FIRST SEMESTER 2011/2012

INS 210 (INTRODUCTION TO INSURANCE)

Instruction: Answer ALL questions

1. All of the following statements about ordinary life insurance are true EXCEPT

(a) premiums are level throughout the policy period (b) the face amount of the

policy is paid if the insured lives to aged 65 (c) there is a build-up of cash value

that can be borrowed by the policyholder (d) *it offers the policyholder the

flexibility to meet a wide variety of financial objective.

2. Which of the following statements about speculative risk is true? (a) they are

almost always insurable by private insurers (b) they are more easily predictable

than pure risks (c) *their occurrence may benefit society (d)they involved only

a change of loss.

3. Which of the following types of risk best meets the requirements for being

insurable by private insurers? (a) market risks (b) property risks (c) *financial

risks (d) political risks

4. Why is a large number of exposure units generally required before a pure risk is

insurable? (a)it prevents the insurer from losing money (b) it eliminate

intentional losses (c) it minimizes moral hazard (d) *it enables the insurer to

predict losses based on the law of large numbers.

5. Traditionally, risk has been defined as (a) any situation in which the probability

of loss is one (b) any situation in which the probability of loss is zero (c)

*uncertainty concerning the occurrence of loss (d) the probability of a loss

occurring.

6. An earthquake is an example of a (a) moral hazard (b) *peril (c) physical hazard

(d) objective risk.

7. Dense fog that increases the chance of an automobile accident is an example of

a (a) speculative risk (b) peril (c) *physical hazard (d) moral hazard.

8. Faking an accident to collect insurance proceeds is an example of a (a) physical

hazard (b) objective risk (c) *moral hazard (d) attitudinal hazard

9. Following the decisions in Donoghue, manufacturers of different kinds of

products have had to seek the advise of their lawyers and insurers on how they

could be affected by the new rule (a) *true (b) false

10. An employer is liable for injuries caused to one employee by another employee

(a) *true (b) false

11. A contractual indemnity policy provide protection against legal liability of an

employer in relation to bodily injury or diseases sustained by any person under

his/her employment of apprenticeship (a) *true (b) false

12. All but one is a limitation to insurability (a) *Void Contract (b) Inherent vice

(c) Lack of Knowledge (d) Fortuitous

13. Insurance contracts are said to be defective when they are (a) *Unenforceable

(b) Unrevoked (c) No consideration (d) None of the above

14. Only Insane and Minors has no right to insure a. true b. *false

15. Subject matter of insurance is (a) The consideration (b) *The physical object (c)

Financial interest (d) None of the above.

16. The subject matter of contract is (a) 1st and 2nd parties in the contract (a) The

object (building) (b) *Financial involvement (d) None of the above.

17. To effect an insurance contract, only one is not a requirement (a) *Rectification

(b) Acceptance (c) Legality (d) Capacity to contract

18. To the potential insured, unrevoked offer does not implies (a) Complete

proposal form (b) Telephone conversation with the brokers (c) A detailed slip

(d) *Consideration

19. Only one of the following does not have capacity to be insured (a) Insurer (b)

*Minors (c) Retired Person (d) None of the above.

20. Some market agreement is a limitation to insurance (a) Radio active

contamination clause (b) War Risk exclusion clause (c) Sonic bangs exclusion

clause (d) *All the above.

21. Only one describes the frequency of risk occurrence (a) *Rate of occurrence (b)

Intensity of occurrence (c) Severity of occurrence (d) None of the above

22. Life is fraught with risk implies (a Risk abound (b) Everybody is exposed to

risk (c) Life must be managed (d) *A & B only

23. An employer is exposed to liability risks due to (a) His hazardous business (b)

His chemical products manufactures (c) *His employees damage to third party

property in the course of their work (d) None of the above

24. Individual can also be exposed to liability risks (a) When he borrows

someone’s car (b) When he deliberately damage someone’s property (c)

*When he is indebted to another person (d) All of the above.

25. Which of these is not reason for insurance regulation? (a) to prevent fraud (b)

*to donate to charity (c) to ensure financial solvency (d) to ensure competence

26. In which of the following capacities does the State not serve in the insurance

industry? (a) insurance intermediary (b) *insurance regulator (c) insurance

buyer (d) insurance seller

27. Fire insurance originated as a municipal arrangement in certain (a) *British

cities (b) American cities (c) German cities (d) French cities

28. When did the standard fire policy begin to be used? (a) 1920 (b) 1921 (c)

1922 (d) 1923

29. Which of these is an association of the providers of insurance ancillary

services? (a) ILAN (b) NCRIB (c) *PRAN (d) ARIAN

30. The group of insurance buyers that represent the greatest percentage of unpaid

premium in Nigeria is (a) individual households (b) commerce and industry

(c) *the state (d) societies and clubs

31. Which of these require a certificate of proficiency from the Chartered Insurance

Institute of Nigeria before they can operate? (a) *brokers (b) consultants (c)

adjusters (d) agents

32. Insurance companies in Nigeria belong to what group of insurance sellers? (a)

proprietary companies (b) *mutual companies (c) P & I clubs (d) civil wrong

33. A violation of laws that govern the relationships among individuals in the

society usually is a (a) public wrong (b) customary wrong (c) preventable

wrong (d) *civil wrong.

