Sample GEN 1A
Questions
Sample Question
Insurance operates by paying the claims of the few from
the premiums of many.
This is known as :
A actuarial rating
B indemnity
C pooling of risk
D underwriting
Answer
Insurance operates by paying the claims of the few from
the premiums of many.
This is known as :
A actuarial rating
B indemnity
C pooling of risk
D underwriting
ANSWER : C
Sample Question
An insurer is able manage high severity, low frequency risk in its
property account by implementing a programme of :
A loss prevention
B loss reduction
C risk retention
D risk transfer
Answer
An insurer is able manage high severity, low frequency risk in its
property account by implementing a programme of :
A loss prevention
B loss reduction
C risk retention
D risk transfer
ANSWER : D
Sample Question
How does the provision of insurance help the cash flow of a
business ?
A It lessens the need for the business to keep cash reserves
B It prevents losses occurring which could interrupt the business
operation
C It provides for the payment of cash if the business makes a
trading loss
D It underwrites the debts owed by the business
Answer
How does the provision of insurance help the cash flow of a
business ?
A It lessens the need for the business to keep cash reserves
B It prevents losses occurring which could interrupt the business
operation
C It provides for the payment of cash if the business makes a
trading loss
D It underwrites the debts owed by the business
ANSWER
:
A
Sample Question
When the insured has effected two policies which cover
the same risk, this is known as :
A co-insurance
B dual insurance
C mutual insurance
D reinsurance
Answer
When the insured has effected two policies which cover
the same risk, this is known as :
A co-insurance
B dual insurance
C mutual insurance
D reinsurance
ANSWER : B
Sample Question
Which type of insurance policy is designed with the specific
knowledge that a valid claim will occur ?
A Comprehensive motor insurance
B Household buildings insurance
C Professional indemnity insurance
D Whole of life insurance
Answer
Which type of insurance policy is designed with the specific
knowledge that a valid claim will occur ?
A Comprehensive motor insurance
B Household buildings insurance
C Professional indemnity insurance
D Whole of life insurance
ANSWER : D
Sample Question
A direct insurance company transacts business through their
contact with :
A Insurance brokers
B Private individuals
C Shareholders
D Tied agents
Answer
A direct insurance company transacts business through their
contact with :
A Insurance brokers
B Private individuals
C Shareholders
D Tied agents
ANSWER
:
B
Sample Question
Insurance may only be placed at Lloyd’s via a Lloyd’s :
A Agent
B Broker
C Name
D Syndicate
Answer
Insurance may only be placed at Lloyd’s via a Lloyd’s :
A Agent
B Broker
C Name
D Syndicate
ANSWER
:
B
Sample Question
A reinsurance company will cover risks :
A
already insured by insurance companies
B
directly from individuals
C
from individuals via a broker
D
on a co-insurance basis with an insurer
Answer
A reinsurance company will cover risks :
A
already insured by insurance companies
B
directly from individuals
C
from individuals via a broker
D
on a co-insurance basis with an insurer
ANSWER
:
A
Sample Question
Who has the responsibility for providing advice to customers
concerning loss control and loss prevention ?
A
An actuary
B
A reinsurer
C
A risk manager
D
An underwriter
Answer
Who has the responsibility for providing advice to customers
concerning loss control and loss prevention ?
A
An actuary
B
A reinsurer
C
A risk manager
D
An underwriter
ANSWER
:
C
Sample Question
Why is the principle of utmost good faith applied to insurance contracts ?
A
The proposer has more knowledge of the risk than the underwriter
B
The underwriter has more knowledge of the risk than the proposer
C
The proposer and the underwriter have equal knowledge of the risk
D
The proposer and the underwriter need to increase their knowledge of
the risk
Answer
Why is the principle of utmost good faith applied to insurance contracts ?
A
The proposer has more knowledge of the risk than the underwriter
B
The underwriter has more knowledge of the risk than the proposer
C
The proposer and the underwriter have equal knowledge of the risk
D
The proposer and the underwriter need to increase their knowledge of
the risk
ANSWER
:
A
Sample Question
Which of the following describes the ‘creating a programme’ stage of
general insurance planning?
A
B
C
D
Establishing a snapshot of the current general insurance
situation
Establishing the ideal solution to the current general insurance
situation
Developing a general insurance plan including risk control
measures
Purchasing insurance or paying for risk control measures
Answer
Which of the following describes the ‘creating a programme’ stage of
general insurance planning?
A
B
C
D
Establishing a snapshot of the current general insurance
situation
Establishing the ideal solution to the current general
insurance situation
Developing a general insurance plan including risk
control measures
Purchasing insurance or paying for risk control measures
ANSWER: C
Sample Question
In the context of the insurance market cycle, which of the following
factors tends to lead towards a general increase in insurance
premiums?
A
B
C
D
High interest rates
Claims frequency reduction
Failure of an insurer
Increased underwriting profits
Answer
In the context of the insurance market cycle, which of the following
factors tends to lead towards a general increase in insurance
premiums?
