1. GEN 2A Sample Questions

2. Sample Multi-Choice Questions

3. Sample Question  Which regulatory tool is used to ensure assets are more than adequate to meet liabilities? ADeposit requirement BReserve requirement CCapital requirement DRight of examination

4. Answer  Which regulatory tool is used to ensure assets are more than adequate to meet liabilities? ADeposit requirement BReserve requirement CCapital requirement DRight of examination Answer: C

5. Sample Question  The Motor Insurance Advisory Board (MIAB) recommended which of the following measures? AGreater use of experts in legal cases BEarlier communication of renewal terms to motor policyholders CGuidelines on damages to apply to the Personal Injuries Assessment Board (PIAB) DAn increase in the solvency margins of authorised motor insurers

6. Answer  The Motor Insurance Advisory Board (MIAB) recommended which of the following measures? AGreater use of experts in legal cases BEarlier communication of renewal terms to motor policyholders CGuidelines on damages to apply to the Personal Injuries Assessment Board (PIAB) DAn increase in the solvency margins of authorised motor insurers Answer: C

7. Sample Question  Member States of the European Union are not permitted to grant authorisation to an insurance undertaking where there are any close links: Awith any other commercial enterprise Bwith any other business unless there are common directors appointed to each entity Cwith any other business unless prior notification is given to the regulator Dwith any other business unless they do not prevent effective supervision

8. Answer  Member States of the European Union are not permitted to grant authorisation to an insurance undertaking where there are any close links: Awith any other commercial enterprise Bwith any other business unless there are common directors appointed to each entity Cwith any other business unless prior notification is given to the regulator Dwith any other business unless they do not prevent effective supervision Answer: D

9. Sample Question  An insurer’s solvency margin is reduced by reinsurance provision, but up to what maximum limit? A10% B25% C50% D75%

10. Answer  An insurer’s solvency margin is reduced by reinsurance provision, but up to what maximum limit? A10% B25% C50% D75% Answer: C

11. Sample Question  If a Non-Life insurer fails to maintain an adequate solvency margin, what power is given to the Financial Regulator (FR) by virtue of the 1994 Non-life framework regulations? AImposition of a fine BControl over the disposal of assets CPublicising the inadequacy in the National press DWithdrawal of authorisation

12. Answer  If a Non-Life insurer fails to maintain an adequate solvency margin, what power is given to the Financial Regulator (FR) by virtue of the 1994 Non-life framework regulations? AImposition of a fine BControl over the disposal of assets CPublicising the inadequacy in the National press DWithdrawal of authorisation Answer: B

13. Sample Question  Under the terms of the Insurance Acts what action (if any) can the Financial Regulator (FR) take if it feels that a person proposed as director of an authorised Non-Life insurer is not suitably qualified to hold that office? ANone. Effectively the Financial Regulator (FR) can only advise BThe Financial Regulator (FR) has the right to investigate but may then only offer advice to the Non-Life insurer CThe Financial Regulator (FR) can impose a time delay but not prohibit the appointment entirely DThe Financial Regulator (FR) can prohibit the appointment

14. Answer  Under the terms of the Insurance Acts what action (if any) can the Financial Regulator (FR) take if it feels that a person proposed as director of an authorised Non-Life insurer is not suitably qualified to hold that office? ANone. Effectively the Financial Regulator (FR) can only advise BThe Financial Regulator (FR) has the right to investigate but may then only offer advice to the Non-Life insurer CThe Financial Regulator (FR) can impose a time delay but not prohibit the appointment entirely DThe Financial Regulator (FR) can prohibit the appointment Answer: D

15. Sample Question  Which of the following methods of terminating an agency may lead to a breach of contract by the agent? APerformance BRevocation CRenunciation DFrustration

16. Answer  Which of the following methods of terminating an agency may lead to a breach of contract by the agent? APerformance BRevocation CRenunciation DFrustration Answer: C

