered from the Third Party and/or which other party ?
Client's insurers
Reinsurers
Third Party Reinsurers
Third Party insurers
None of the above

UnAttempted

CORRECT ANSWER:

Third Party insurers

Explanation:

The insurer recovers subrogation amounts from the Third Party and / or Third Party insurers.

Q 41. The first aviation policy was issued in the year ______ .
1901
1911
1921
1931
1941

UnAttempted

CORRECT ANSWER:

1911

Explanation:

The first aviation policy was issued by Lloyds in 1911.

Q 42. When looking for reinsurance, the underwriter works at two levels - one is at risk level and the other
is _____ .
Macro
Micro
Primary
Retention
Portfolio

UnAttempted
 CORRECT ANSWER:

Portfolio

Q 43. IRDA premium investment guidelines state that investments in Central Government Securities
should not be less than ______ .
10%
20%
30%
35%
No such guidelines

UnAttempted

CORRECT ANSWER:

20%

Explanation:

As per premium investment guidelines by IRDA, investment in Central Govt. securities should not be less than 20%.

Q 44. If the insurer wants to avoid liability on grounds of non-disclosure, he must prove certain facts -
which of the following is INCORRECT ?
Facts were within the actual or presumed knowledge of the insured
Undisclosed facts were material
The client was fraudulent
Facts were not communicated to the insurer
None of the above

UnAttempted

CORRECT ANSWER:

The client was fraudulent

Explanation:

Insurer does not have to prove fraud to dispute a claim.

Q 45. In which section of the policy document is the location of property to be insured mentioned ?
Schedule
Heading
Preamble
Conditions
Operative clause

UnAttempted

CORRECT ANSWER:

Schedule

Explanation:

The Schedule is the part of the policy document that is specific / unique to each insured person or property.

It mentions the Insured's title, address, policy number etc.

Q 46. Which is the most appropriate insurance cover for contingent losses like cancellation, loss of
 reputation, loss of gate money and advertisement etc. ?
Cyber Risks
Event Cancellation
Standard Fire burglary & Liability
Standard Fire & LOP
Films / Entertainment

UnAttempted

CORRECT ANSWER:

Event Cancellation

Explanation:

Loss of Advertisement Revenues and Cancellation expenses etc. are common perils for an event.

Q 47. For what is ‘Open Cover’ generally issued ?

Fire insurance
Consignments
Trade
Stocks
Supply

UnAttempted

CORRECT ANSWER:

Consignments

Explanation:

An Open Cover is issued for import- export and also for inland consignments.

Q 48. What are the claims recoveries made from third parties known as ?
Contribution
Closure
Salvage
Co-pay
Subrogation

UnAttempted

CORRECT ANSWER:

Subrogation

Explanation:

Subrogation is the right for an insurer to legally pursue a third party that caused an insurance loss to the insured. This is done as a
means of recovering the amount of the claim paid by the insurance carrier to the insured for the loss.

Q 49. How are the claims cost ideally controlled ?

by improved application of dividend payments
by improved application of loss management
by improved application of risks
by improved application of damage control
by improved application of underwriting

UnAttempted

CORRECT ANSWER:
 by improved application of loss management

Q 50. What does 'Condition of Average' mean ?

The property is double insured
The property is over insured
The property is fully insured
The property is under insured
The property is Uninsured

UnAttempted

CORRECT ANSWER:

The property is under insured

Explanation:

The Subject matter is said to be under-insured when the value for which it is insured is less than its actual value and if the insured value
is inadequate, claims during that period will be payable accordingly by applying the 'Condition of Average' by the insurer. Thus, the
insurer can reduce its liability for a claim by applying the proportionate approach.

Out of 50 questions 50 are un attempted.