RIBO Insurance Course Practice
Questions Week 3
What is a main benefit of having an insurance application completed in writing and
signed by the applicant?
Select one:
a. Provides accurate documentation of the coverage requested and confirms the
accuracy of the information.
b. Is less costly for the insurer to underwrite written applications than oral applications
c. Allows the insured to get a premium discount of fifteen percent
d. Allows the insured to choose which questions to answer and which to leave blank -
ANS-a. Provides accurate documentation of the coverage requested and confirms the
accuracy of the information. The benefit of a written application is that it provides
accurate documentation of what was requested, and indicates the intentions of the
parties at the time the application was made—particularly if the client signs it, as the
signature attests to the accuracy of the information.
What other types of supplemental applications might an intermediary add to a standard
application?
Select one:
a. Home business and oil tank
b. Overland water and criminal history
c. Rental supplements and pre-existing damage
d. Wood heat and sewer back up - ANS-a. Home business and oil tank. In addition to
the introductory client profiles form, the intermediary may use other specific application
forms for wood heat, rental supplements, oil tanks, overland water, or business in the
home.
What can result from an agent/broker's failure to advise insurers of all information
material to a risk during the application process?
Select one:
a. The agent/broker will have their license suspended.
b. The agent/broker may be found liable for losses that may occur.
c. The agent/broker will be required to return any commission earned from the sale.
,d. The agent/broker may have to pay a fine to the insurer. - ANS-b. The agent/broker
may be found liable for losses that may occur. Agents/brokers acting on behalf of
insurance companies and their clients have a duty to advise insurers of all the
information material to the risk.
Which national association is a main resource for and has a key initiative to create
industry-standard application forms?
Select one:
a. Financial Services Regulatory Association (FSRA)
b. Insurance Bureau of Canada (IBC)
c. Financial Services Regulatory Authority (FSRA)
d. Centre for Study of Insurance Operations/Centre D'Étude de la Pratique D'Assurance
(CSIO/CEPA) - ANS-d. Centre for Study of Insurance Operations/Centre D'Étude de la
Pratique D'Assurance (CSIO/CEPA). A number of different application forms are in use.
The CSIO is a national association of property and casualty insurers and independent
insurance brokers working together to achieve electronic business solutions for the
insurance industry. One of its projects is the creation of industry-standard application
forms.
Who is the person or firm that requests insurance?
Select one:
a. The insurer
b. The applicant
c. The underwriter
d. The loss adjuster - ANS-b. The applicant. An applicant is a person or firm requesting
insurance. The applicant completes and signs written application forms that contain
personal statements.
What does an underwriter watch for when there are more than one loss payees named
on an insurance application?
Select one:
a. Financial hardship, poor property maintenance, and temptation for fraud
b. Increased severity of loss, slow service, and a temptation for fraud
c. Financial success, slow service, and a temptation for fraud
d. Increased frequency of loss, poor property maintenance, and slow service - ANS-a.
Financial hardship, poor property maintenance, and temptation for fraud. Most insurers
have criteria that indicate an underwriter must investigate an application with multiple
, loss payees, as it could mean financial challenges, improper property maintenance, and
a temptation to stage a loss.
Why do insurers ask for prior insurance on an application?
Select one:
a. Confirm claim history and check for any lienholders
b. Confirm loss history and identify the loss payees
c. Identify previous declinations or cancellations and the amount of coverage
d. Confirm loss history and identify any gaps in coverage - ANS-d. Confirm loss history
and identify any gaps in coverage. Applicants are asked for prior insurers names, policy
numbers and policy expiry dates; and this information is used to check loss history,
identify any gaps, and potential moral hazard.
In ratemaking, what does the validity of statistics on past losses depend on?
Select one:
a. A larger sample group and longer time observed
b. A smaller sample group and shorter time observed
c. A larger sample group and shorter time observed
d. A smaller sample group and longer time observed - ANS-a. A larger sample group
and longer time observed. The validity of these statistics depends on loss data covering
several losses over time. The larger the group and the greater the time observed, the
more stable the results.
The degree of uncertainty of a prediction is reduced as the size of the sample is
increased is one of the reliability factors in which concept?
Select one:
a. Contribution
b. Reinsurance
c. Lloyd's of London
d. Law of large numbers - ANS-d. Law of large numbers. Law of Large numbers is a
mathematical premise which states—the degree of uncertainty is reduced as the
number of events increases.
Why would an underwriter reject a risk?
