Page 1 of 25
NEWLY UPDATED LM1-CII EXAM STUDYGUIDE
QUESTIONS AND ANSWERS
Why might a client choose the London Market in
preference to anywhere else in the world for its
insurance cover?
The London Market is able to accept complex risks
which are difficult to place elsewhere
How does the London subscription market operate?
A lead insurer quotes the terms for an insurance risk
which is supported by following insurers each for their
own proportion
By sharing information about their risk, the insured
satisfies which obligation?
Good faith
The proximate cause of a loss will always be the
Dominant cause
, Page 2 of 25
Which insurance principle gives an insurer the right to
call upon other insurers to share in the settling of a
claim?
Contribution
A building valued at £250,000 is jointly owned by Karen
and Terry, who each individually arrange insurance on
it. Karen insures the building for £100,000, whilst Terry
insures it for £150,000. If a valid claim of £55,000 occurs
how much is each insurer liable to pay?
Karen's insurer is liable for £22,000 and Terry's for
£33,000.
An insurer arranges for a policyholder's car to be
repaired following damage by a negligent third party
motorist. Under which insurance principle can the
insurer recover the paid claim?
Subrogation
, Page 3 of 25
Which insurance principle ensures that in the event of a
loss the insured is placed in the same financial position
as he was immediately prior to the loss?
Indemnity
The protection of jobs is classed as which type of
function of insurance?
A secondary function of insurance only
Which type of risk arises from a cause outside the
control of any one individual and affects a large number
of people?
Fundamental risk
For an individual, which class of risk is always
uninsurable?
Speculative risk
The subjective judgment that individuals or
organisations make about the characteristics and
severity of a risk is known as
NEWLY UPDATED LM1-CII EXAM STUDYGUIDE
QUESTIONS AND ANSWERS
Why might a client choose the London Market in
preference to anywhere else in the world for its
insurance cover?
The London Market is able to accept complex risks
which are difficult to place elsewhere
How does the London subscription market operate?
A lead insurer quotes the terms for an insurance risk
which is supported by following insurers each for their
own proportion
By sharing information about their risk, the insured
satisfies which obligation?
Good faith
The proximate cause of a loss will always be the
Dominant cause
, Page 2 of 25
Which insurance principle gives an insurer the right to
call upon other insurers to share in the settling of a
claim?
Contribution
A building valued at £250,000 is jointly owned by Karen
and Terry, who each individually arrange insurance on
it. Karen insures the building for £100,000, whilst Terry
insures it for £150,000. If a valid claim of £55,000 occurs
how much is each insurer liable to pay?
Karen's insurer is liable for £22,000 and Terry's for
£33,000.
An insurer arranges for a policyholder's car to be
repaired following damage by a negligent third party
motorist. Under which insurance principle can the
insurer recover the paid claim?
Subrogation
, Page 3 of 25
Which insurance principle ensures that in the event of a
loss the insured is placed in the same financial position
as he was immediately prior to the loss?
Indemnity
The protection of jobs is classed as which type of
function of insurance?
A secondary function of insurance only
Which type of risk arises from a cause outside the
control of any one individual and affects a large number
of people?
Fundamental risk
For an individual, which class of risk is always
uninsurable?
Speculative risk
The subjective judgment that individuals or
organisations make about the characteristics and
severity of a risk is known as