34. An infringement of the right of another individual in the society constitute a (a)

private wrong (b) *public wrong (c) individual wrong (d) government wrong.

35. Murder, arson, assault, rape are actionable in the court of law by the state

through a (a) civil proceedings (b) *criminal proceedings (c) customary

proceedings (d) religious proceedings.

36. Tort and harming another part from failure to meet contractual obligations

amount to (a) criminal violation (b) *civil violation (c) government violation

(d) personal violation

37. A tort feasor is a person who has contravene (a) criminal law (b) *civil law (c)

court proceedings (d) court orders

38. Liability in tort could be predicated on any of the following three bases: (1)

intentional invasion of the interests of others; (2) unintentional invasion of

interests of others, otherwise known as negligence; and strict or absolute

liability (a) True (b) *False

39. Under negligence, the onus is on the plaintiff to proof that the defendant was

negligent, an exception being res ipsa loquitor (a) *True (b) False

40. Unless a prima facie evidence of duty to behave with care is established in a

particular circumstance, there will be no ground to decide whether an act or

omission which resulted in harm was negligent (a) *true (b) false

41. Only one is not a pure risk (a) Premature death (b) Assassination (c) *Stock

loss (d) Ship wreck

42. If the probability of risk occurrence is 0.8. this implies (a) It is certain the risk

would happen (b) The risk is not going to happen (c) *The risk may or many

not happen (d) The probability is deceptive.

43. Certainty of event has a probability of 1.0 while uncertainty of event has its

probability as ___________ (a) 0.1 (b) 0.0 (c) *Between 0.0 to 0.9 (d) None of

the above
44. Insurance role as a stimulus to business implies (a) Insurance helps business to

establish contingency fund (b) *Insurance is a risk transfer mechanism (c)

Insurance enable business to expand more (d) None of the above

45. Loss prevent include all pre loss management activities except one (a) Diaspora

of waste material (b) Using fire surveyors to identify risks (c) Fire proof doors

(d) *Making insurance to pay for your losses

46. Some of the essentials of insurance contracts are Consideration, Unrevoked

offer and Intention to create legal obligation *true false

47. The first set of people that mooted the idea of insurance are (a) The British

Merchants (b) The British Adventures (c) *The Lombards of Italy (d) Only A

&B

48. All the following is barred from effecting an insurance policy except one (a)

*Married women (b) Insane persons (c) Minors (d) None of the above

49. The third party in insurance contract is (a) The insurer (b) The policy holder

(c) *Any person other than insurer and insurer (d)A & B

50. Catastrophic loss is said to be a limitation in insurance because (a) *It is

uninsurable (b) The loss is widespread (c) Insurer cannot pay (d) None of the

above

51. Only one is not a pure and insurable risk (a) Disability risks (b) Liability risks

(c) Failure risks (d) *None of the above

52. Give one example of speculative risk *The risk in price for a businessman who

has a large stock

53. Which of these is strictly an investment policy? (a) term assurance (b) whole

life (c) whole life with premium payment stopping at age 65 (d) *endowment

54. Pay As You Go type of pension in most cases contributory in nature (a) True

(b)False

55. Loss or damage caused by fire spreading from its natural confine is covered (a)

*True (b) False

56. A primary purpose of insurance as a risk transfer mechanism is to (a)

*compensate for financial losses however sustained (b) provide risk control

advice (c) spread the cost of an insured loss amongst many policyholders (d)

provide a source of funds for capital investment.

57. An example of a physical hazard for a property risk would be (a) an insured

with a criminal record (b) an insured with a high staff turnover (c) a regularly

serviced burglar alarm (d) *old and unchecked electrical wiring

58. When completing a proposal form for household insurance, a proposer states

that his house is build from timber. An underwriter would treat this information

as being (a) an implied condition (b) *a material fact (c) a policy condition (d)

a policy warranty
59. The premium paid under a contract of insurance is known as the (a) assignment

(b) *consideration (c) contribution (d) indemnity

60. A cedant would NOT by reinsurance in order to (a) avoid peaks and troughs in

an underwriting account (b) protect against large individual losses (c) avoid

being heavily committed in a particular country by spreading the risk (d)

increase investment income.

61. Which of the following statements about speculative risks is true (a) they are

almost always insurable by private insurers (b) they are more easily predictable

than pure risks (c) *they may benefit society even though a loss occurs (d) they

involve only a chance of loss

62. Which of the following is implied by the pooling of losses? (a) *sharing of

losses by an entire group (b) inability to predict losses with any degree of

accuracy (c) substitution of actual loss for average loss (d) increase of objective

risk

63. According to the law of large numbers, what should happen as an insurer

increases the number of units insured? (a) the amount the insurer expects to

pay in claims should decrease (b) underwriting expenses should decrease (c)

*actual results will more closely approach expected results (d) the insurer’s

profitability should become more variable.

