AIIM Certified Insurance Policy Analyst CIPA
Exam
**Question 1.** Which principle requires both parties to disclose all material facts in an
insurance contract?
A) Indemnity
B) Subrogation
C) Utmost Good Faith
D) Insurable Interest
Answer: C
Explanation: Utmost Good Faith obligates full disclosure of material information by both insurer
and insured.
**Question 2.** The primary purpose of risk pooling is to:
A) Eliminate all losses
B) Transfer risk to the government
C) Share losses among many insureds
D) Increase premiums for high‑risk individuals
Answer: C
Explanation: Risk pooling spreads individual losses across a large group, reducing the financial
impact on any single member.
**Question 3.** Which of the following is a pure risk?
A) Investing in stocks
B) Fire damage to a building
C) Launching a new product line
D) Currency speculation
Answer: B
, AIIM Certified Insurance Policy Analyst CIPA
Exam
Explanation: Pure risks involve only the possibility of loss, not gain, such as property damage
from fire.
**Question 4.** An insurer’s right to step into the shoes of the insured after payment of a claim
is called:
A) Subrogation
B) Assignment
C) Reinsurance
D. Coinsurance
Answer: A
Explanation: Subrogation allows the insurer to recover costs from a third party responsible for
the loss.
**Question 5.** Which entity typically acts as an intermediary that represents multiple insurers
to clients?
A) Reinsurer
B) Broker
C) Agent
D. TPA
Answer: B
Explanation: Brokers work on behalf of insureds and can place business with several insurers.
**Question 6.** The declaration page of an insurance policy most commonly includes:
A) Exclusions
B) Definitions
C) Named insured and coverage limits
, AIIM Certified Insurance Policy Analyst CIPA
Exam
D. Conditions
Answer: C
Explanation: The declarations summarize key policy details such as insured name, policy period,
and limits.
**Question 7.** A clause that states the insurer will pay only after a primary insurer has
exhausted its limits is known as:
A) Excess clause
B) Primary clause
C) Deductible clause
D. Aggregate clause
Answer: A
Explanation: An excess clause provides coverage after the primary layer’s limit is reached.
**Question 8.** Which hazard is moral in nature?
A) Poor building construction
B) Fraudulent claims after a loss
C) Flood‑prone location
D. High‑speed traffic area
Answer: B
Explanation: Moral hazards arise from dishonest behavior, such as filing false claims.
**Question 9.** The NAIC primarily functions as:
A) A reinsurance pool
B) A state‑level regulatory body
C) A global insurance standard‑setter
, AIIM Certified Insurance Policy Analyst CIPA
Exam
D. A consumer advocacy group
Answer: B
Explanation: The National Association of Insurance Commissioners coordinates state insurance
regulation in the U.S.
**Question 10.** Under the Consumer Protection Act, an insurer may be liable for mis‑selling if
it:
A) Offers a policy with a higher premium than market average
B) Fails to disclose a material limitation to the insured
C) Uses a third‑party administrator for claims
D. Provides a discount for early payment
Answer: B
Explanation: Mis‑selling involves withholding material facts that affect the consumer’s decision.
**Question 11.** Which of the following is a key feature of parametric insurance?
A) Loss adjustment based on actual damage assessment
B) Payout triggered by a predefined index event
C) Coverage limited to bodily injury only
D. Requires a forensic investigation for each claim
Answer: B
Explanation: Parametric policies pay a set amount when a measurable parameter (e.g., wind
speed) exceeds a threshold.
**Question 12.** In a life insurance needs analysis, “human capital” refers to:
A) The value of the insured’s future earnings
B) The cash surrender value of the policy
Exam
**Question 1.** Which principle requires both parties to disclose all material facts in an
insurance contract?
A) Indemnity
B) Subrogation
C) Utmost Good Faith
D) Insurable Interest
Answer: C
Explanation: Utmost Good Faith obligates full disclosure of material information by both insurer
and insured.
**Question 2.** The primary purpose of risk pooling is to:
A) Eliminate all losses
B) Transfer risk to the government
C) Share losses among many insureds
D) Increase premiums for high‑risk individuals
Answer: C
Explanation: Risk pooling spreads individual losses across a large group, reducing the financial
impact on any single member.
**Question 3.** Which of the following is a pure risk?
A) Investing in stocks
B) Fire damage to a building
C) Launching a new product line
D) Currency speculation
Answer: B
, AIIM Certified Insurance Policy Analyst CIPA
Exam
Explanation: Pure risks involve only the possibility of loss, not gain, such as property damage
from fire.
**Question 4.** An insurer’s right to step into the shoes of the insured after payment of a claim
is called:
A) Subrogation
B) Assignment
C) Reinsurance
D. Coinsurance
Answer: A
Explanation: Subrogation allows the insurer to recover costs from a third party responsible for
the loss.
**Question 5.** Which entity typically acts as an intermediary that represents multiple insurers
to clients?
A) Reinsurer
B) Broker
C) Agent
D. TPA
Answer: B
Explanation: Brokers work on behalf of insureds and can place business with several insurers.
**Question 6.** The declaration page of an insurance policy most commonly includes:
A) Exclusions
B) Definitions
C) Named insured and coverage limits
, AIIM Certified Insurance Policy Analyst CIPA
Exam
D. Conditions
Answer: C
Explanation: The declarations summarize key policy details such as insured name, policy period,
and limits.
**Question 7.** A clause that states the insurer will pay only after a primary insurer has
exhausted its limits is known as:
A) Excess clause
B) Primary clause
C) Deductible clause
D. Aggregate clause
Answer: A
Explanation: An excess clause provides coverage after the primary layer’s limit is reached.
**Question 8.** Which hazard is moral in nature?
A) Poor building construction
B) Fraudulent claims after a loss
C) Flood‑prone location
D. High‑speed traffic area
Answer: B
Explanation: Moral hazards arise from dishonest behavior, such as filing false claims.
**Question 9.** The NAIC primarily functions as:
A) A reinsurance pool
B) A state‑level regulatory body
C) A global insurance standard‑setter
, AIIM Certified Insurance Policy Analyst CIPA
Exam
D. A consumer advocacy group
Answer: B
Explanation: The National Association of Insurance Commissioners coordinates state insurance
regulation in the U.S.
**Question 10.** Under the Consumer Protection Act, an insurer may be liable for mis‑selling if
it:
A) Offers a policy with a higher premium than market average
B) Fails to disclose a material limitation to the insured
C) Uses a third‑party administrator for claims
D. Provides a discount for early payment
Answer: B
Explanation: Mis‑selling involves withholding material facts that affect the consumer’s decision.
**Question 11.** Which of the following is a key feature of parametric insurance?
A) Loss adjustment based on actual damage assessment
B) Payout triggered by a predefined index event
C) Coverage limited to bodily injury only
D. Requires a forensic investigation for each claim
Answer: B
Explanation: Parametric policies pay a set amount when a measurable parameter (e.g., wind
speed) exceeds a threshold.
**Question 12.** In a life insurance needs analysis, “human capital” refers to:
A) The value of the insured’s future earnings
B) The cash surrender value of the policy
