Insurance Underwriting – Non-UK (WUE) Practice Exam

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• In insurance terminology, a risk too serious to be insured is called a
• In underwriting, which statement best describes a hazard?
• Business interruption insurance usually does NOT arise from:
• What is the risk premium? (Expected claims = $250,000; IBNR = 10%)
• Which is a method of collecting premium?
• Excess of loss reinsurance can be written on which basis?
• Where are the insured perils listed in a property insurance policy?
• In an insurance contract, the value exchanged between the insured and insurer is known as
• Breach of a condition precedent to liability gives the insurer the right to
• If a loss ratio is 120%, how much is paid in claims per $100 of premium?
• What is the term for the proposer’s duty to disclose material information in an insurance contract?
• At a 2.5% rate, what is the premium for $50,000 of coverage?
• Utmost good faith is usually:
• What type of policy should the supermarket have in effect to deal with this loss?
• If turnover is $30,000,000 and the rate is 0.5‰, what is the premium for a $5,000,000 indemnity limit?
• If a loss ratio is 115%, how much is paid in claims for every $100 of premium?
• Which describes the primary purpose of reinsurance for an insurer?
• At a 2.5% rate, what is the premium for $2,000 of coverage?
• In reinsurance, which arrangement transfers a fixed percentage of every risk from the ceding insurer to the reinsurer?
• A common exclusion to a theft policy is:
• What do insurance underwriters need to consider when assessing the exposure caused by a property risk?
• If the premium hasn't been paid but is intended, the contract is which of the following?
• Who would be appointed to make initial enquiries about the loss and then to ensure that an accurate claims settlement is achieved?
• Failure to tell the insurer something important is called?
• An insurance policy can best be described as:
• When underwriting employers' liability insurance, which factor is considered the primary rating driver?
• Other than the use of the building, what is the main underwriting consideration for glass insurance?
• Uninsured working expenses under business interruption include which item?
• When would an insured use a 24/7 helpline?
• A material damage warranty is usually automatically imposed under which type of policy?
• In the pooling of risks, the law of large numbers helps insurers with making reliable:
• Fire doors and resistant walls are considered what type of hazards in underwriting?
• With surplus reinsurance, the insurer:
• What is the purpose of a cover note?
• Extended warranty insurance primarily covers which risk?
• At a 2.5% rate, what is the premium for $24,000 of coverage?
• The premium base in a public and products liability policy is typically:
• Insurers X and Y have returns on capital employed of 6.5% and 8.5% respectively. This tends to suggest that:
• What does a return on capital employed (ROCE) of 10% indicate?
• Glass insurance typically excludes breakage caused by
• What is the period of cover for a single policy from inception to its first renewal called?
• What ratio is most likely used to assess the quality of profits excluding investment income?
• What does IBNR stand for in claims reserving?
• At a 2.5% rate, what is the premium for $25,000 of coverage?
• A ship explosion in the Atlantic is an example of which risk profile?
• For fire insurance underwriting, the two most important underwriting factors are:
• Which policy protects professionals such as accountants against liability for professional services?
• Which items are included in a quotation pack?
• Which policy is usually sold at the point of sale?
• What is the most common way for an insurer to get risk information?
• This type of policy is usually based on the level of benefits selected and the premiums tend to increase with the age of the policyholder.
• What is the term for failing to disclose information that would influence an underwriter's decision?
• Short-period premium is usually charged when?
• What document proves insurance exists for compulsory insurance?
• Which of the following is a pecuniary insurance?
• An insurer calculates a claims loss ratio by dividing the:
• Who is responsible for providing information that could affect risk classification?
• Professional indemnity insurance is usually made on what basis?
• Which risk category is most likely to trigger a supplementary questionnaire due to complexity?
• Which component confirms the exact cover provided to the insured?
• Apart from the destination, what is the most important underwriting factor for annual travel insurance?
• Which term best describes the top level of the information pyramid?
