CII - Exam 1 2025 Questions and
Answers 100% Pass
Definition of Risk - ✔✔Possibility of an unfortunate occurrence, unpredictability,
possibility of loss, chance of gain
Risk Transfer - ✔✔The accepting of an unknown future potential risk by an insurer for
an agreed premium.
Other meanings of the term 'risk' - ✔✔1. period that are insured
2. relates to the thing actually insured
3. when an underwriter quotes for a risk an even wider definition is implied
Reasons for Risk Management - ✔✔1. Reduces the potential for loss by identifying and
managing hazards
2. gives shareholders a greater degree of confidence
3. provides a disciplined approach to quantify risk
Risk Identification - ✔✔Involves discovering the threats to a company that may already
exist and potential ones for the future.
Risk Analysis - ✔✔Involves examine past data to evaluate rush and predict future
trends.
Risk Control - ✔✔Involves put some sort of action into place to reduce or eliminate
Risk. Physical, Financial and developing a good risk culture
COPYRIGHT © 2025 BY EMILLY CHARLOTTE, ALL RIGHTS RESERVED 1
,Financial and Non-financial Risks - ✔✔Risks that are not capable of financial
measurement are not suitable for insurance. Exception for personal and sickness
policies.
Speculative Risk - ✔✔Insurance does not apply to speculative risk.
Pure Risk - ✔✔Those where there is the possibility of a loss but not of gain
Fundamental Risk - ✔✔Risks that occur on such a vast scale that they are uninsurable.
Arise from social, economic, political or natural causes and are widespread in their
effect.
Particular Risk - ✔✔localised or even personal in their cause and effect.
Insurable Risk Criteria - ✔✔1. Fortuitous Event
2. Insurable Interest
3. Shouldn't be against public policy
4. Homogeneous Exposure
Homogeneous Exposures - ✔✔A sufficient number of exposures to similar risks will
enable an insurer to forecast expected extent of future losses.
How is risk assessed? - ✔✔Frequency and severity
Peril - ✔✔Defined as that which gives rise to a loss
Hazard - ✔✔Defined as that which influences the operation of the peril. Can be physical
or moral.
Pooling of Risks - ✔✔Gathers together relatively small amounts of money to be
protected from similar kinds of perils. Law of Large Numbers. must be prepared to
make an equitable contribution to the pool.
Benefits of Insurance - ✔✔1. Releases capital within companies.
2. Enterprises are encouraged to start, insurance provides security.
3. Employees are kept in work
4. Losses are reduced
COPYRIGHT © 2025 BY EMILLY CHARLOTTE, ALL RIGHTS RESERVED 2
, 5. Nation benefits from investments made by insurers and benefits from invisible
exports
Co-insurance (Type 1) - ✔✔1. Relates to risk sharing between insurers. Each Insurer
received % of premium, they must pay =% of claim. Leading office is the first insurer.
Co-insurance (Type 2) - ✔✔Used in relation to the amount of a risk that the insured
may retain
Dual Insurance - ✔✔used to describe when there are two or more policies in force
which cover the same risk
Self-insurance - ✔✔means that an individual has decided to carry the risk themselves
Property Insurance - ✔✔Covers the risk of actual property.
Pecuniary Insurance - ✔✔Covers risk relating to money.
Marine Insurance - ✔✔covers: 1. Physical damage to ships or goods, liability incurred
and loss of income.
Insurers must be authorised... - ✔✔by the Prudential Regulation Authority. PRA must
be satisfied that the applicant complies with their conditions. Must be distinguished
from one another in terms of ownership and function.
Proprietary Companies - ✔✔Usually registered under the CA 1985. Owned by
Shareholders. Limited Liability companies.
Societas Europaeas - ✔✔Public EU company that can be registered in any member state
of EU and cab be transferred to other member states without need for liquidation.
Mutual Companies - ✔✔Owned by the policyholders. They share in profits by having
lower premiums. Limited by guarantee.
Mutual Indemnity Association - ✔✔Self managed pools of insurers and also owned by
policyholders.
Captive Insurers - ✔✔an insurer owned by a parent firm for the purposes of insuring
the parent firm's loss exposures
Protected cell company (PCC) - ✔✔A corporate entity separated into cells so that each
participating company owns an entire cell but only a portion of the overall company
COPYRIGHT © 2025 BY EMILLY CHARLOTTE, ALL RIGHTS RESERVED 3
Answers 100% Pass
Definition of Risk - ✔✔Possibility of an unfortunate occurrence, unpredictability,
possibility of loss, chance of gain
Risk Transfer - ✔✔The accepting of an unknown future potential risk by an insurer for
an agreed premium.
