CAIB 2 - Chapter 2 Test with Accurate
Solutions
3 advantages of using a fact find or survey - ANS-1) Assists brokers when identifying
potential losses 2) Assists brokers not to sell coverages the client does not need 3)
Assists brokers in collecting information needed by insurance companies
3 benefits of commercial property checklists - ANS-1) Assists brokers when identifying
potential losses 2) Assists brokers to make sure coverages are not overlooked 3)
Assists brokers in reducing E&O losses
Define "Fire Resistive" - ANS-This means that the building has achieved the standard
set in hours to remain structurally sound when attacked by fires
Define "Non-Combustible" - ANS-These buildings are slightly below the standard of fire
resistive structures
5 areas where insurers request additional information when the building is 25 years or
older (WHORP) - ANS-1)Wiring 2) Heating 3) Over-current protection 4) Roof 5)
Plumbing
Identify an internal source underwriters utilise when rate making - ANS-Staff inspectors
Identify an external source underwriters utilise when rate making - ANS-IAO - Insurer's
advisory organization
2 influences which cause premiums to change from year to year - ANS-1) increasing
claims paid due to inflation 2) rates of return on insurance company's investments
Define "Soft Market" - ANS-intense competition between insurers resulting in lower
premiums and broader coverage
Define "Hard Market" - ANS-occurs when low profit margins force out some of the
competition resulting in a more disciplined underwriting approach where insureds
receive little to nothing in rate discounts
Define "Hazard" - ANS-a condition that may cause a peril to occur
Define "Physical Hazard" - ANS-conditions relating to the use of the insured property
which could cause a peril to occur
Solutions
3 advantages of using a fact find or survey - ANS-1) Assists brokers when identifying
potential losses 2) Assists brokers not to sell coverages the client does not need 3)
Assists brokers in collecting information needed by insurance companies
3 benefits of commercial property checklists - ANS-1) Assists brokers when identifying
potential losses 2) Assists brokers to make sure coverages are not overlooked 3)
Assists brokers in reducing E&O losses
Define "Fire Resistive" - ANS-This means that the building has achieved the standard
set in hours to remain structurally sound when attacked by fires
Define "Non-Combustible" - ANS-These buildings are slightly below the standard of fire
resistive structures
5 areas where insurers request additional information when the building is 25 years or
older (WHORP) - ANS-1)Wiring 2) Heating 3) Over-current protection 4) Roof 5)
Plumbing
Identify an internal source underwriters utilise when rate making - ANS-Staff inspectors
Identify an external source underwriters utilise when rate making - ANS-IAO - Insurer's
advisory organization
2 influences which cause premiums to change from year to year - ANS-1) increasing
claims paid due to inflation 2) rates of return on insurance company's investments
Define "Soft Market" - ANS-intense competition between insurers resulting in lower
premiums and broader coverage
Define "Hard Market" - ANS-occurs when low profit margins force out some of the
competition resulting in a more disciplined underwriting approach where insureds
receive little to nothing in rate discounts
Define "Hazard" - ANS-a condition that may cause a peril to occur
Define "Physical Hazard" - ANS-conditions relating to the use of the insured property
which could cause a peril to occur
