1. Sample GEN 1A Questions

2. Insurance operates by paying the claims of the few from the premiums of many. This is known as : This is known as : A actuarial rating A actuarial rating B indemnity B indemnity C pooling of risk C pooling of risk D underwriting Sample Question

3. Answer Insurance operates by paying the claims of the few from the premiums of many. This is known as : This is known as : A actuarial rating A actuarial rating B indemnity C pooling of risk C pooling of risk D underwriting ANSWER : C

4. Sample Question An insurer is able manage high severity, low frequency risk in its property account by implementing a programme of : A loss prevention A loss prevention B loss reduction B loss reduction C risk retention C risk retention D risk transfer

5. Answer An insurer is able manage high severity, low frequency risk in its property account by implementing a programme of : A loss prevention A loss prevention B loss reduction B loss reduction C risk retention C risk retention D risk transfer ANSWER :D

6. Sample Question How does the provision of insurance help the cash flow of a business ? 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 A It lessens the need for the business to keep cash reserves B It prevents losses occurring which could interrupt the business operation operation C It provides for the payment of cash if the business makes a trading loss trading loss D It underwrites the debts owed by the business

7. Answer How does the provision of insurance help the cash flow of a business ? 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 A It lessens the need for the business to keep cash reserves B It prevents losses occurring which could interrupt the business operation operation C It provides for the payment of cash if the business makes a trading loss trading loss D It underwrites the debts owed by the business ANSWER:A

8. Sample Question When the insured has effected two policies which cover the same risk, this is known as : A co-insurance A co-insurance B dual insurance B dual insurance C mutual insurance C mutual insurance D reinsurance

9. Answer When the insured has effected two policies which cover the same risk, this is known as : A co-insurance A co-insurance B dual insurance B dual insurance C mutual insurance C mutual insurance D reinsurance ANSWER :B

10. Sample Question Which type of insurance policy is designed with the specific knowledge that a valid claim will occur ? A Comprehensive motor insurance A Comprehensive motor insurance B Household buildings insurance B Household buildings insurance C Professional indemnity insurance C Professional indemnity insurance D Whole of life insurance

11. Answer Which type of insurance policy is designed with the specific knowledge that a valid claim will occur ? A Comprehensive motor insurance A Comprehensive motor insurance B Household buildings insurance B Household buildings insurance C Professional indemnity insurance C Professional indemnity insurance D Whole of life insurance ANSWER :D

12. Sample Question A direct insurance company transacts business through their contact with : A Insurance brokers A Insurance brokers B Private individuals B Private individuals C Shareholders C Shareholders D Tied agents

13. Answer A direct insurance company transacts business through their contact with : A Insurance brokers A Insurance brokers B Private individuals B Private individuals C Shareholders C Shareholders D Tied agents ANSWER:B

14. Sample Question Insurance may only be placed at Lloyd’s via a Lloyd’s : A Agent A Agent B Broker B Broker C Name C Name D Syndicate

15. Answer Insurance may only be placed at Lloyd’s via a Lloyd’s : A Agent A Agent B Broker B Broker C Name C Name D Syndicate ANSWER:B

16. Sample Question A reinsurance company will cover risks : A already insured by insurance companies A already insured by insurance companies B directly from individuals B directly from individuals C from individuals via a broker C from individuals via a broker D on a co-insurance basis with an insurer

17. Answer A reinsurance company will cover risks : A already insured by insurance companies A already insured by insurance companies B directly from individuals B directly from individuals C from individuals via a broker C from individuals via a broker D on a co-insurance basis with an insurer ANSWER:A

18. Sample Question Who has the responsibility for providing advice to customers concerning loss control and loss prevention ? A An actuary A An actuary B A reinsurer B A reinsurer C A risk manager C A risk manager D An underwriter

19. Answer Who has the responsibility for providing advice to customers concerning loss control and loss prevention ? A An actuary A An actuary B A reinsurer B A reinsurer C A risk manager C A risk manager D An underwriter ANSWER:C