A
B
C
D
High interest rates
Claims frequency reduction
Failure of an insurer
Increased underwriting profits
ANSWER: C
Sample Question
Which of the following does a public liability policy cover?
A
B
C
D
Injury to employees
Fixed benefits for accidents
Illness arising from goods sold
Injury to third parties through negligence
Answer
Which of the following does a public liability policy cover?
A
B
C
D
Injury to employees
Fixed benefits for accidents
Illness arising from goods sold
Injury to third parties through negligence
ANSWER: D
Sample Question
Which of the following are required by statute to have professional
indemnity insurance in the Republic of Ireland?
A
B
C
D
Actuaries
Chartered accountants
Chartered surveyors
Solicitors
Answer
Which of the following are required by statute to have professional
indemnity insurance in the Republic of Ireland?
A
B
C
D
Actuaries
Chartered accountants
Chartered surveyors
Solicitors
ANSWER: D
Sample Question
What does a revenue account show?
A
B
C
D
Underwriting profit or loss
Total profit or loss during a stated period
Assets and liabilities at a point in time
Projected business forecasts
Answer
What does a revenue account show?
A
B
C
D
Underwriting profit or loss
Total profit or loss during a stated period
Assets and liabilities at a point in time
Projected business forecasts
ANSWER: A
Sample Question
What is the correct sequence of the risk management process?
A
B
C
D
Economic control; identification; analysis
Analysis; identification; economic control
Identification; analysis; economic control
Identification; economic control; analysis
Answer
What is the correct sequence of the risk management process?
A
B
C
D
Economic control; identification; analysis
Analysis; identification; economic control
Identification; analysis; economic control
Identification; economic control; analysis
ANSWER: C
Sample Question
What do material facts enable a prudent underwriter to assess?
A Whether the cover being sold is the most suitable cover for the
proposer
B Whether the claim against a policy is valid and how much should be
paid
C Whether a risk should be accepted and on what terms
D Whether the proximate cause of a loss is an insured peril
Answer
What do material facts enable a prudent underwriter to assess?
A Whether the cover being sold is the most suitable cover for the
proposer
B Whether the claim against a policy is valid and how much should be
paid
C Whether a risk should be accepted and on what terms
D Whether the proximate cause of a loss is an insured peril
ANSWER: C
Sample Question
In a typical commercial property policy the principle of utmost good
faith (disclosure of material facts) is modified by the:
A
B
C
D
change of risk (increase in risk of damage) clause
subrogation (recovery rights) clause
contribution (dual insurance) clause
business definition
Answer
In a typical commercial property policy the principle of utmost good
faith (disclosure of material facts) is modified by the:
A
B
C
D
change of risk (increase in risk of damage) clause
subrogation (recovery rights) clause
contribution (dual insurance) clause
business definition
ANSWER: A
Sample Question
The proprietor of a sales shop has been insured for the past three
years with the same insurer. When investigating a theft claim the
insurer discovers that the insured was convicted of theft when aged
11. What action can the insurer take?
A
B
C
D
The insurer can avoid the policy from its inception
The insurer must deal with the claim and ignore the conviction
The insurer can avoid liability for the particular claim but
otherwise leave the policy in force
The insurer can sue the insured for damages
Answer
The proprietor of a sales shop has been insured for the past three
years with the same insurer. When investigating a theft claim the
insurer discovers that the insured was convicted of theft when aged
11. What action can the insurer take?
A
B
C
D
The insurer can avoid the policy from its inception
The insurer must deal with the claim and ignore the conviction
The insurer can avoid liability for the particular claim but
otherwise leave the policy in force
The insurer can sue the insured for damages
ANSWER: B
Sample Question
Global Manufacturing has two policies covering the same building for
fire and special perils. One policy is with ABC insurance for
€400,000; the other with XYZ Insurance for €800,000. Both are
subject to average. The total rebuilding cost is €2,400,000. What will
each insurer pay if there is a fire loss of €120,000?
A
B
C
D
ABC pays €60,000: XYZ pays €60,000
ABC pays €20,000: XYZ pays €40,000
ABC pays €40,000: XYZ pays €80,000
ABC pays €30,000: XYZ pays €30,000
Answer
Global Manufacturing has two policies covering the same building for
fire and special perils. One policy is with ABC insurance for
€400,000; the other with XYZ Insurance for €800,000. Both are
subject to average. The total rebuilding cost is €2,400,000. What will
each insurer pay if there is a fire loss of €120,000?