64. From the viewpoint of the insurer, all of the following are characteristics of an

ideally insurable risk EXCEPT (a) the loss must be accidental (b) *the loss

should be catastrophic (c) the premium must be economically feasible (d) there

must be a large number of exposure units

65. Why is a large number of exposure units generally required before a pure risk is

insurable? (a) it prevents the insurer from losing money (b) it eliminates

intentional losses (c) it minimizes moral hazard (d) *it enables the insurers to

predict losses more accurately.

66. Which of the following is implied by the requirement that a loss should be

determinable and measurable to be insurable? I. The loss must be definite as to

place. II The loss must be definite as to amount (a) I only (b) II only (c) *both

I and II (d) neither I nor II

67. Which of the following types of risks best meet the requirements for being

insurable by private insurers? (a) market risks (b) property risks (c) *financial

risks (d) political risks

68. Which of the following statements regarding insurance and gambling is (are)

true? I. insurance is used to handle existing pure risks, while gambling creates a

new speculative risk. II. Insurance usually involves risk avoidance, while

gambling typically involves only risk reduction (a) I only (b) II only (c) *both I

and II (d) neither I nor II

69. Following the decisions in Donoghue, manufacturers of different kinds of

products have had to seek the advise of their lawyer and insurers on how they

could be affected by the new rule (a) *true (b) false

An employer is liable for injuries caused to one employee by another employee (a)

*true (b) false

70. A contractual indemnity policy provide protection against legal liability of an

employer in relation to bodily injury or diseases sustained by any person under

his/her employment or apprenticeship (a) true (b) false

71. All but one is a limitation to insurability (a) Void Contract (b) Inherent vice

(c) Lack of Knowledge (d) Fortuitous

72. Insurance contracts are said to be defective when they are (a) Unenforceable

(b) Unrevoked (c) No consideration (d) None of the above

73. Only Insane and Minor has no right to insure

74. Subject matter of insurance is (a) The consideration (b) The physical object

(c) Financial interest (d) None of the above

75. The subject matter of contract is (a) 1st and 2nd parties in the contract (b) The

object (building) (c) Financial involvement (d) None of the above

76. A customer has a legitimate claim against his broker in respect of bad advice,

but the broker has become insolvent. The customer has the right to seek redress
 from the (a) Nigerian Insurance association (b) National Insurers Commission

(c) National Insurance Corporation of Nigeria (d) Central Bank of Nigeria.

77. The technical regulatory term for the required difference between an insurer’s

assets and liabilities is the (a) free asset ratio (b) profit margin (c) reinsurance

retention ratio (d) solvency margin

78. How is the Corporation of Lloyd’s primarily funded? (a) by the Government (b)

by levies on insureds (c) from Corporation profits on policy sales (d) by levies

on members.

79. What requirements must a broker meet before transacting business at Lloyd’s

market? (a) it will need to trade in both marine business (b) it will need to show

that it is capable of handing business in accordance with London Market

standards and practices (c) it must first have been asked by a client to

specifically seek Lloyd’s coverage (d) it is allowed an exemption.

80. An underwriter’s primary duty is to the (a) NAICOM (b) policyholders (c)

placing brokers (d) various suppliers.

81. Insurance is possible because of the law of large numbers, which means (a)

events that are unpredictable for an individual become predictable for a large

number of individuals (b) events that are unpredictable for a large number of

individual become predictable for an individual (c) insurers can predict whether

an individual will suffer a loss better than they can predict whether a large
 number of individuals will suffer losses (d) insurers can adequately predict the

losses incurred by an individual, but are unable to predict the losses for large

numbers of individuals

82. Which of the following does not fall into one of the broad categories of

insurable risk? (a) gambling losses at a casino (b) loss of property due to fire (c)

liability for loss resulting from negligent use of property (d) financial loss,

particularly inability to make mortgage payments, as a result of death of the

wage earner.

83. All of the following statements about term insurance are true EXCEPT (a) the

insurance provides protection for a specified period of time (b) most policies

can be renewed for additional periods without evidence of insurability (c) most

policies can be converted to a permanent life insurance police (d) most policies

have a cash value that is refunded when coverage ceases.

