#1
Which of the following is not a principle of insurance underwriting?
Indemnity
ExplanationPrinciple focusing on compensation for losses.
#2
What is the principle of 'indemnity' in insurance underwriting?
The insured must be compensated for their losses
ExplanationPrinciple focusing on compensation.
#3
Which of the following is an example of 'insurable interest'?
A homeowner purchasing insurance for their own home
ExplanationExample of personal interest in the insured property.
#4
What does 'moral hazard' refer to in insurance underwriting?
The intentional creation of risk by the insured
ExplanationIntentional risk creation by insured parties.
#5
Which of the following is a typical responsibility of an underwriter?
Assessing risk and determining premium rates
ExplanationResponsibility for risk assessment and premiums.
#6
What is 'subrogation' in insurance underwriting?
The right of the insurer to pursue legal action against a third party
ExplanationInsurer's right to pursue legal action.
#7
Which of the following is a primary consideration in determining insurance premiums?
Age of the insured
ExplanationAge's impact on premium determination.
#8
What is the purpose of 'uberrimae fidei' principle in insurance?
To disclose all material facts
ExplanationPrinciple emphasizing full disclosure.
#9
Which principle of insurance underwriting emphasizes that an insurance contract should be interpreted in favor of the insured in case of ambiguity?
Adhesion
ExplanationPrinciple favoring the insured in contract interpretation.
#10
Under the principle of 'adhesion,' who primarily drafts the terms of the insurance contract?
Insurer
ExplanationThe party responsible for drafting contract terms.
#11
What is the primary purpose of 'underwriting' in insurance?
To assess risk and determine premium rates
ExplanationAssessment of risk and setting premiums.
#12
What does the term 'risk assessment' refer to in insurance underwriting?
Evaluating the likelihood and potential impact of a loss
ExplanationEvaluation of loss probability and impact.
#13
What is 'reinsurance' in the context of insurance underwriting?
When an insurer transfers a portion of their risk to another insurer
ExplanationTransferring risk to another insurer.
#14
Which of the following is an example of 'exclusion' in an insurance policy?
Coverage for pre-existing conditions
ExplanationExample of a condition not covered by insurance.
#15
What does the principle of 'utmost good faith' require from both the insurer and the insured?
Complete honesty and disclosure of all material facts
ExplanationExpectation of honesty and full disclosure.
#16
In insurance underwriting, what is 'actuarial science' primarily concerned with?
Statistical analysis of risk and premiums
ExplanationStatistics-based analysis of risk and premiums.
#17
What is the role of 'loss ratio' in insurance underwriting?
To evaluate the insurer's underwriting performance
ExplanationAssessing underwriting performance.
#18
What is the significance of 'underwriting guidelines' in insurance?
To provide guidance on risk assessment and policy issuance
ExplanationGuidance for risk assessment and policy issuance.
#19
What is 'catastrophe modeling' used for in insurance underwriting?
To assess the likelihood of catastrophic events
ExplanationAssessing likelihood of catastrophic events.