A
B
C
D
ABC pays €60,000: XYZ pays €60,000
ABC pays €20,000: XYZ pays €40,000
ABC pays €40,000: XYZ pays €80,000
ABC pays €30,000: XYZ pays €30,000
ANSWER: B
Sample Question
A fire occurs in a warehouse in which stock is held on behalf of a
client for a fee. The fire insurer for the client pays the claim and
acquires subrogation rights that arise from:
A
B
C
D
Tort
Contract
Statute
The subject-matter of insurance
Answer
A fire occurs in a warehouse in which stock is held on behalf of a
client for a fee. The fire insurer for the client pays the claim and
acquires subrogation rights that arise from:
A
B
C
D
Tort
Contract
Statute
The subject-matter of insurance
ANSWER: B
Sample Question
Michael Clark’s car has been written off in a motorway pile up. ABC
insurance has paid him the car’s full market value. To whom does the
salvage belong?
A
B
C
D
Both the insurance company and Michael Clark equally
Michael Clark
The agent that removed the car from the motorway
The insurance company
Answer
Michael Clark’s car has been written off in a motorway pile up. ABC
insurance has paid him the car’s full market value. To whom does the
salvage belong?
A
B
C
D
Both the insurance company and Michael Clark equally
Michael Clark
The agent that removed the car from the motorway
The insurance company
ANSWER: D
Sample Question
To whom could a private individual go to arrange an insurance policy?
A
B
C
D
A captive insurance company
An insurance intermediary
A Lloyd’s name
A reinsurance company
Answer
To whom could a private individual go to arrange an insurance policy?
A
B
C
D
A captive insurance company
An insurance intermediary
A Lloyd’s name
A reinsurance company
ANSWER: B
Sample Question
What is the principal service offered by an independent risk manager?
A
B
C
D
The provision of specialist claims handling
Advice on loss control and prevention
Negotiation for lower premium levels at renewal
Provision of loss assessment services in the event of a claim
Answer
What is the principal service offered by an independent risk manager?
A
B
C
D
The provision of specialist claims handling
Advice on loss control and prevention
Negotiation for lower premium levels at renewal
Provision of loss assessment services in the event of a claim
ANSWER: B
Sample Question
In the offer and acceptance of a motor insurance contract what would
be the consideration which makes the cover valid?
A
B
C
D
A cover note
The certificate
The policy
The premium
Answer
In the offer and acceptance of a motor insurance contract what would
be the consideration which makes the cover valid?
A
B
C
D
A cover note
The certificate
The policy
The premium
ANSWER: D
Sample Question
Despite no emergency an agent acts outside the terms of the agency
agreement he has with his principal. The principal agrees to be
bound by these actions in any case. This is an example of an agency
created by:
A
B
C
D
apparent authority
consent
necessity
ratification
Answer
Despite no emergency an agent acts outside the terms of the agency
agreement he has with his principal. The principal agrees to be
bound by these actions in any case. This is an example of an agency
created by:
A
B
C
D
apparent authority
consent
necessity
ratification
ANSWER: D
Sample Question
An insurance broker recommends and arranges an insurance policy
for his client and collects the premium for the insurer. The broker
subsequently advises the client on how to make a claim. At what
point in this scenario is the insurer the broker’s principal?
A
B
C
D
Recommendation of the policy
Arrangement of the policy
Collection of the premium
Advising on the claim
Answer
An insurance broker recommends and arranges an insurance policy
for his client and collects the premium for the insurer. The broker
subsequently advises the client on how to make a claim. At what
point in this scenario is the insurer the broker’s principal?
A
B
C
D
Recommendation of the policy
Arrangement of the policy
Collection of the premium
Advising on the claim
ANSWER: C
Sample Question
Mrs Williams suffers a loss under a household policy. When must
insurable interest exist for the claim to be valid?
A
B
C
D
Only when she first proposes for insurance
When the policy comes into effect
At the time of loss only
At inception and the time of the loss
Answer
Mrs Williams suffers a loss under a household policy. When must
insurable interest exist for the claim to be valid?
A
B
C
D
Only when she first proposes for insurance
When the policy comes into effect
At the time of loss only
At inception and the time of the loss
ANSWER: D
Sample Question
Fire destroys an injection moulding machine insured on an indemnity
basis. The measure of indemnity would be calculated by:
A
B
C
D
the cost of a new replacement less an amount for wear and tear
the cost of new replacement
the original purchase price
the original purchase price less an amount for war and tear
Answer
Fire destroys an injection moulding machine insured on an indemnity
basis. The measure of indemnity would be calculated by:
A
B
C
D
the cost of a new replacement less an amount for wear and tear
the cost of new replacement
the original purchase price
the original purchase price less an amount for war and tear
ANSWER: A
Sample Question
Five years ago Mr O’Shea bought a table for the equivalent of €400,
which is now worth €200. It is badly damaged and will cost €600 to
repair, or €500 to replace. How much will Mr O’Shea be paid under
his new for old policy, given that this is a valid claim and no excess
applies?
A
B
C
D
€200
€400
€500
€600
Answer
Five years ago Mr O’Shea bought a table for the equivalent of €400,
which is now worth €200. It is badly damaged and will cost €600 to
repair, or €500 to replace. How much will Mr O’Shea be paid under
his new for old policy, given that this is a valid claim and no excess
applies?
A
B
C
D
€200
€400
€500
€600
ANSWER: C