17. Sample Question  Which of the following statements highlights a key difference between Multi-agency intermediaries and Authorised Advisors? AThe Multi-agency intermediary has a more onerous regulatory responsibility than an Authorised Advisor BThe Multi-agency intermediary cannot hold client money; an Authorised Advisor can CThe Multi-agency intermediary may provide advice only on those products from providers with whom it holds an agency appointment; an Authorised Advisor’s remit is wider DAn Authorised Advisor’s role is better suited to operating with a limited number of insurers than a Multi-agency Intermediary

18. Answer  Which of the following statements highlights a key difference between Multi-agency intermediaries and Authorised Advisors? AThe Multi-agency intermediary has a more onerous regulatory responsibility than an Authorised Advisor BThe Multi-agency intermediary cannot hold client money; an Authorised Advisor can CThe Multi-agency intermediary may provide advice only on those products from providers with whom it holds an agency appointment; an Authorised Advisor’s remit is wider DAn Authorised Advisor’s role is better suited to operating with a limited number of insurers than a Multi-agency Intermediary Answer: C

19. Sample Question  The Financial Regulator’s (FR) guidance notes for retail investment products in relation to the Criminal Justice Act 1994 relate to what subject? AAccounting practices BMoney laundering CCompetition DData Protection

20. Answer  The Financial Regulator’s (FR) guidance notes for retail investment products in relation to the Criminal Justice Act 1994 relate to what subject? AAccounting practices BMoney laundering CCompetition DData Protection Answer: B

21. Sample Question  Which of the following statements is true regarding the Consumer Information Act 1978 ? AThe Act is of general application and has no specific insurance requirements BThe Act gives insurers and policyholders equal rights CThe Act is concerned with the release of personal information to other parties DThe Act creates offences for insurers that make false statements

22. Answer  Which of the following statements is true regarding the Consumer Information Act 1978 ? AThe Act is of general application and has no specific insurance requirements BThe Act gives insurers and policyholders equal rights CThe Act is concerned with the release of personal information to other parties DThe Act creates offences for insurers that make false statements Answer: D

23. Sample Question  Which of the following best describes the trend in net underwriting results for the period 2001 to 2005 in the Irish non-life insurance market? AWorsening BImproving CStatic DFluctuating

24. Answer  Which of the following best describes the trend in net underwriting results for the period 2001 to 2005 in the Irish non-life insurance market? AWorsening BImproving CStatic DFluctuating Answer: B

25. Sample Question  Which of the following is not a responsibility of the Financial Regulator? AInsurance legislation and policy development BWordings approval and guidance CConsumer protection DAuthorisation and prudential supervision

26. Answer  Which of the following is not a responsibility of the Financial Regulator? AInsurance legislation and policy development BWordings approval and guidance CConsumer protection DAuthorisation and prudential supervision Answer: B

27. Sample Question  The exclusion imposed by the European Union relating to the granting of authorisation to an insurance undertaking where there are any ‘close links’ is based upon: Acommon activities Bcommon directors Ceffective regulatory supervision Dgeographic proximity

28. Answer  The exclusion imposed by the European Union relating to the granting of authorisation to an insurance undertaking where there are any ‘close links’ is based upon: Acommon activities Bcommon directors Ceffective regulatory supervision Dgeographic proximity Answer: C

29. Sample Question  Under the terms of the Insurance Act 1989 what is the measure used by the Financial Regulator (FR) in determining that a person proposed as director of an authorised Non-Life insurer is inappropriate to hold that office? AWhether the individual is of an appropriate age BWhether the individual is suitably experienced CWhether the individual is suitably qualified DWhether the individual has passed an examination

30. Answer  Under the terms of the Insurance Act 1989 what is the measure used by the Financial Regulator (FR) in determining that a person proposed as director of an authorised Non-Life insurer is inappropriate to hold that office? AWhether the individual is of an appropriate age BWhether the individual is suitably experienced CWhether the individual is suitably qualified DWhether the individual has passed an examination Answer: C

31. Sample Question  When accounting for monies received from its clients by an Authorised Adviser, the Financial Regulator (FR) insists upon: Aseparation of funds Bdesignation of funds Cidentification of funds Dcategorising of funds