• Omitting a material fact on a public liability form is considered
• This form of issuing a policy is called a:
• For which risk are insurers most likely to request the completion of a supplementary questionnaire?
• For theft of shop stock to be covered, what is usually required?
• In personal accident insurance, what is the main rating factor?
• General exclusions common to all policies are called which of the following?
• A clause requiring prompt submission of a claim is an example of:
• This section of the policy includes the name of the insurer and, in some cases, the address and company logo:
• What is the primary function of an uninsured loss recovery service?
• Calculate ROCE given premium 350,000, claims 150,000, and capital 1,000,000.
• Which occurrence is usually excluded under travel insurance?
• For which class would insurers request a supplementary questionnaire rather than a survey?
• Which formula represents the incurred loss ratio?
• Besides building use, what is the main underwriting factor for glass insurance?
• Which term describes the ratio comparing claims to booked premiums?
• Which professional handles initial loss enquiries and oversees settlement?
• The top level of the information pyramid is:
• In policy terms, utmost good faith is described as what type of condition?
• When a quotation is issued, the status of cover is:
• Which clause allows the insurer to recover its outlay from a third party?
• Which concept explains why insurers can predict losses more accurately as the number of similar risks increases?
• When is an arbitration clause typically used in an insurance policy?
• Which statement best describes the premium calculation formula?
• Which option describes the items that are optional extensions under Business Interruption?
• Which policy feature activates when a claim exceeds a threshold and pays out in full?
• Which party typically purchases an extended warranty policy on electrical goods?
• A return on capital employed of 25% means which of the following?
• A very large excess is known as a
• The insured's duty to minimize a loss is an example of which type of contract condition?
• Reinsurers want to increase investment at what stage in the market cycle?
• The insured's obligation to mitigate loss after a claim is best described as which of the following?
• Who would take out an extended warranty insurance policy on electrical goods?
• At a 2.5% rate, what is the premium for $6,000 of coverage?
• Who has an obligation to renew an insurance policy at the end of the term?
• Most money policies exclude dishonesty by an employee unless discovered within how many days?
• Which factor is NOT among the two most important underwriting factors for fire insurance?
• An insurer will usually require an examination of financial accounts when considering a proposal for which class of insurance?
• What type of policy is sometimes issued on a short-period basis?
• Premium on a household policy with sum insured $200,000 and rate of 1.5 per mille is
• What characterizes a hard market in insurance?
• If expected claims are $300,000 and IBNR is 12%, what is the risk premium?
• What term describes the premium paid at policy renewal?
• With a capital employed of $2,000,000, an ROCE of 12% yields what profit?
• If Insurers X and Y have ROCE of 6.5% and 8.5% respectively, this suggests:
• An insurer is embarking on a new class of insurance. Which type of reinsurance should it arrange?
• If the premium rate is 2.5%, what is the premium for a $1,000 insured?
• An insurer has arranged reinsurance on a risk. This means that the insurer has:
• Excess of loss reinsurance primarily protects an insurer against which type of loss?
• Which risk is typically covered by public liability insurance policy?
• What type of reinsurance would a liability account manager take out to protect against large losses?
• What is a clause requiring removal of sawdust daily in a fire policy?
• At a 2.5% rate, what is the premium for $15,000 of coverage?
• In a tiered premium formula where the first 200,000 is charged at 1.5% and the excess at 1.0 per mille, what does this illustrate?
• Lapse flow analysis relates to which type of business?
• Which statement best describes stop loss reinsurance?
• What is the legal significance of an insurance policy?
• In a fire policy, the daily sawdust removal clause is described as what?
• What is the main rating factor for products liability insurance?
• Excess of loss reinsurance is typically written on which basis?
• At a 2.5% rate, what is the premium for $4,000 of coverage?
• Which cover under a Household insurance policy covers the reasonable cost of alternative but similar accommodations while the premises are uninhabitable due to an insured peril?
