Question 1

The Financial Ombudsman Service was set up to assist insurance

brokers.

policyholders.

intermediaries.

companies.

Question 2

Under the Financial Conduct Authority’s complaints-handling requirements, eligible

complainants are defined as any

consumers or micro businesses.

person able to refer a complaint to the Financial Services Compensation Scheme.

personal lines policyholder only.

private individual only.

Question 3

An insurer is in the process of settling a claim and has already made three interim payments
of £300000 and it comes to their notice that the insured did not disclose the material fact,
how much can they reclaim from their insured

Nil

£900,000

£600,000

£300,000
 Question 4

Under its disciplinary procedures, when is the Prudential Regulation Authority most likely to
take action against an approved person, instead of the firm?

When the approved person has deliberately breached the regulations.

When the firm has breached the reasonable care rule in maintaining its systems and controls.

When the approved person has performed an influence and a regulatory failure has occurred in the
area for which he is responsible.

When the approved person has delegated correctly, but the fault was outside of his control.

Question 5

What is the current rate of Insurance Premium Tax payable, if any, when taking out a travel
insurance policy?

C. 12%

D. 20%

B. 9.5%

Nil.

Question 6

Under which insurance principle can an insurer assume the rights of the insured against a
third party to recover money paid out under a claim?

Contribution.

Subrogation.

Arbitration.
Average.

Question 7

A farmer loses a building containing livestock feed during a lightning strike. The loss adjuster
advises the insurer that the building is adequately insured, however the livestock feed is only
insured for 80% of market value. The claim is paid with no deduction for underinsurance.
This is an example of the application of the

principle of contribution.

special condition of average.

subrogation waiver.

first loss basis of cover.

Question 8

An insurer is deemed to have waived its rights regarding the disclosure of information on a
proposal form when the proposer has neglected to

fully complete the form and the insurer has not requested further details.

advise of a material circumstance that is a fact of law.

advise of a material circumstance that is common knowledge.

advise a material circumstance that improves the risk.

Question 9

At which stage of a policy’s lifecycle does the Financial Conduct Authority expect an insurer
to treat the customer fairly?

At inception of the policy.

At the proposal stage.

At the time of a claim.

During the whole lifecycle.

Question 10

Under the general insurance compensation arrangements of the Financial Services

Compensation Scheme, for what total percentage of a compulsory third party motor
insurance claim may compensation be provided?

C. 90%

A. 70%

B. 80%

D. 100%

Question 11

A building valued at £250,000 is jointly owned by Karen and Delsin, who each individually
arrange insurance on it. Karen insures the building for £100,000, whilst Delsin insures it for
£150,000. How much of the valid claim is each insurer liable to pay if a loss of £55,000
occurs?

Karen’s insurer is liable for £27,500 and Delsin’s for £27,500.

Karen’s insurer is liable for £22,000 and Delsin’s for £33,000.

Karen’s insurer is liable for £55,000 and Delsin’s for £55,000.

Karen’s insurer is liable for £33,000 and Delsin’s for £22,000.

Question 12
 A claims handler is investigating a major fire claim at a policyholder’s warehouse. He
unexpectedly receives the offer of a foreign holiday as a goodwill gesture from the
policyholder who is grateful for his efforts. What should the claims handler do to comply with
the Chartered Insurance Institute’s Code of Ethics?

Reject the offer until the validity of the claim has been established and the claim has been settled.

Accept the offer and pass all further handling of the claim to a colleague.

Reject the offer entirely.

Accept the offer and continue handling the claim.

Question 13

For which type of establishment is public liability insurance compulsory by statute?

A theme park.

A sports centre.

A horse-riding school.

A swimming pool.

Question 14

Insurers collect Insurance Premium Tax on behalf of

HM Revenue & Customs.

the Compensation Recovery Unit.

the Department for Works and Pensions.

the Prudential Regulation Authority.

 Question 15

Under a household insurance policy, the reinstatement basis of cover is more commonly
known as

underinsurance cover.

new for old cover.

first loss cover.

agreed value cover.

Question 16

A Norwegian insurer wants to set up an office in the City of London. In order for the insurer
to be authorised to transact insurance business, approval must be obtained from the

Financial Conduct Authority.

Department for Business, Energy & Industrial Strategy.

Foreign and Commonwealth Office.

Home Office.

Question 17

Which insurance principle seeks to place the insured in the same position after an insured
loss as existed immediately before

Indemnity.

Subrogation.

Contribution.
Utmost good faith.

Question 18

In what circumstances may an insurer have the right to avoid paying a claim and to void a
household contents insurance policy from inception?

When a premium instalment is not paid.