32. Answer  When accounting for monies received from its clients by an Authorised Adviser, the Financial Regulator (FR) insists upon: Aseparation of funds Bdesignation of funds Cidentification of funds Dcategorising of funds Answer: A

33. Sample Question  What is a wholesale intermediary? AOne that has a scheme accessible to Multi-Agency Intermediaries BOne that is part of a supply chain accessing the Lloyd’s market COne that does not deal with personal insurances DOne that operates in the State on a ‘freedom of services’ basis

34. Answer  What is a wholesale intermediary? AOne that has a scheme accessible to Multi-Agency Intermediaries BOne that is part of a supply chain accessing the Lloyd’s market COne that does not deal with personal insurances DOne that operates in the State on a ‘freedom of services’ basis Answer: B

35. Sample Question  The case of Kelly v Hennessy 1995 determined that claims for nervous shock: Aare only payable if the claimant witnesses the accident giving rise to injury Bmust be caused at the time of or very shortly after an accident C will apply to subsequent distress or grief arising from an accident whenever it occurs Dmust involve more than one family member

36. Answer  The case of Kelly v Hennessy 1995 determined that claims for nervous shock: Aare only payable if the claimant witnesses the accident giving rise to injury Bmust involve immediacy of impact C will apply to subsequent stress or grief arising from an accident Dmust involve more than one family member Answer: B

37. Sample Question  Which of the following statements is true of a data controller in Turkey operating through an Irish intermediary? AThe data controller is subject only to Turkish law BThe data controller may apply to the Irish authorities for an exemption from the need to comply with Irish law CThe data controller may determine whether the Turkish or Irish data protection requirements apply DThe data controller is subject to Irish data protection legislation

38. Answer  Which of the following statements is true of a data controller in Turkey operating through an Irish intermediary? AThe data controller is subject only to Turkish law BThe data controller may apply to the Irish authorities for an exemption from the need to comply with Irish law CThe data controller may determine whether the Turkish or Irish data protection requirements apply DThe data controller is subject to Irish data protection legislation Answer: D

39. Sample Question  The European Communities (Misleading Advertising) Regulations, 1988 defines ‘misleading’ in terms of advertising that is: Adeceptive Bunreasonable Cfraudulent Dexcessive

40. Answer  The European Communities (Misleading Advertising) Regulations, 1988 defines ‘misleading’ in terms of advertising that is: Adeceptive Bunreasonable Cfraudulent Dexcessive Answer: A

41. Sample Question  Under the terms of the Consumer Protection Code issued by the Financial Regulator (FR) which of the following statements is true regarding ‘Chinese Walls’? AThey are barriers between one part of a regulated entity and another BThey are barriers between the regulated entity and the client CThey are barriers between the regulated entity and insurer DThey are barriers between the client and the insurer

42. Answer  Under the terms of the Consumer Protection Code issued by the Financial Regulator (FR) which of the following statements is true regarding ‘Chinese Walls’? AThey are barriers between one part of a regulated entity and another BThey are barriers between the regulated entity and the client CThey are barriers between the regulated entity and insurer DThey are barriers between the client and the insurer Answer: A

43. Sample Question  In the Financial Regulator’s (FR’s) mission statement what is the description of the attribute(s) required of financial institutions? ASound BSound and growing CSound and solvent DSound, growing and solvent

44. Answer  In the Financial Regulator’s (FR’s) mission statement what is the description of the attribute(s) required of financial institutions? ASound BSound and growing CSound and solvent DSound, growing and solvent Answer: D

45. Sample Question  A Non-Life insurer wishing to become authorised by the Financial Regulator (FR) in Ireland must have a minimum paid up share capital of a specified sum set between: A€500,000 and €1 million B€1 million and €2 million C€2 million and €5 million D€5 million and €10 million

46. Answer  A Non-Life insurer wishing to become authorised by the Financial Regulator (FR) in Ireland must have a minimum paid up share capital of a specified sum set between: A€500,000 and €1 million B€1 million and €2 million C€2 million and €5 million D€5 million and €10 million Answer: A