Other meanings of the term 'risk' - ✔✔1. period that are insured
2. relates to the thing actually insured
3. when an underwriter quotes for a risk an even wider definition is implied
Reasons for Risk Management - ✔✔1. Reduces the potential for loss by identifying and
managing hazards
2. gives shareholders a greater degree of confidence
3. provides a disciplined approach to quantify risk
Risk Identification - ✔✔Involves discovering the threats to a company that may already
exist and potential ones for the future.
Risk Analysis - ✔✔Involves examine past data to evaluate rush and predict future
trends.
Risk Control - ✔✔Involves put some sort of action into place to reduce or eliminate
Risk. Physical, Financial and developing a good risk culture
COPYRIGHT © 2025 BY EMILLY CHARLOTTE, ALL RIGHTS RESERVED 1
,Financial and Non-financial Risks - ✔✔Risks that are not capable of financial
measurement are not suitable for insurance. Exception for personal and sickness
policies.
Speculative Risk - ✔✔Insurance does not apply to speculative risk.
Pure Risk - ✔✔Those where there is the possibility of a loss but not of gain
Fundamental Risk - ✔✔Risks that occur on such a vast scale that they are uninsurable.
Arise from social, economic, political or natural causes and are widespread in their
effect.
Particular Risk - ✔✔localised or even personal in their cause and effect.
Insurable Risk Criteria - ✔✔1. Fortuitous Event
2. Insurable Interest
3. Shouldn't be against public policy
4. Homogeneous Exposure
Homogeneous Exposures - ✔✔A sufficient number of exposures to similar risks will
enable an insurer to forecast expected extent of future losses.
How is risk assessed? - ✔✔Frequency and severity
Peril - ✔✔Defined as that which gives rise to a loss
Hazard - ✔✔Defined as that which influences the operation of the peril. Can be physical
or moral.
Pooling of Risks - ✔✔Gathers together relatively small amounts of money to be
protected from similar kinds of perils. Law of Large Numbers. must be prepared to
make an equitable contribution to the pool.
Benefits of Insurance - ✔✔1. Releases capital within companies.
2. Enterprises are encouraged to start, insurance provides security.
3. Employees are kept in work
4. Losses are reduced
COPYRIGHT © 2025 BY EMILLY CHARLOTTE, ALL RIGHTS RESERVED 2
, 5. Nation benefits from investments made by insurers and benefits from invisible
exports
Co-insurance (Type 1) - ✔✔1. Relates to risk sharing between insurers. Each Insurer
received % of premium, they must pay =% of claim. Leading office is the first insurer.
Co-insurance (Type 2) - ✔✔Used in relation to the amount of a risk that the insured
may retain
Dual Insurance - ✔✔used to describe when there are two or more policies in force
which cover the same risk
Self-insurance - ✔✔means that an individual has decided to carry the risk themselves
Property Insurance - ✔✔Covers the risk of actual property.
Pecuniary Insurance - ✔✔Covers risk relating to money.
Marine Insurance - ✔✔covers: 1. Physical damage to ships or goods, liability incurred
and loss of income.
Insurers must be authorised... - ✔✔by the Prudential Regulation Authority. PRA must
be satisfied that the applicant complies with their conditions. Must be distinguished
from one another in terms of ownership and function.
Proprietary Companies - ✔✔Usually registered under the CA 1985. Owned by
Shareholders. Limited Liability companies.
Societas Europaeas - ✔✔Public EU company that can be registered in any member state
of EU and cab be transferred to other member states without need for liquidation.
Mutual Companies - ✔✔Owned by the policyholders. They share in profits by having
lower premiums. Limited by guarantee.
Mutual Indemnity Association - ✔✔Self managed pools of insurers and also owned by
policyholders.
Captive Insurers - ✔✔an insurer owned by a parent firm for the purposes of insuring
the parent firm's loss exposures
Protected cell company (PCC) - ✔✔A corporate entity separated into cells so that each
participating company owns an entire cell but only a portion of the overall company
COPYRIGHT © 2025 BY EMILLY CHARLOTTE, ALL RIGHTS RESERVED 3