20. 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 A The proposer has more knowledge of the risk than the underwriter B The underwriter has more knowledge of the risk than the proposer B The underwriter has more knowledge of the risk than the proposer C The proposer and the underwriter have equal knowledge of the risk 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 the risk

21. 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 A The proposer has more knowledge of the risk than the underwriter B The underwriter has more knowledge of the risk than the proposer B The underwriter has more knowledge of the risk than the proposer C The proposer and the underwriter have equal knowledge of the risk 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 the risk ANSWER:A

22. Sample Question Which of the following describes the ‘creating a programme’ stage of general insurance planning? AEstablishing a snapshot of the current general insurance situation BEstablishing the ideal solution to the current general insurance situation CDeveloping a general insurance plan including risk control measures DPurchasing insurance or paying for risk control measures

23. Answer Which of the following describes the ‘creating a programme’ stage of general insurance planning? AEstablishing a snapshot of the current general insurance situation BEstablishing the ideal solution to the current general insurance situation CDeveloping a general insurance plan including risk control measures DPurchasing insurance or paying for risk control measures ANSWER:C

24. 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? AHigh interest rates BClaims frequency reduction CFailure of an insurer DIncreased underwriting profits

25. Answer In the context of the insurance market cycle, which of the following factors tends to lead towards a general increase in insurance premiums? AHigh interest rates BClaims frequency reduction CFailure of an insurer DIncreased underwriting profits ANSWER:C

26. Sample Question Which of the following does a public liability policy cover? AInjury to employees BFixed benefits for accidents CIllness arising from goods sold DInjury to third parties through negligence

27. Answer Which of the following does a public liability policy cover? AInjury to employees BFixed benefits for accidents CIllness arising from goods sold DInjury to third parties through negligence ANSWER: C

28. Sample Question Which of the following are required by statute to have professional indemnity insurance in the Republic of Ireland? AActuaries BChartered accountants CChartered surveyors DSolicitors

29. Answer Which of the following are required by statute to have professional indemnity insurance in the Republic of Ireland? AActuaries BChartered accountants CChartered surveyors DSolicitors ANSWER: D

30. Sample Question What does a revenue account show? AUnderwriting profit or loss BTotal profit or loss during a stated period CAssets and liabilities at a point in time DProjected business forecasts

31. Answer What does a revenue account show? AUnderwriting profit or loss BTotal profit or loss during a stated period CAssets and liabilities at a point in time DProjected business forecasts ANSWER:A

32. Sample Question What is the correct sequence of the risk management process? AEconomic control; identification; analysis BAnalysis; identification; economic control CIdentification; analysis; economic control DIdentification; economic control; analysis

33. Answer What is the correct sequence of the risk management process? AEconomic control; identification; analysis BAnalysis; identification; economic control CIdentification; analysis; economic control DIdentification; economic control; analysis ANSWER: C

34. Sample Question What do material facts enable a prudent underwriter to assess? AWhether the cover being sold is the most suitable cover for the proposer BWhether the claim against a policy is valid and how much should be paid CWhether a risk should be accepted and on what terms DWhether the proximate cause of a loss is an insured peril

35. Answer What do material facts enable a prudent underwriter to assess? AWhether the cover being sold is the most suitable cover for the proposer BWhether the claim against a policy is valid and how much should be paid CWhether a risk should be accepted and on what terms DWhether the proximate cause of a loss is an insured peril ANSWER:C

36. Sample Question In a typical commercial property policy the principle of utmost good faith (disclosure of material facts) is modified by the: Achange of risk (increase in risk of damage) clause Achange of risk (increase in risk of damage) clause Bsubrogation (recovery rights) clause Ccontribution (dual insurance) clause Dbusiness definition

37. Answer In a typical commercial property policy the principle of utmost good faith (disclosure of material facts) is modified by the: Achange of risk (increase in risk of damage) clause Achange of risk (increase in risk of damage) clause Bsubrogation (recovery rights) clause Ccontribution (dual insurance) clause Dbusiness definition ANSWER:A