47. Sample Question  Which of the following has the main potential to lead to inconsistency in the application of regulations across the European Union? AInadequate guidance on timing under the EU directives BDerogations allowed in EU legislation CA concentration by legislators on consumer protection measures DMajority voting by the European Parliament on non-tax issues

48. Answer  Which of the following has the main potential to lead to inconsistency in the application of regulations across the European Union? AInadequate guidance on timing under the EU directives BDerogations allowed in EU legislation CA concentration by legislators on consumer protection measures DMajority voting by the European Parliament on non-tax issues Answer: B

49. Sample Question  If an independent intermediary acts for an insurer when settling claims, what is the intermediary entitled to do with information that is provided by the insurer that will affect the settlement of the claim? AThe intermediary should declare any conflict of interests to both parties and may then disclose the information to the client BProvided the intermediary advises the insurer of the intention to give the client the information, the intermediary may do so CSince the intermediary is predominantly the agent of the client, the information must be disclosed to the client DThe intermediary is not free to disclose the information to the client

50. Answer  If an independent intermediary acts for an insurer when settling claims, what is the intermediary entitled to do with information that is provided by the insurer that will affect the settlement of the claim? AThe intermediary should declare any conflict of interests to both parties and may then disclose the information to the client BProvided the intermediary advises the insurer of the intention to give the client the information, the intermediary may do so CSince the intermediary is predominantly the agent of the client, the information must be disclosed to the client DThe intermediary is not free to disclose the information to the client Answer: D

51. Sample Question  If an intermediary, authorised by the Financial Regulator (FR), wishes to open a new branch office, when must the Financial Regulator (FR) be notified? AIn advance BAt the time of opening CWithin 7 days of opening DWithin 1 month of opening

52. Answer  If an intermediary, authorised by the Financial Regulator (FR), wishes to open a new branch office, when must the Financial Regulator (FR) be notified? AIn advance BAt the time of opening CWithin 7 days of opening DWithin 1 month of opening Answer: A

53. Sample Problem Question

54. Sample Problem Question  ABC, an insurer established in Ireland, wish to extend their market and offer insurance in the United Kingdom. The insurer specialises in commercial property business.

55. Problem Question A  When ABC consider how to develop in the UK market, which of the following means would be controlled by the Irish Financial Regulator (FR) with the least permissible UK regulatory intervention? APassporting into the UK BOpening a branch office in the UK CPurchasing an existing UK insurer as a subsidiary DOperating through an intermediary based in the UK

56. Problem Question B  If ABC decides to operate on a freedom of services basis in the UK which of the following must occur first? AAdvising the Financial Regulator (FR) of the intention to open the Branch BAdvising the UK Regulator of the intention to open the Branch CSetting up the branch as a going concern DPrinting of stationery and opening of appropriate bank accounts

57. Problem Question C  If ABC decide to proceed on the basis of freedom of services, how soon must the Financial Regulator (FR) advise the UK authorities of this fact? AWithin 15 days BWithin 1 month CWithin 6 weeks DWithin 3 months

58. Problem Question D  If ABC wish all insurance contracts to be subject to Irish law, which of the following statements is true? AThe Second Non-Life Insurance Directive allows ABC to choose entirely at their discretion, provided the fact is made clear in documentation BThe Second Non-Life Insurance Directive insists that English or Scots law applies in order to protect the consumer CIf UK law permits another system of law to operate, ABC is free to choose Irish law to govern the interpretation, otherwise, English or Scots law would apply DThe UK regulatory authorities would need to give prior approval for Irish law to apply to the interpretation of UK issued policies

59. Problem Question E  When ABC consider their investment policy which of the following statements is true? AABC are free to choose any reasonable investment for funds regardless of currency BA fixed proportion (25%) of assets must be held in GB£ CABC must match liabilities and assets denominated in GB£ DABC must maintain the investment mix originally advised to the Financial Regulator (FR) when originally applying to carry on business in Ireland

60. Answers to Problem Question  1A – Answer: B  1B – Answer: A  1C – Answer: B  1D – Answer: C  1E – Answer: C