Select one:
a. The underwriter recently heard about a similar risk that experienced a serious loss
Questions Week 3
What is a main benefit of having an insurance application completed in writing and
signed by the applicant?
Select one:
a. Provides accurate documentation of the coverage requested and confirms the
accuracy of the information.
b. Is less costly for the insurer to underwrite written applications than oral applications
c. Allows the insured to get a premium discount of fifteen percent
d. Allows the insured to choose which questions to answer and which to leave blank -
ANS-a. Provides accurate documentation of the coverage requested and confirms the
accuracy of the information. The benefit of a written application is that it provides
accurate documentation of what was requested, and indicates the intentions of the
parties at the time the application was made—particularly if the client signs it, as the
signature attests to the accuracy of the information.
What other types of supplemental applications might an intermediary add to a standard
application?
Select one:
a. Home business and oil tank
b. Overland water and criminal history
c. Rental supplements and pre-existing damage
d. Wood heat and sewer back up - ANS-a. Home business and oil tank. In addition to
the introductory client profiles form, the intermediary may use other specific application
forms for wood heat, rental supplements, oil tanks, overland water, or business in the
home.
What can result from an agent/broker's failure to advise insurers of all information
material to a risk during the application process?
Select one:
a. The agent/broker will have their license suspended.
b. The agent/broker may be found liable for losses that may occur.
c. The agent/broker will be required to return any commission earned from the sale.
,d. The agent/broker may have to pay a fine to the insurer. - ANS-b. The agent/broker
may be found liable for losses that may occur. Agents/brokers acting on behalf of
insurance companies and their clients have a duty to advise insurers of all the
information material to the risk.
Which national association is a main resource for and has a key initiative to create
industry-standard application forms?
Select one:
a. Financial Services Regulatory Association (FSRA)
b. Insurance Bureau of Canada (IBC)
c. Financial Services Regulatory Authority (FSRA)
d. Centre for Study of Insurance Operations/Centre D'Étude de la Pratique D'Assurance
(CSIO/CEPA) - ANS-d. Centre for Study of Insurance Operations/Centre D'Étude de la
Pratique D'Assurance (CSIO/CEPA). A number of different application forms are in use.
The CSIO is a national association of property and casualty insurers and independent
insurance brokers working together to achieve electronic business solutions for the
insurance industry. One of its projects is the creation of industry-standard application
forms.
Who is the person or firm that requests insurance?
Select one:
a. The insurer
b. The applicant
c. The underwriter
d. The loss adjuster - ANS-b. The applicant. An applicant is a person or firm requesting
insurance. The applicant completes and signs written application forms that contain
personal statements.
What does an underwriter watch for when there are more than one loss payees named
on an insurance application?
Select one:
a. Financial hardship, poor property maintenance, and temptation for fraud
b. Increased severity of loss, slow service, and a temptation for fraud
c. Financial success, slow service, and a temptation for fraud
d. Increased frequency of loss, poor property maintenance, and slow service - ANS-a.
Financial hardship, poor property maintenance, and temptation for fraud. Most insurers
have criteria that indicate an underwriter must investigate an application with multiple
, loss payees, as it could mean financial challenges, improper property maintenance, and
a temptation to stage a loss.
Why do insurers ask for prior insurance on an application?
Select one:
a. Confirm claim history and check for any lienholders
b. Confirm loss history and identify the loss payees
c. Identify previous declinations or cancellations and the amount of coverage
d. Confirm loss history and identify any gaps in coverage - ANS-d. Confirm loss history
and identify any gaps in coverage. Applicants are asked for prior insurers names, policy
numbers and policy expiry dates; and this information is used to check loss history,
identify any gaps, and potential moral hazard.
In ratemaking, what does the validity of statistics on past losses depend on?
Select one:
a. A larger sample group and longer time observed
b. A smaller sample group and shorter time observed
c. A larger sample group and shorter time observed
d. A smaller sample group and longer time observed - ANS-a. A larger sample group
and longer time observed. The validity of these statistics depends on loss data covering
several losses over time. The larger the group and the greater the time observed, the
more stable the results.
The degree of uncertainty of a prediction is reduced as the size of the sample is
increased is one of the reliability factors in which concept?
Select one:
a. Contribution
b. Reinsurance
c. Lloyd's of London
d. Law of large numbers - ANS-d. Law of large numbers. Law of Large numbers is a
mathematical premise which states—the degree of uncertainty is reduced as the
number of events increases.
Why would an underwriter reject a risk?
Select one:
a. The underwriter recently heard about a similar risk that experienced a serious loss