84. Which of these is a limitation in insurance (a) Loss control (b) Insurable interest

(c) Common pool (d) None of the above

85. Risk is classified into the following except one (a) Fundamental Risk (b)

Psychological Risk (c) Pure Risk (d) Speculative Risk

86. Only one is not an individual risk (a) Personnel risks (b) Premature death (c)

Liability risks (d) None of the above

87. Which one is not a fundamental risk (a) Volcano eruption (b) Windstorm (c)

Assassination (d) Flood

88. Insurance could be defined as a scheme which provides fundamental

compensation for the effects of a misfortune

89. One is not a primary function for insurance (a) Security (b) Spreading risks (c)

Common pool (d) Equitable premium

90. Which of these is not a secondary function of insurance (a) Savings (b)

Stimulus to business (c) Research (d) None of the above

91. All but one is a limitation to insurance (a) Provisional premium (b)

Consideration (c) Fortuity (d) Loss prevention

92. All of the following are benefits to society that result from insurance EXCEPT

(a) less worry and fear (b) elimination of moral hazard (c) indemnification for

loss (d) loss prevention

93. A situation or circumstance in which a loss is possible, regardless of whether a

loss occurs, is called a (a) deductible (b) loss exposure (c) loss avoidance (d)

peril

94. Loss frequency is defined as the (a) probable size of the losses that may occur

during some period (b) probable number of losses that may occur during some

period (c) probability that any particular piece of property may be totally
 destroyed (d) probability that a liability judgment may exceed a firm’s net

worth.

95. All of the following statements about captive insurers are true EXCEPT (a) they

may act as a profit center by insuring parties other than the parent company (b)

they provide a way to obtain types of insurance that may be unavailable from

commercial insurers (c) they increase the volatility of the parent company’s

earnings (d) they make it easier for a firm to have access to reinsurance.

96. Generally, the losses covered by insurance must be (a) self-inflicted (b)

accidental (c) of inherent vice (d) difficult to measure

97. Which of these aptly defines risk (a) Risk is inseparable from life (b) Risk is at

the centre of life (c) Risk is the possibility of an unfortunate occurrence (d)

None of the above

98. Only one can expose house-owners to insurable risk (a) Possibility of house

being burnt down (b) Possibility of government demolition for lack of approval

plan (c) Possibility of arson by the house owner (d) None of the above.

99. There are many types of losses. Insurers are only interest in ______________

loss (a) Economic loss (b) Sentimental loss (c) Total loss (d) Socio economic

loss
 DEPARTMENT OF FINANCE INS 210 ASSIGNMENT (GROUP A-D) Q&A

FINANCE GROUP A QUESTION

1. Which of these may offer the possibility of loss or gain

(a) Pure risk (b) *Speculative risk (c) Fundamental risk (d) Financial risk

2. Which of these risk is uninsurable

(a) *Investiture in stock and shares )b) Injury at work (c) Fire at a factory (d)

Earthquake

3. The difference of the insured to a loss, thereby increasing the magnitude of such

loss is known as

(a) Moral hazard (b) Physical hazard (c) Loss hazard (d) *Moral hazard

4. An individual’s personal estimate of the chance of loss is

(a) Peril (b) Subjective risk (c) Objective probability (d) *Subjective

probability

5. The transfer of pure risk from the insured to the insurer is known as

(a) *Risk transfer (b) Risk bearing (c) Indemnification (d) Fortuitous loss

6. Dishonesty or character defects in an individual that increases the frequency or

severity of loss is

(a) Physical hazard (b) Character hazard (c) *Moral hazard (d) Morale

hazard
7. This type of risk affects the entire economy or a large number of persons groups

within the economy

(a) Enterprise risk (b) *Fundamental risk (c) Pure Risk (d) Speculative risk

8. This is describe as the cause of loss; prime cause which gives rise to a loss

beyond the control of anyone

(a) Hazard

(b) Misfortune

(c) *Peril

(d) Sear

9. An example of risk includes all but one of the following

(a) War (b) Inflation (c) *Deficit budget (d) Unemployment

10. Chance of loss is said to be

(a) An event that has occurred (b) *Probability that an event will occur

(b) Probability that an event will never occur (d) Change in the goods insured

11. Chance and risk are synonymous

(a) True (b) Not entirely true (c) *False (d) None of the above

12. All insurable risk are

(a) Non financial risk (b) Particular risks (c) *Pure risk (d) All of the above

13. The risks which transcend all human control are

(a) Pure (b) Speculative (c) Particular (d) *Fundamental

14. How many categories of risk are there?

(a) 5 (b) *6 (c) 10 (d) 18

15. How many combinations of severity and frequency are there?

(a) 5 (b) *4 (c) 6 (d) 2

16. Insurance is a pure risk while gambling is what?

(a) Common Risk (b) Comparative risk (c) Socialization risk (d) *Speculative

risk

17. One of the following is a major difference between peril and hazard

(a) Peril influences loss hazard is the cause of loss

(b) No difference between hazard

(c) *Peril is the cause of loss while hazard is the factor influencing the out come

of loss

(d) Peril and hazard are synonymous risks

18. There are ___ major methods of handling risk

(a) 4 (b) 2 (c) 2 (d) *5

19. Risks that directly affect an individual are known as

(a) *Personal risk (b) Fundamental risk (c) Liability risk (d) Pure risk

20. The payment the insurer receives is called

(a) Pension (b) *Premium (c) Compensation (d) Mobilization fee

ANSWERS

1. B 11. C

2. A 12. C

3. D 13. D

4. D 14. B

5. A 15. B

6. C 16. D

7. B 17. C

8. C 18. D

9. C 19. A

10. B 20. B

FINANCE GROUP B QUESTIONS

1. Which of the following is not an example of pure risk

a. Earthquake

b. *Investment in share and stock

c. Premature death

d. Fire at factor

2. Risk can be defined in terms of __________

a. *Uncertainty
 b. Certainty

c. Speculation

d. Damage

3. The type of hazard that is based on carelessness or indifference to a loss is

known as ______

a. Physical hazard

b. Legal hazard

c. *Morale hazard

d. Illegal hazard

4. A pure risk is one where _________

a. *The result can only be a loss or no loss

b. The result can be a gain or loss

c. The result can only be a gain or no pain

d. The result cannot be predicted.

