#1
What is the primary purpose of insurance?
Providing financial protection against risk
ExplanationFinancial protection against risk.
#2
Which financial ethics principle advocates for the responsible and sustainable use of financial resources?
Principle of Sustainability
ExplanationResponsible use of financial resources.
#3
What is the primary goal of ethical behavior in the financial industry?
Ensuring fair and honest treatment of stakeholders
ExplanationFair and honest treatment of stakeholders.
#4
In the context of financial ethics, what does the term 'conflict of interest' refer to?
A situation where a party has competing interests that may compromise their objectivity
ExplanationCompeting interests compromising objectivity.
#5
What is the purpose of a risk retention group in the insurance industry?
To pool the risks of similar businesses and provide liability coverage
ExplanationPooling risks and providing liability coverage.
#6
Which principle of insurance emphasizes that the insured should not gain from a loss?
Principle of Indemnity
ExplanationInsured should not profit from a loss.
#7
What does the term 'moral hazard' refer to in insurance?
The intentional increase in risk by the insured
ExplanationIntentional risk increase by insured.
#8
What is the primary function of the Financial Conduct Authority (FCA) in the UK?
Ensuring fair competition in financial markets
ExplanationEnsuring fair competition in financial markets.
#9
In insurance, what does the term 'deductible' refer to?
The amount paid by the insured before the insurance coverage kicks in
ExplanationAmount paid by insured before coverage.
#10
What is the role of an actuary in the insurance industry?
Assessing and managing risk through mathematical modeling
ExplanationAssessing and managing risk with math.
#11
Which ethical principle is based on treating all policyholders fairly and equally?
Principle of Equity
ExplanationFair and equal treatment of policyholders.
#12
What is the purpose of the 'Know Your Customer' (KYC) policy in the financial industry?
To prevent money laundering and fraud
ExplanationPreventing money laundering and fraud.
#13
Which ethical principle emphasizes the importance of honesty and transparency in insurance contracts?
Principle of Good Faith
ExplanationImportance of honesty and transparency.
#14
What is the purpose of reinsurance in the insurance industry?
To transfer a portion of risk to another insurer
ExplanationTransferring risk to another insurer.
#15
Which ethical principle emphasizes the duty of insurance professionals to act in the best interests of their clients?
Principle of Loyalty
ExplanationDuty to act in client's best interest.