London Market 1 (LM1) - Insurance Exam Questions and Answers Latest Update 2025 Graded A+
For the principle of contribution to apply, a number of factors need to be present. What would NOT
typically be one of these?
The peril that causes the loss must be common to both policies.
b. There must be a common subject-matter.
c. Both policies must share a common insurable interest.
d. Both insurers' policies have to be identical. - Answers d. Both insurers' policies have to be identical.
Is this definition of supply and demand, correct?
"Supply is the provision of something and demand is the need for something but only at a certain price."
- Answers Yes
How might a change in the law making more classes of insurance compulsory impact on supply and
demand?
1) Greater demand will be created.
2) Greater demand will be created at the start but reduce later. - Answers Greater demand will be
created (1)
Who do Lloyd's Names use as their professional advisers when deciding to invest in the market?
1) Member agents
2) Brokers
3) Managing agents - Answers Member agents (1)
What is meant by the term 'premium income limit'?
1) A measure of the size of the insurer based on how much business it can accept in a year.
2) How much premium any individual client can be asked to pay.
,3) How little premium any individual client can be asked to pay
4) The target set by the regulators for insurers each year. - Answers 1) A measure of the size of the
insurer based on how much business it can accept in a year.
Which type of insurer typically specialises in risks such as shipowners' liability? - Answers Mutual
indemnity association.
For whom is the broker usually working in the London Market?
1) Insurer
2) Which ever party contacts the broker first
3) Insured
4) both insured and insurer - Answers 3) Insured
Which section of the market does the LMA represent?
A) Mutual Indemnity associations
B) Insurance companies
C) The regulators
D) Managing Agents - Answers D) Managing Agents
Money Laundering - What is placement? - Answers Putting cash into other financial assets, such as
cheques or property.
Money Laundering - What is layering? - Answers Criminal creates a series of complex transactions, to
avoid cash being traced to illegal origins.
Money Laundering - What is integration? - Answers Criminal gets access to clean money.
Which of these different types of information about a risk would an overseas
regulator not be interested in?
1) Location of Risk
2) Amount of gross premium paid
, 3) Location of the broker
4) Whether the risk is direct or reinsurance - Answers 2) Amount of gross premium paid
What is OFAC? - Answers The part of the US government that issue sanctions related guidance.
Under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer)
Regulations 2017, what additional risk assessment needs to be done, alongside the risk of money
laundering?
1) Bribery
2) Sanctions
3) Terrorist Financing
4) Fraud - Answers C) Terrorist Financing
What is BIPAR?
1) The European federation of insurance intermediaries.
2) The European federation of insurance companies.
3) The European federation of insurance regulators.
4) The European federation of insurance buyers. - Answers 1) The European federation of insurance
intermediaries.
If the second underwriter that a broker approaches requests more premium than the first underwriter,
should the broker return to the first underwriter to see if they also want more premium?
1) Yes, because the 100% premium for each insurer should always be the same.
2) No, as it would contravene BIPAR rules.
3) Yes, because the leader will probably want to increase their price to match.
4) No, because once the leader has seen it once they cannot see the risk again . - Answers 2) No, as it
would contravene BIPAR rules.
What is a bureau leader? - Answers Leader of the individual section of the London Market, i.e Lloyd's or
company market.
For the principle of contribution to apply, a number of factors need to be present. What would NOT
typically be one of these?
The peril that causes the loss must be common to both policies.
b. There must be a common subject-matter.
c. Both policies must share a common insurable interest.
d. Both insurers' policies have to be identical. - Answers d. Both insurers' policies have to be identical.
Is this definition of supply and demand, correct?
"Supply is the provision of something and demand is the need for something but only at a certain price."
- Answers Yes
How might a change in the law making more classes of insurance compulsory impact on supply and
demand?
1) Greater demand will be created.
2) Greater demand will be created at the start but reduce later. - Answers Greater demand will be
created (1)
Who do Lloyd's Names use as their professional advisers when deciding to invest in the market?
1) Member agents
2) Brokers
3) Managing agents - Answers Member agents (1)
What is meant by the term 'premium income limit'?
1) A measure of the size of the insurer based on how much business it can accept in a year.
2) How much premium any individual client can be asked to pay.
,3) How little premium any individual client can be asked to pay
4) The target set by the regulators for insurers each year. - Answers 1) A measure of the size of the
insurer based on how much business it can accept in a year.
Which type of insurer typically specialises in risks such as shipowners' liability? - Answers Mutual
indemnity association.
For whom is the broker usually working in the London Market?
1) Insurer
2) Which ever party contacts the broker first
3) Insured
4) both insured and insurer - Answers 3) Insured
Which section of the market does the LMA represent?
A) Mutual Indemnity associations
B) Insurance companies
C) The regulators
D) Managing Agents - Answers D) Managing Agents
Money Laundering - What is placement? - Answers Putting cash into other financial assets, such as
cheques or property.
Money Laundering - What is layering? - Answers Criminal creates a series of complex transactions, to
avoid cash being traced to illegal origins.
Money Laundering - What is integration? - Answers Criminal gets access to clean money.
Which of these different types of information about a risk would an overseas
regulator not be interested in?
1) Location of Risk
2) Amount of gross premium paid
, 3) Location of the broker
4) Whether the risk is direct or reinsurance - Answers 2) Amount of gross premium paid
What is OFAC? - Answers The part of the US government that issue sanctions related guidance.
Under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer)
Regulations 2017, what additional risk assessment needs to be done, alongside the risk of money
laundering?
1) Bribery
2) Sanctions
3) Terrorist Financing
4) Fraud - Answers C) Terrorist Financing
What is BIPAR?
1) The European federation of insurance intermediaries.
2) The European federation of insurance companies.
3) The European federation of insurance regulators.
4) The European federation of insurance buyers. - Answers 1) The European federation of insurance
intermediaries.
If the second underwriter that a broker approaches requests more premium than the first underwriter,
should the broker return to the first underwriter to see if they also want more premium?
1) Yes, because the 100% premium for each insurer should always be the same.
2) No, as it would contravene BIPAR rules.
3) Yes, because the leader will probably want to increase their price to match.
4) No, because once the leader has seen it once they cannot see the risk again . - Answers 2) No, as it
would contravene BIPAR rules.
What is a bureau leader? - Answers Leader of the individual section of the London Market, i.e Lloyd's or
company market.