5. The premature death of an individual is an example of

a. *Pure risk

b. Speculative risk

c. Fundamental risk

d. Physical hazard
6. The dishonesty or character defect in an individual that increase the frequency

of loss is _____

a. *Moral hazard

b. Morale hazard

c. Physical hazard

d. Legal hazard

7. _______ is the prime cause of loss

a. Hazard b. *Peril c. Gambling d. Pooling

8. The first book on insurance was written in the year _______

a. 1651 b. 1422 c. *1488 d. 1552

9. The primary function of insurance is

a. *Risk b. Transfer c. Invisible earnings d. Investment

10. The law of large numbers is synonymous with

a. Speculative riskb. Subjective risk c. *Objective risk d. None of

the above

11. Special benefits of insurance include all except one

a. *Prevention of loss b. Security c. Equitable premium d. All of

the above

12. The three basic perils covered by standard fire policy are

a. Fire, burglary and explosion

 b. *Fire, lighting and explosion

c. Fire, earthquake and explosion

d. Fire, explosion and riot

13. A risk that affect the entire economy or large numbers of person or group

within the economy is referred to as_________

a. Financial risk

b. Economy risk

c. *Fundamental risk

d. Pure risk

14. Gambling can also be called _______ risk

a. *Speculative b. Fundamental c. Pure d.

Particular

15. _________ are some losses that will occur frequently and may be very costly

a. High frequency, low severity

b. Low frequency, low severity

c. *High frequency, high severity

d. Low frequency, high severity

16. Individual risks are classified as;

a. *Property, income, liability

b. Misfortune, loss, claims

 c. Death, injury, theft

d. Danger, marine, cargo

17. One of the limitation of insurance include;

a. *Insurable interest

b. Forfeiture

c. Premium

d. Subrogation

18. Insurance regulatory in Nigeria started in _____

a. 1996 b. *1961 c. 1660 d. 1970

19. Risk can be defined as __________

a. *Uncertainty of loss

b. Chance

c. Uninsurable loss

d. Insured occurrence

20. The payment the insurer receives is called___________

a. Interest

b. Dividend

c. *Premium

d. None of the above

ANSWER

1. B 11. C

2. A 12. B

3. C 13. C

4. A 14. A

5. A 15. C

6. A 16. A

7. B 17. A

8. C 18. B

9. A 19. B

10. C 20. C
 FIRST SEMESTER 2013/2014 EXAMINATION

INS 210 (INTRODUCTION TO INSURANCE)

Instruction: Answer all question

1. The development of life Assurance is closely linked with _________insurance

a. Fire insurance b. Motor insurance c. Accident insurance d. *Marine

insurance

2. The first Life Assurance was written on whose life of Merchant in what year

a. 1583 b. *1584 c. 1683 d. 1684

3. Mr. William Gibbons was Assured for the sum of (a) ₤384 (b) ₤200 (c) *₤383

(d) ₤386

4. Mr. William Gibbons died on _____ (a) *18th May 1584 (b) 16th May 1584

(c) 18th May 1684 (d) 16th May 1684

5. The form of pension providing an income for a fixed period or for life is what?

(a) *Annuity (b) Short term Assurance (c) Underwriters (d) Mutual Assure

Association

6. An important mortality table, was compill3ed by (a) *Dodson (b) William

Gibbons (c) Lloyds brokers (d) Edward Lloyds

7. An important mortality table was compile in what year? (a) 1777 (b) *1755

(c) 1760 (d) 1751

8. The amiable society association was formed in what year (a) 1706 (b) 1708 (c)

*1705 (d) 1791

9. The first propriety company with share capital was formed in what year? (a)

*1792 (b) 1777 (c) 1791 (d) 1776

10. Benefit of Life Assurance are all except (a) it prevents break up of families (b)

it cater for old age (c) it helps to train the children (d) *all of the above

11. The liberation of the use of motor car came with the passing of locomotive on

high ways act of (a) 1897 (b) *1896 (c) 1889 (d) 1885

12. After the Second World War, the ownership and use of motor vehicles in Great

Britain soar among (a) the middle age citizen (b) *among young persons (c)

among the old ones

13. A person on foot was originally required to carry a Red Flag and to perced a

motor car was abolished in what year? (a) *1878 (b) 1876 (c) 1877 (d)