38. 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? AThe insurer can avoid the policy from its inception BThe insurer must deal with the claim and ignore the conviction CThe insurer can avoid liability for the particular claim but otherwise leave the policy in force DThe insurer can sue the insured for damages

39. 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? AThe insurer can avoid the policy from its inception BThe insurer must deal with the claim and ignore the conviction CThe insurer can avoid liability for the particular claim but otherwise leave the policy in force DThe insurer can sue the insured for damages ANSWER: B

40. 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? AABC pays €60,000: XYZ pays €60,000 BABC pays €20,000: XYZ pays €40,000 CABC pays €40,000: XYZ pays €80,000 DABC pays €30,000: XYZ pays €30,000

41. 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? AABC pays €60,000: XYZ pays €60,000 BABC pays €20,000: XYZ pays €40,000 CABC pays €40,000: XYZ pays €80,000 DABC pays €30,000: XYZ pays €30,000 ANSWER: B

42. 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: ATort BContract CStatute DThe subject-matter of insurance

43. 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: ATort BContract CStatute DThe subject-matter of insurance ANSWER:B

44. 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? ABoth the insurance company and Michael Clark equally BMichael Clark CThe agent that removed the car from the motorway DThe insurance company

45. 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? ABoth the insurance company and Michael Clark equally BMichael Clark CThe agent that removed the car from the motorway DThe insurance company ANSWER: D

46. Sample Question To whom could a private individual go to arrange an insurance policy? AA captive insurance company BAn insurance intermediary CA Lloyd’s name DA reinsurance company

47. Answer To whom could a private individual go to arrange an insurance policy? AA captive insurance company BAn insurance intermediary CA Lloyd’s name DA reinsurance company ANSWER: B

48. Sample Question What is the principal service offered by an independent risk manager? AThe provision of specialist claims handling BAdvice on loss control and prevention CNegotiation for lower premium levels at renewal DProvision of loss assessment services in the event of a claim

49. Answer What is the principal service offered by an independent risk manager? AThe provision of specialist claims handling BAdvice on loss control and prevention CNegotiation for lower premium levels at renewal DProvision of loss assessment services in the event of a claim ANSWER: B

50. Sample Question In the offer and acceptance of a motor insurance contract what would be the consideration which makes the cover valid? AA cover note BThe certificate CThe policy DThe premium

51. Answer In the offer and acceptance of a motor insurance contract what would be the consideration which makes the cover valid? AA cover note BThe certificate CThe policy DThe premium ANSWER: D

52. 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: Aapparent authority Bconsent Cnecessity Dratification

53. 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: Aapparent authority Bconsent Cnecessity Dratification ANSWER: D

54. 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? ARecommendation of the policy BArrangement of the policy CCollection of the premium DAdvising on the claim

55. 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? ARecommendation of the policy BArrangement of the policy CCollection of the premium DAdvising on the claim ANSWER: C

56. Sample Question Mrs Williams suffers a loss under a household policy. When must insurable interest exist for the claim to be valid? AOnly when she first proposes for insurance BWhen the policy comes into effect CAt the time of loss only DAt inception and the time of the loss

57. Answer Mrs Williams suffers a loss under a household policy. When must insurable interest exist for the claim to be valid? AOnly when she first proposes for insurance BWhen the policy comes into effect CAt the time of loss only DAt inception and the time of the loss ANSWER: D

58. Sample Question Fire destroys an injection moulding machine insured on an indemnity basis. The measure of indemnity would be calculated by: Athe cost of a new replacement less an amount for wear and tear Bthe cost of new replacement Cthe original purchase price Dthe original purchase price less an amount for war and tear

59. Answer Fire destroys an injection moulding machine insured on an indemnity basis. The measure of indemnity would be calculated by: Athe cost of a new replacement less an amount for wear and tear Bthe cost of new replacement Cthe original purchase price Dthe original purchase price less an amount for war and tear ANSWER: A

60. 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€200 B€400 C€500 D€600

61. 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€200 B€400 C€500 D€600 ANSWER: C