When a deliberately undisclosed material circumstance is discovered.

When a second insurer is used by the insured.

When the value of contents is mistakenly underestimated by the insured.

Question 19

An insurance proposal received for an engineering company’s premises reveals that the
building is 25 years old and has timber flooring, an intruder alarm and a sprinkler system.
Which aspect is an underwriter most likely to consider a physical hazard?

The age of the building.

The sprinkler system.

The intruder alarm.

The timber flooring.

Question 20

What is the principle purpose of the Proceeds of Crime Act (2002)?

To facilitate the conviction of persons suspected of money laundering activities.

To empower authorities to confiscate funds where it is believed that such funds have been obtained
unlawfully.

To evaluate the annual loss to the British economy from organised criminal activities.

To enable retrieved goods which have been obtained by theft or deception to be returned to their
rightful owners.

Question 21

When a claim is made under a standard fire insurance policy, at what stage can an insurer
begin to exercise subrogation rights?

As soon as a valid claim is notified.

As soon as the insured has been paid.

As soon as any third party admits liability.

As soon as settlement has been agreed.

Question 22

An insurer’s underwriting manager is proposing to introduce a new household insurance

scheme for civil servants which will NOT be available to individuals of a particular religious
or political belief. What is the significance of this proposal, if any, in the context of the
Chartered Insurance Institute’s Code of Ethics?

It is of no significance as marketing strategy is not covered by the Code of Ethics.

It is a positive indicator of compliance with the Code of Ethics.

It is a negative indicator of compliance with the Code of Ethics.

It is of no significance as underwriting strategy is not covered by the Code of Ethics.

 Question 23

Following a football match, 200 rival fans riot in the street setting fire to cars and breaking
shop windows. The window of a boutique is broken and smoke from a burning car outside
damages the stock. What is the proximate cause of the stock damage?

The breakage of the boutique window.

The riot.

The fire from the cars.

The football match.

Question 24

The Insurance: Conduct of Business sourcebook (ICOBS) is issued and regulated by the

Chartered Insurance Institute.

Association of British Insurers.

Financial Conduct Authority.

Financial Ombudsman Service.

Question 25

The Prudential Regulation Authority’s Principles for Businesses states that a firm must
maintain financial resources that are

less than its liabilities.

easy to liquidate.
adequate.

equal to its liabilities.

Question 26

In terms of the duty of fair presentation, what is the difference, if any, between a non-life
policy and a life policy?

There is no difference.

It only applies at inception for a life policy.

It only applies at inception for a non-life policy.

It applies continuously for a life policy.

Question 27

What are the key elements of the Chartered Insurance Institute’s Code of Ethics relating to
treating people fairly?

Insurers should observe the principle of good faith at all times.

Discrimination based on race, sex, religion, age or disability should be prevented.

A cooling-off period should be provided and premiums returned to customers who choose not to
complete an insurance purchase.

Claim settlements are to be negotiated fairly and claim payments should be made promptly.

Question 28

When Sabana submitted a proposal form for her household insurance, she forgot to answer
one of the questions. The insurer did NOT query the missing information and the policy is
now in force. This is NOT regarded as non-disclosure because
Sabana intended to provide the insurer with the information.

Sabana could not be expected to know the answers.

the non-disclosure was not important.

the insurer has waived its right to the information.

Question 29

Which concept is reformed by the Contracts (Right of Third Parties) Act 1999?

Proximate cause.

Privity of contract.

Subrogation.

Estoppel.

Question 30

What type of insurance contract is a personal accident policy?

First loss.

Benefit.

Indemnity.

Agreed value.

Question 31
 The Prudential Regulation Authority requires an insurer to calculate its enhanced capital
requirement by adding an asset and an insurance-related requirement then deducting the

claims reserve provision.

equalisation provision.

incurred but not reported claims provision.

unearned premium provision.

Question 32

John has a complaint against his insurer and has received the insurer’s final response letter
upholding their original decision. How long does he have to refer his complaint to the
Financial Ombudsman Service?

Six months.

One year.

One month.

Three years.

Question 33

When considering an insurance contract, the Consumer Rights Act 2015 applies to
individuals and

insurers.

reinsurers.

brokers.
trade bodies.

Question 34

An insurer wishes to use a motor policyholder’s personal data in connection with a proposed
direct marketing campaign. Under the Data Protection Act 2018, it CANNOT proceed with
the mailing unless it

ensures that the policy is still valid.

gives the policyholder permission to opt in or out of the mailing.

ensures that all data is held electronically.

guarantees the policyholder’s anonymity.

Question 35

An insurance broker’s administration manager has discovered that the firm has no
complaints-handling system in place. What, if anything, is he required to do to comply with
the Chartered Insurance Institute’s Code of Ethics?