1889

14. The road traffic act was amended in what year (a) *1934 (b) 1935 (c) 1834

(d) 1835

15. A Doctor treating an injured person in road accident is entitle to a claim from

the motor insurer which amount to _________? (a) *True (b) False

16. Trade tariff is a trade association formed in what year ? (a) *1906 (b) 1908 (c)

1910 (d) 1912

17. Green card is issue in what continent? (a) Africa (b) *Europe (c) Asia (d)

Australia

18. Scope of motor insurance are all except? (a) private cars (b) commercial

vehicles (c) motorcycle (d) *none of the above

19. Some groups are excluded from taking motor insurance are? (a) *police (b)

insurer (c) insurance company (d) none of the above

20. The Marine Insurance was introduced to the UK by? (a) UAC Insurance (b)

United Nigeria Insurance Company (c) Northern Assurance (d) *The Great

Traders of Northern Italy

21. The Bottomry and Respondential Bonds involves _______ (a) Money given to

sailors for sale keeping on the cargos (b) *Loans to ship-owners/merchants to

finance their voyage (c) Bonds being giving by the government (d) Payment

for goods and services of merchants

22. When was the Chambers of Assurance Established? (a) *1575 (b) 1930 (c)

1953 (d) 1601

23. _________was established to consider disputes on marine policies issued? (a)

Chambers of Assurance (b) *Court of Arbitration (c) The Lombards (d) The

Merchants
24. For what reason did the underwriters set up a Committee of Lloyds? (a) *The

government affairs (b) To grant them loan (c) To sail their goods (d) For

religious reason

25. All the followings are perils covered under marine insurance except (a) Collison

(b) Fire (c) Theft (d) *None of the above

26. There is an Actual loss when the subject matter insured is __________? (a)

Sold (b) Bought (c) *Destroyed (d) Delivered

27. RDC means (a) *Running Down (b) Royal Dockyard Cargo (c) Runtime

Dark Commission (d) Royal Dockyard Committee

28. _________ refers to he cost of transporting the good? (a) *Freight (b)

Collision (c) Tax (d) Revenue

29. The main purpose of fire insurance is to provide compensation to an insured

person in the event of ________ to property insured (a) *Fire Damage (b)

Ship Wreckage (c) Death (d) Accident

30. In the early development of Fire Insurance _______ is a symbol used to indicate

building that is insured (a) Private Fire Brigades (b) *Fire Marks (c) Fire

Insurance duty (d) Public Address system

31. What year did the great fire of London occur? (a) 1875 (b) 1901 (c) *1666 (d)

1925
32. A ________ is a fire fighting equipment that earns substantial discount for an

insured when installed in the insured’s premises (a) Fire Brigades (b) Fire

system (c) Thunderbolt (d) *Sprinkler system

33. ________ is an example of standard fire policies issued by all fire insurers? (a)

Combined policies (b) Sprinkler Leakage Policies (c) Consequential Loss

Policies (d) *None of the above

34. _________are the experts in fire insurance inspections (a) *Fire surveyors (b)

Fire offices committee (c) Fire waster (d) Fire extinguisher

35. The extent of damage sustained through fire incidents is termed _______? (a)

Fire Brigade (b) Fire surveyors (c) *Fire Waste (d) Fire Marks

36. ________ are experts in fire insurance inspections? (a) *Fire surveyors (b)

Fire brigade (c) Fire waste (d) Fire Marks

37. Savage corps perform the following functions except (a) Removal of the goods

partly destroyed (b) Cleaning and restoring damaged goods (c) A & B (d)

*Payment of insurance premium

38. Components of insurance market includes the following except (a) Buyers (b)

Seller (c) Intermediary (d) *Traders

39. The largest buyers of insurance services products are the _______ (a) Public (b)

Government (c) *Commerce & Industry (d) Lloyds

40. The commencement of publication on a news sheet done by Lloyds is called?

(a) Lloyds list (b) Lloyds newspaper (c) Lloyds journal (d) Lloyds magazine

41. _________ are accredited insurance brokers who are allowed to place business

in at Lloyds (a) *Insurance brokers (b) Agents (c) *Lloyds brokers (d)

Agents

42. There are two types of insurance companies namely (a) Proprietary & Sole

proprietorship companies (b) *Proprietary & mutual companies (c) Friendly

and captive insurance companies (d) Self insurance & proprietary companies

43. Before one can be called an insurance broker one has to be registered by

______ (a) *National Insurance Commission Decree No. 2 of 1997 (b)

National Insurance Commission Decree No 3 of 1998 (c) National Insurance

Commission Decree No 2 of 1996 (d) National Insurance Commission Decree

No 6 of 1990

44. In insurance agents is another name for brokers (a) True (b) *False

45. Modern insurance was brought to Nigeria from Great Britain (a) *True (b)

False

46. Mutual companies are companies owned by the policyholders (a) *true (b)

false

47. One of this is not a characteristic of insurance market (a) intangibility (b)

*portability (c) inseparability (d) heterogeneity

48. Friendly society is formed by ________ (a) *registration (b) amalgamation

(c) combination (d) computation

49. The buyers in insurance market are made up of the following except (a) the

commercial and industry (b) the government (c) *the shareholders (d) the

public

50. Insurance market intermediaries include all except one of these (a) agent (b)

brokers (c) *public (d) consultants

51. The modern corporation of Lloyd’s was formed in what year? (a) *1871 (b)

1681 (c) 1791 (d) 1971

52. Reinsurance is one of the seller of insurance (a) *true (b) false (c) not sure (d)

all of the above

53. ________societies are formed by registration under the friendly societies act to