• Which document serves as evidence that insurance has been granted, pending the issue of a new policy or endorsement?
• What is the premium for a sum insured of $230,000 when the first $200,000 is charged at 1.5% and the remaining $30,000 at 1.0 per mille?
• Which type of reinsurance is used by insurers to protect their loss ratio?
• The policy feature that reduces claims payments in proportion to underinsurance is called:
• Which policy is usually sold at the point of sale, providing immediate protection at purchase?
• What is the principal consideration when underwriting employers' liability insurance for a company?
• How do fraudulent claims affect an insurer?
• The term used to describe a risk that has been passed to a reinsurer is:
• A document issued as evidence that insurance has been granted, pending the issue of a new policy or endorsement is known as a
• At a 2.5% rate, what is the premium for $20,000 of coverage?
• If the proposer changes the vehicle engine after a quote, what is the insurer's obligation?
• The insurer's quotation represents the:
• Which item is not included in the ROCE calculation example provided?
• Implied conditions such as insurable interest and utmost good faith are:
• Under a cancellation condition, what are usually the minimum number of days an insurer must give when sending written notice of cancellation?
• Under a household insurance policy, how does the insurer generally discourage claims for items that do not exist?
• Which of the following correctly shows the three elements of the combined operating loss ratio?
• Which of the following is a reason to issue a cover note?
• Which document is used by underwriters to obtain key information about the risk?
• Which item is NOT typically included in a quotation pack?
• When a quotation is issued, cover is considered to be:
• A supplementary questionnaire is typically requested for which class of insurance?
• Why would an insured choose a voluntary excess?
• Which term describes exclusions common to all general insurance policies (such as war and terrorism)?
• In introductory policy text, which term describes the opening section?
• If a risk is valued at $500,000 with an estimated maximum loss of 60%, what amount of the risk would the insurer be able to retain?
• Which statement best describes Return on Capital Employed (ROCE) in insurer performance?
• Which part of a policy personalises the cover?
• Which measure combines claims costs and underwriting expenses to assess underwriting profitability, excluding investment income?
• During renewal, which action is typically performed by the insurer?
• Which document confirms the existence of an insurance contract?
• Which item is typically excluded from a theft policy?
• An employee falls from a faulty ladder and incurs medical costs $650 and lost wages $1,500. If the employer is liable, how much is the Employer's Liability policy likely to pay?
• If underwriting capacity decreases, price of insurance will?
• What is the primary purpose of reinsurance?
• At a 2.5% rate, what is the premium for $3,000 of coverage?
• The declaration on a consumer's proposal form is intended to do which of the following?
• What would be the annual premium for a $10,000,000 indemnity limit when turnover is $25,000,000 and the rate is 0.8 per mille?
• In reinsurance, what does 'retention' refer to?
• Which section of the policy typically identifies the insurer's identity and branding?
• Which of the following is achieved by the complete and final agreement of all terms between the insured and the insurer by the time that they enter into the contract, with the contract documentation provided promptly thereafter?
• Which insurance class is most affected by electrical breakdown risk?
• Which type of insurance covers financial losses due to interruption of business operations?
• Why are material circumstances important to underwriters?
• An event with low frequency but high severity is described as which of the following?
• What effect on the insurance market cycle does a reduced capacity to accept risks have?
• What does per mille denote?
• Why is it important that an insurer accurately reserves for claims?
• With a franchise of 2,500, a claim of 2,400 would be paid by the insurer
• In the event of an increased capacity for underwriting risks, the price of insurance would be expected to:
• Which section of policy wording would you consult to understand the claims process?
• If the insured fails to meet a condition precedent to liability, the insurer will
• The statement signed by the proposer confirming that the information supplied is true and correct is a:
• Which trio correctly represents the components of the combined operating loss ratio?
• In risk management terms, which statement best defines a hazard?
• Under subrogation, when can the insurer exercise its rights?
