CII – terms questions with verified
answers rated A+
Definition of Risk - correct answer ✔✔ Possibility of an unfortunate occurrence,
unpredictability, possibility of loss, chance of gain
Risk Transfer - correct answer ✔✔ The accepting of an unknown future potential risk by an
insurer for an agreed premium.
Other meanings of the term 'risk' - correct answer ✔✔ 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 - correct answer ✔✔ 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 - correct answer ✔✔ Involves discovering the threats to a company that may
already exist and potential ones for the future.
Risk Analysis - correct answer ✔✔ Involves examine past data to evaluate rush and predict
future trends.
Risk Control - correct answer ✔✔ Involves put some sort of action into place to reduce or
eliminate Risk. Physical, Financial and developing a good risk culture
,Financial and Non-financial Risks - correct answer ✔✔ Risks that are not capable of financial
measurement are not suitable for insurance. Exception for personal and sickness policies.
Speculative Risk - correct answer ✔✔ Insurance does not apply to speculative risk.
Pure Risk - correct answer ✔✔ Those where there is the possibility of a loss but not of gain
Fundamental Risk - correct answer ✔✔ 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 - correct answer ✔✔ localised or even personal in their cause and effect.
Insurable Risk Criteria - correct answer ✔✔ 1. Fortuitous Event
2. Insurable Interest
3. Shouldn't be against public policy
4. Homogeneous Exposure
Homogeneous Exposures - correct answer ✔✔ A sufficient number of exposures to similar risks
will enable an insurer to forecast expected extent of future losses.
How is risk assessed? - correct answer ✔✔ Frequency and severity
Peril - correct answer ✔✔ Defined as that which gives rise to a loss
Hazard - correct answer ✔✔ Defined as that which influences the operation of the peril. Can be
physical or moral.
, Pooling of Risks - correct answer ✔✔ 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 - correct answer ✔✔ 1. Releases capital within companies.
2. Enterprises are encouraged to start, insurance provides security.
3. Employees are kept in work
4. Losses are reduced
5. Nation benefits from investments made by insurers and benefits from invisible exports
Co-insurance (Type 1) - correct answer ✔✔ 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) - correct answer ✔✔ Used in relation to the amount of a risk that the
insured may retain
Dual Insurance - correct answer ✔✔ used to describe when there are two or more policies in
force which cover the same risk
Self-insurance - correct answer ✔✔ means that an individual has decided to carry the risk
themselves
Property Insurance - correct answer ✔✔ Covers the risk of actual property.
Pecuniary Insurance - correct answer ✔✔ Covers risk relating to money.
Marine Insurance - correct answer ✔✔ covers: 1. Physical damage to ships or goods, liability
incurred and loss of income.
answers rated A+
Definition of Risk - correct answer ✔✔ Possibility of an unfortunate occurrence,
unpredictability, possibility of loss, chance of gain
Risk Transfer - correct answer ✔✔ The accepting of an unknown future potential risk by an
insurer for an agreed premium.
Other meanings of the term 'risk' - correct answer ✔✔ 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 - correct answer ✔✔ 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 - correct answer ✔✔ Involves discovering the threats to a company that may
already exist and potential ones for the future.
Risk Analysis - correct answer ✔✔ Involves examine past data to evaluate rush and predict
future trends.
Risk Control - correct answer ✔✔ Involves put some sort of action into place to reduce or
eliminate Risk. Physical, Financial and developing a good risk culture
,Financial and Non-financial Risks - correct answer ✔✔ Risks that are not capable of financial
measurement are not suitable for insurance. Exception for personal and sickness policies.
Speculative Risk - correct answer ✔✔ Insurance does not apply to speculative risk.
Pure Risk - correct answer ✔✔ Those where there is the possibility of a loss but not of gain
Fundamental Risk - correct answer ✔✔ 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 - correct answer ✔✔ localised or even personal in their cause and effect.
Insurable Risk Criteria - correct answer ✔✔ 1. Fortuitous Event
2. Insurable Interest
3. Shouldn't be against public policy
4. Homogeneous Exposure
Homogeneous Exposures - correct answer ✔✔ A sufficient number of exposures to similar risks
will enable an insurer to forecast expected extent of future losses.
How is risk assessed? - correct answer ✔✔ Frequency and severity
Peril - correct answer ✔✔ Defined as that which gives rise to a loss
Hazard - correct answer ✔✔ Defined as that which influences the operation of the peril. Can be
physical or moral.
, Pooling of Risks - correct answer ✔✔ 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 - correct answer ✔✔ 1. Releases capital within companies.
2. Enterprises are encouraged to start, insurance provides security.
3. Employees are kept in work
4. Losses are reduced
5. Nation benefits from investments made by insurers and benefits from invisible exports
Co-insurance (Type 1) - correct answer ✔✔ 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) - correct answer ✔✔ Used in relation to the amount of a risk that the
insured may retain
Dual Insurance - correct answer ✔✔ used to describe when there are two or more policies in
force which cover the same risk
Self-insurance - correct answer ✔✔ means that an individual has decided to carry the risk
themselves
Property Insurance - correct answer ✔✔ Covers the risk of actual property.
Pecuniary Insurance - correct answer ✔✔ Covers risk relating to money.
Marine Insurance - correct answer ✔✔ covers: 1. Physical damage to ships or goods, liability
incurred and loss of income.