transact industrial life assurance. (a) *friendly societies (b) proprietary

societies (c) amicable society (d) solvency society

54. ________ insurance company is owned and established by a parent firm for the

purpose of insuring the parent firm’s loss exposure (a) Marine (b) motor (c)

*captive (d) amicable

55. Reasons for captive insurance include the following except (a) Easier access to

reinsurer (b) Greater stability in earnings (c) Difficulty in obtaining insurance

(d) *Reduced responsibility

56. ________ is a situation whereby a company makes a conscious decision to set a

fund aside to meet insurable losses. (a) *Self-insurance (b) Reinsurance (c)

Intermediation (d) Friendly Insurance

57. _________ is the coding of part or all of the insurance originally written by one

insurer to another insurer. (a) Self-insurance (b) *Reinsurance (c) Captive

insurance (d) Social insurance

58. The first act set up for insurance regulation in Nigeria is the Insurance Act of

1976 (a) True (b) *False

59. Insurance Act of 2003 only applies to insurance business and insurers (a) *True

(b) False

60. Insurance business is divided into 3 classes for the purpose of regulation (a)

True (b) *False

61. The insurance companies Act of 1961 omitted the regulation of insurance

company management (a) *True (b) False

62. Recapitalization of insurance companies was effected in 2008 (a) True (b)

*False

63. The regulatory body of insurance business in Nigeria is NAICOM (a) *True (b)

False

64. Group insurance is a contract of insurance where by an insurer provides cover

for a group of people based on their insurance need (a) *True (b) False
65. Individual evidence of insurability is required in group insurance (a) *True (b)

False

66. Group insurance usually costs less in comparison to individual insurance (a)

*True (b) False

67. An example of social insurance is National Health Insurance Scheme (a) *True

(b) False

68. Premiums are regulated by the Chartered Institute of Insurers of Nigeria (a)

True (b) *False

69. The regulatory body is responsible for registering new companies (a) *True (b)

False

70. Minimum capital requirement for life business is N2bn (a) *True (b) False

71. An underwriting principle in group insurance is simple and efficient

administration (a) *True (b) False

72. One reason of the regulation of insurance business is prevent insolvency (a)

*True (b) False

73. The National insurance Commission was established in 2003 (a) True (b)

*False

74. Workers compensation insurance is the largest of the social insurance programs

operated by the federal government (a) *True (b) False

75. An example of group life insurance is employee pension plans (a) *True (b)

False

76. Social insurance programmes are a form of private insurance (a) True (b)

*False

77. A basic characteristic of social insurance is that it is a compulsory program (a)

*True (b) False

78. Social insurance programs are necessary because some risks are difficult to

insure privately (a) *True (b) False

79. Non premium, no cover (a) *True (b) False

80. Insurance business is regulated in order to protect the insurers (a) True (b)

*False

81. A director of a brokerage firm can also be a member of staff of an insurance

company according to the Insurance Decree of 1997 (a) True (b) *False

82. Insurance companies do not have to maintain other financial reserves aside

from its capital reserves (a) True (b) *False

83. ______ is the minimum capital requirement for general business (a) N1bn (b)

N2bn (c) *N3bn (d) N4bn

84. In a pay-as-you-go Social Security System: (a) future benefit are not

contractually guaranteed (b) current workers pay for current beneficiaries (c)

some Social Security surplus is still needed (d) *all of the above
85. What is the minimum contributory plan for pension scheme in Nigeria? (a) 5%

(b) 6% (c) *7.5% (d) 10%

86. A problem which insurers should be concerned about in group insurance policy

is (a) ponzi scheme (b) means test (c) utmost good faith (d) *adverse

selection

87. Social insurance programs have high levels of public support because (a) of

their self-financing feature (b) they are based on an equality principle (c) *their

cost is consistently below the spending level for public assistance programs (d)

they create an economic surplus for government to use for other programs

88. Which of the following nations is the only one not to have a socialized health

care system? (a) England (b) United State (c) Germany (d) *Nigeria

89. Public policy typically aims to do which of the following (a) exacerbate

conflicting claims made on scarce resources (b) *protect rights and activities of

individuals (c) remove incentives for collective action (d) all of the above

90. Who implements a social insurance program once it has been adopted (a)

*Federal Government (b) State Government (c) NAICOM (d) Senate

91. Settlement of claims should be made within _________ days as stipulated by

the regulatory body (a) *90 (b) 60 (c) 45 (d) 120

92. All of the following are reasons for regulating Insurance EXCEPT (a) protect

insurance companies (b) *maintain solvency level (c) premium regulation (d)

make insurance available

93. Group insurance differs from individual insurance because (a) it is more

expensive (b) *experience rating is used (c) individual insurability is required

(d) premiums are paid individually

94. Eligibility requirements for group insurance are all BUT one of the following

(a) satisfy probationary period (b) *have something other than insurance need

in common (c) be active members of the group (d) none of the above

95. Adverse selection arises when proposers with a _____ chance of loss succeed in

obtaining coverage at standard or average rates (a) lower than average (b)