• Meredith has a personal accident and sickness policy with a franchise of seven days for sickness cover. If she is off work for ten days, what will her insurer pay?
• In the policy examples, which itemization describes what is part of Building?
• In risk premium, the term 'frequency' refers to what?
• What policy covers an accountant's liability for staff errors/omissions?
• Mary has a building policy with sum insured $100,000 and a franchise of $2,500. How much would insurers pay if she submitted a claim for $5,500?
• If a claim is 1,350 with a 300 excess, the insured receives
• When arranging a contract of insurance, what is the payment of the premium known as?
• The benefit received by one party in return for a promise of performance of an act of another is:
• At a 2.5% rate, what is the premium for $100,000 of coverage?
• At a 2.5% rate, what is the premium for $5,000 of coverage?
• Insurance policies are most commonly issued in a:
• The amount paid to an insurer to obtain cover is known as the:
• A franchise in insurance means
• At a 2.5% rate, what is the premium for $12,000 of coverage?
• Which statement best describes a material factor in underwriting?
• During the 2024 underwriting year, what was the total premium paid?
• Who has an obligation to renew an insurance policy at the end of the term?
• What is the effect on the premium when choosing a voluntary excess?
• Professional indemnity insurance is usually made on what basis?
• Which statement about renewal is most accurate?
• What information does an underwriter use to assess profitability of a class of business?
• In percentage terms, what is the insurer's estimated maximum loss for any one fire?
• Which insurance class is most influenced by latent claims affecting risk premium?
• Which of the following, in normal legal definition is considered a minor contract term but, in insurance terms goes to the heart of the contract and must be complied with?
• With a commercial combined insurance contract, what is most likely to indicate a moral hazard?
• In the given example, what percentage of the risk is retained by the insurer?
• Which policy is specifically designed to cover construction projects and associated works for material damage?
• The condition that reduces claims payments in proportion to any underinsurance is known as:
• If a receipt submitted for a claim is tampered with, the insurer is most likely to
• Which type of reinsurance protects an entire account from large losses?
• In underwriting terminology, policy terms and conditions are sometimes referred to as
• Latent claims are claims not known at policy issue but may surface later. True or false?
• Calculate the premium for a household policy with sum insured $150,000 and rate 2.0 per mille.
• Where would someone find how to make a claim in their policy wording?
• What term describes funds set aside to pay future claims?
• If turnover is $15,000,000 and the rate is 0.5‰, what is the premium for a $5,000,000 indemnity limit?
• Which peril is NOT usually excluded under household buildings insurance when the property is unoccupied for over 30 or 60 days?
• In insurance contracts, a warranty is a promise by the insured that a fact is true and essential to the contract.
• An excess accepted by the insured in return for a premium discount is known as:
• If an engineering firm wants to cover itself against third party claims for personal injury or damages arising from its operations, it will need to take out a:
• Security, property construction, and vehicle condition are examples of which hazard?
• In insurance, policy terms and conditions are sometimes referred to as
• Another name for the preamble in an insurance policy is:
• An insurance policy shows a gross premium of $1,000, settled claims of $300 and outstanding claims of $200. What is the incurred loss ratio?
• General exclusions common to all policies are best described as which type of exclusions?
• At a 2.5% rate, what is the premium for $10,000 of coverage?
• Which policy covers a solicitor for loss of profits after an insured loss?
• Which principle ensures that all terms are agreed before the contract is binding and that the documentation is issued promptly?
• Which statement best describes the purpose of endorsements in an insurance policy?
• An extended warranty insurance policy commonly excludes risks covered by which policy?
• A hazard can be defined as
• What is the principal rating factor when underwriting employers' liability insurance?
• Some general insurance exclusions (e.g., war and terrorism) are common to all general insurance policies and are called:
• In a legal expenses insurance policy, which costs are normally covered?
• At a 2.5% rate, what is the premium for $8,000 of coverage?
• What does the loss ratio measure?
• Which statement best describes a franchise in an insurance policy?