He should establish a written complaints-handling system to address complaints sent through social
media channels only.

He should assess working practices and satisfy himself that there is no area in which a complaint may
arise.

He should establish a written complaints-handling system applicable to all complaints, however

submitted, and ensure that it is followed.

He need take no action as insurance brokers are exempt from the provisions of the Code of Ethics.

Question 36

Which insurance principle gives an insurer the right to call upon other insurers to share in
the settling of a claim?
Average.

Good faith.

Subrogation.

ContributionQuestion 37

Question 37

Under the duty of fair presentation, what is required to be disclosed by the proposer in
relation to an insurance policy?

Facts of law which affect the assessment of the risk.

Financial details upon which ability to pay the premium can be assessed.

Material circumstances upon which the risk is to be assessed.

Full details of how the proposer has improved the risk.

Question 38

If an insured suffers a loss covered under her insurance policy, the measure of indemnity will
ensure that she will be

in a worse financial position than before the loss.

able to make a profit from the loss.

provided with replacement items.

placed in the same financial position as she was before the loss.
 Question 39

A transaction which is suspected of involving money laundering has been reported to and
validated by a firm’s Money Laundering Reporting Officer (MLRO). To which organisation
should the MLRO report this matter?

The Serious Fraud Office.

The Department for Business, Energy & Industrial Strategy.

The National Crime Agency.

HM Revenue & Customs.

Question 40

Insurance Premium Tax applies to

insurers’ premium income.

life insurance premiums only.

some general insurance premiums.

all insurance premiums.

Question 41

What are the main elements covered in the Chartered Insurance Institutes Code of Ethics
relating to provision of a high standard of service?

Accuracy, transparency and suitability.

Non discrimination, transparency, suitability.

Non discrimination, price competiveness and accuracy.

Accuracy, price competiveness and suitability.

Question 42

The insurance principle which imposes a duty on the parties of a contract ‘not to
misrepresent any matter relating to the insurance’ is known as

insurable interest.

good faith.

assignment.

legal personality.

Question 43

The proximate cause of a loss will always be the

last cause.

dominant cause.

first cause.

only cause.

Question 44

What financial indicator does the Prudential Regulation Authority monitor to determine the
continued viability of an insurer?

The loss ratio.

The share price.

The solvency margin.

The gearing ratio.

Question 45

Hiroshi effects two personal accident insurance policies. In respect of loss of limb cover, the
first policy provides £25,000 and the second policy provides £30,000. What is the total
amount that Hiroshi will receive in the event of a valid loss of limb claim?

A. £25,000

D. £55,000

B. £27,500

C. £30,000

Question 46

Under the Financial Conduct Authority’s regulations for training and competence, an
individual in the front office of an intermediary that deals with private customers can only
carry out unsupervised work once

he has been with the firm for a minimum period.

he has completed the relevant examinations.

he has been assessed as competent.

the job has been fully explained.

Question 47
 An intermediary gives advice on employers’ liability, public liability and professional
indemnity insurance. Which of these areas are regulated by the Financial Conduct Authority?

Employers’ liability, public liability and professional indemnity insurance.

Professional indemnity and public liability insurance only.

Employers’ liability and public liability insurance only.

Employers’ liability and professional indemnity insurance only.

Question 48

Which type of insurance is compulsory by statute for a manufacturing company that employs
salaried staff?

Fidelity guarantee insurance.

Products liability insurance.

Public liability insurance.

Employers’ liability insurance.

Question 49

In connection with an insurance policy, at what point does the duty of disclosure first arise?

At policy inception.

At the beginning of negotiations.

On the making of an offer.

On the acceptance of an offer.

 Question 50

Assuming that the sum insured is adequate, what is the measure of indemnity used in the
case of the total loss of a building?

The cost of reconstruction at the time of the loss.

The original purchase price.

The cost of reconstruction at the time of policy inception.

The original purchase price less an allowance for wear and tear.

QUESTION NO: 1

A firm of insurance brokers holds client records on an index card system and does NOT intend to
computerise this information. In what circumstances, if any, will these records be covered by the Data
Protection Act 2018?

A. Only if the records include details of race.

B. In no circumstances.

C. Only if the records include dates of birth.

D. In all circumstances.

QUESTION NO: 2

In order for a contract to be legally enforceable, what further action is required after offer and

acceptance?

A. Exchange of consideration between the two parties.

B. Witnessing by a third party.

C. Delivery of goods or services concerned.

D. Provision of written terms and conditions.

QUESTION NO: 10

In the event of an insurer including an unclear clause in its household insurance policy, which
statute could the policyholder rely upon if there was a contractual dispute?