*higher than average (c) higher than expected loss (d) all of the above

96. Rating is the process of (a) paying claims (b) underwriting (c) *fixing premium

(d) none of the above

97. The National Insurance Commission (NAICOM) is responsible and reports

directly to (a) *minister of finance (b) governor of the central bank (c)

president (d) none of the above

98. Social insurance program place primary emphasis on _____ rather than on

equity in cost and benefits. (a) *adequacy of benefits (b) equality of persons (c)

all of the above (d) none of the above

99. The insurance industry is subject to a greater degree of control than are most

other industries because (a) there are larger amount of money involved (b)

insurance is vested in the public interest (c) *insurance is necessary for the

functioning of the economy (d) the industry is oligopolistic

100. The primary purpose of government regulation of insurance is to (a) raise

revenue through premium taxes. (b) *prevent artificially high premiums (c)

guarantee fair contracts at fair prices from sound insurers (d) all of the above

101. Solvency margin is necessary for the following reasons (a) to ensure that claims

will be paid as at when due (b) protect insured from financial insecurity (c)

prevent social and economic costs associated with insolvency (d) all of the

above

102. The minimum capital requirement for composite business is (a) N2bn (b) N3bn

(c) N4bn (d) N5bn

103. Laws promulgated to regulate operation of insurers include all but ONE of the

following (a) Insurance rate (b) Sales and claim practices (c) Taxation (d)

None of the above

104. Which year was the provision of investment of insurance funds addressed (a)

1961 (b) 1964 (c) 1968 (d) 1976

105. A major cause limiting contribution is (a) Unemployment (b) Adverse

selection (c) Moral hazard (d) All of the above

106. The right of subrogation: (a) Prevents the insured from collecting twice for the

same loss (b) Sometimes conflicts with the principle of indemnity (c) Increased

the cost of insurance (d) Is not applicable in fire insurance (e) Applies only to

ocean marine insurance

107. Pension contribution percentage by employer and employee in Nigeria is (a)

10:20 (b) 15:15 (c) 7.5:7.5 (d) 5:10 (e) None of the above

108. Probability of 0.0; 0.1; 0.5; 0.8 & 1.0 corresponds to (a) Extremely unlikely,

impossible even change, very likely, certainty respectively (b ) Impossible,

extremely unlikely, even chance, very likely, and certainty respectively (c)

Uncertainty, impossible, possible, certainty and uncertainty respectively (d)

Certainty, even chance, extremely unlikely, impossible and very likely

respectively

109. All of the following are transferable risks EXCEPT (a) damage from hurricane

(b) theft of your car (c) fire at your home (d) investment risk

Read this to answer question 112 and 113. If there are 1,000,000 persons age 25, and

based on past experience, it is predicted that 3,000 of them will die in a given period

of time

110. The probability of loss is (a) 0.003 (b) 0.0003 (c) 0.00003 (d) 0.03

111. If an insurer has 10,000 persons covered under life insurance contracts, the

probable number of loss to the insurer is (a) 300 (b) 30 (c) 3 (d) 33
Read this to answer question 114 and 115. Given that an insurer has only 100

automobiles in an insured group and the probability of collision loss is estimated to be

0.20 per year i.e. 20 collisions per year

112. If it is estimated that in 5% of the cases, the number of collision will exceed the

average by 8, the objective risk is (a) 20% (b) 40% (c) 30% (d) 10%

113. If the number of autos is increased to 900, and it is estimated that in 5%m the

number of collision will exceed the average by 24, the objective risk is (a)

24/180 (b) 24/900 (c) 8/20 (d) 24/100

114. The combination of a large number of exposure units by an insurer is important

for the operation of insurance because: (a) it reduces uncertainty in the

aggregate (b) it allows the insurer to make accurate predictions (c) it spreads

losses among the members of the group (d) it makes the insurer’s aggregate risk

less than a summation of the risks of the individuals (e) all of the above.

115. For the insurance company, a meaningful measure of risk is (a) the probability

that a loss will or will not occur (b) the possible deviation of actual from

predicted results (c) the size of the population insured (d) the relationship of

premium to average loss (e) none of the above

116. Sayers Tobacco Company is concerned that the company may be held liable in

a court of law and forced to pay a large damage award. The characteristics of
the judicial system that increase the frequency and severity of losses is known

as (a) moral hazard (b) particular risk (c) speculative risk (d) legal hazard