CII W01 AWARD IN
GENERAL INSURANCE
NON-UK PRACTICE EXAM
COMPLETE 100Q
Question 1: Why is capital adequacy important for an insurer?
Choices:
1) It determines which customers may buy travel insurance 2) It guarantees that no claims will occur 3) It removes the need for reserves 4) It helps ensure the insurer has su�cient �nancial resources to absorb losses and meet obligations Correct Answer: It helps ensure the insurer has su�cient �nancial resources to absorb losses and meet obligations Explanation: Adequate capital provides a �nancial bu�er against adverse experience and supports the insurer's ability to remain solvent and pay policyholder obligations.Page 1
Question 2: A claimant deliberately in�ates the value of items allegedly stolen in an otherwise genuine burglary. What type of conduct is this?
Choices:
1) Risk pooling 2) Insurance claims fraud 3) Legitimate contribution 4) Agency by necessity
Correct Answer: Insurance claims fraud
Explanation: Deliberately exaggerating the amount of a claim to obtain more than is legitimately due is a form of insurance fraud.
Question 3: Why is contractual capacity relevant to an insurance contract?
Choices:
1) It replaces the need for consideration 2) The parties must have legal ability to enter into the contract 3) It determines the physical severity of every insured loss 4) It guarantees a claim will occur
Correct Answer: The parties must have legal ability to enter into the contract
Explanation: Capacity concerns whether a person or entity has legal competence to enter a binding contract. Lack of capacity can a�ect enforceability.Page 2
Question 4: Which action is most consistent with an insurer's responsibility to
combat �nancial crime?
Choices:
1) Accepting anonymous large payments without review 2) Deleting records immediately after policy inception 3) Applying customer due diligence, monitoring and reporting controls required by applicable rules 4) Ignoring unusual transactions from long-standing customers Correct Answer: Applying customer due diligence, monitoring and reporting controls required by applicable rules Explanation: Insurers should operate proportionate systems such as customer due diligence, transaction monitoring, record keeping and suspicious activity reporting where required.Question 5: What is a possible consequence of a serious relevant misrepresentation, subject to applicable law and policy terms?
Choices:
1) The insurer must always pay double the claim 2) The insured automatically becomes a reinsurer 3) The policy converts into a bene�t policy 4) The insurer may have a remedy a�ecting the contract or claim Correct Answer: The insurer may have a remedy a�ecting the contract or claim Explanation: Material non-disclosure or misrepresentation can give the insurer contractual or legal remedies, the nature of which depends on the circumstances and applicable law.Page 3