A. The Contracts (Rights of Third Parties) Act 1999.

B. The Consumer Rights Act 2015.

C. The Criminal Justice Act 1993.

D. The Data Protection Act 2018.

QUESTION NO: 9

Which key test for money laundering is defined under the Proceeds of Crime Act 2002?

A. Criminal intelligence.

B. Criminal record.

C. Criminal possession.

D. Criminal lifestyle.

QUESTION NO: 8

When motor insurance is purchased directly with an insurer, what is usually the main disadvantage
to

the policyholder in the event of a claim compared to purchasing indirectly through a different
marketing channel?

A. The risk of losing a no claims discount is greater.

B. There is no intermediary to provide assistance.

C. A courtesy car is not available.

D. The policy excess is higher.

QUESTION NO: 7

What legally recognised financial relationship must exist, between a policyholder and the items
being

insured, to constitute a valid household contents insurance policy?

A. Insurable Interest.

B. Risk Indemnity.

C. Vicarious liability.

D. Delegated authority.

QUESTION NO: 6

How do an insurer's subrogation rights differ, if at all, between a theft policy and a personal accident

policy?

A. Subrogation rights do not apply under either policy.

B. Subrogation rights only apply under a theft policy.

C. Subrogation rights apply under both policies.

D. Subrogation rights only apply under a personal accident policy.

QUESTION NO: 5

Sara searches on a comparison website for car insurance. She selects the cheapest quotation and

pays by credit card for immediate cover. This is known as

A. unconditional acceptance.

B. an offer.

C. a Terms of Business Agreement.

D. conditional acceptance.

QUESTION NO: 4

The capital requirements of insurers and intermediaries are set out by

A. Prudential Regulation Authority rules.

B. Money Laundering Regulations.

C. Data Protection legislation.

D. Proceeds of Crime Act 2002.

QUESTION NO: 3

Lloyd's is known as a subscription market because

A. a fee must be paid.

B. if an insurer writes a particular class, he is expected to subscribe to the majority of these risks.

C. a number of syndicates accept a share of the same risk.

D. the underwriter assigns his signature individually to each risk.

NO.1 Peter currently has no penalty points on his driving licence, although he was convicted of a

minor motoring offence eight years ago. Why does Peter NOT need to disclose this to his motor

insurer?

A. It is information that would not influence an underwriter.

B. It represents a physical hazard.

C. It represents a moral hazard.

D. It is a spent conviction.

NO.2 Who can place business directly with a Lloyd's underwriter?

A. Lloyd's brokers only.

B. Lloyd's agents.

C. Members of the public.

D. Lloyd's brokers and other intermediaries.

NO.3 When should a direct insurer advise a policyholder in writing of its complaints-handling

procedure, to comply with regulatory requirements?

A. At the lime of a claim.

B. Within 30 days of cover being incepted.

C. At the time of the sale or immediately afterwards.

D. Within 7 days of a complaint being made.

NO.4 It is important to ensure the fair treatment of customers in order to comply with rules set by

the

A. Association of British Insurers.

B. Chartered Insurance Institute.

C. British Insurance Brokers' Association.

D. Financial Conduct Authority.

NO.5 A Terms of Business Agreement between an insurer and an intermediary will normally state

that the insurer will deal with the policyholder

A. via the intermediary.

B. only when collecting premiums.

C. outside normal business hours,

D. on a direct basis,

NO.6 Which professional body specialises in giving its members advice on the long-term
management of assets and liabilities?

A. The Lloyd's Market Association.

B. The Institute and Faculty of Actuaries.

C. The Chartered Institute of Loss Adjusters.

D. The International Underwriting Association of London.

NO.7 A firm of insurance brokers holds client records on an index card system and does NOT intend

to computerise this information. In what circumstances, if any, will these records be covered by the

Data Protection Act 2018?

A. Only if the records include details of race.

B. In no circumstances.

C. Only if the records include dates of birth.

D. In all circumstances.

NO.8 Under common law. when does the insured's duly of fair presentation cease with regard to

declarations that do NOT affect policy cover?

A. When a claim is submitted.

B. At renewal.

C. When the policy contract lakes effect.

D. When a claim is paid.

NO.9 Under the regulator's training and competency rules, a general insurance employee carrying

out a non-WiFID business activity

A. for 20 years after the employee stops carrying out the activity.

B. for 3 years after the employee stops carrying out the activity.

C. indefinitely.

D. for 10 years after the employee stops carrying out the activity.

NO.10 A risk that is always insurable is a

A. fundamental risk.

B. pure risk.

C. capital risk.

D. speculative risk.