CII – Terms & Definitions Questions and Answers 2025

CII – Terms & Definitions Questions and
Answers 2025
DefinitionAofARiskA-ACORRECTAANSWERSA-
PossibilityAofAanAunfortunateAoccurrence,Aunpredictability,ApossibilityAofAloss,AchanceAofA
gain
RiskATransferA-ACORRECTAANSWERSA-
TheAacceptingAofAanAunknownAfutureApotentialAriskAbyAanAinsurerAforAanAagreedApremium.
OtherAmeaningsAofAtheAtermA'risk'A-ACORRECTAANSWERSA-
1.AperiodAthatAareAinsured
2.ArelatesAtoAtheAthingAactuallyAinsured
3.AwhenAanAunderwriterAquotesAforAaAriskAanAevenAwiderAdefinitionAisAimplied
ReasonsAforARiskAManagementA-ACORRECTAANSWERSA-
1.AReducesAtheApotentialAforAlossAbyAidentifyingAandAmanagingAhazards
2.AgivesAshareholdersAaAgreaterAdegreeAofAconfidence
3.AprovidesAaAdisciplinedAapproachAtoAquantifyArisk
RiskAIdentificationA-ACORRECTAANSWERSA-
InvolvesAdiscoveringAtheAthreatsAtoAaAcompanyAthatAmayAalreadyAexistAandApotentialAones
AforAtheAfuture.

RiskAAnalysisA-ACORRECTAANSWERSA-
InvolvesAexamineApastAdataAtoAevaluateArushAandApredictAfutureAtrends.
RiskAControlA-ACORRECTAANSWERSA-
InvolvesAputAsomeAsortAofAactionAintoAplaceAtoAreduceAorAeliminateARisk.APhysical,AFinanci
alAandAdevelopingAaAgoodAriskAculture
FinancialAandANon-financialARisksA-ACORRECTAANSWERSA-
RisksAthatAareAnotAcapableAofAfinancialAmeasurementAareAnotAsuitableAforAinsurance.AExce
ptionAforApersonalAandAsicknessApolicies.
SpeculativeARiskA-ACORRECTAANSWERSA-InsuranceAdoesAnotAapplyAtoAspeculativeArisk.
PureARiskA-ACORRECTAANSWERSA-
ThoseAwhereAthereAisAtheApossibilityAofAaAlossAbutAnotAofAgain
FundamentalARiskA-ACORRECTAANSWERSA-
RisksAthatAoccurAonAsuchAaAvastAscaleAthatAtheyAareAuninsurable.AAriseAfromAsocial,Aecono
mic,ApoliticalAorAnaturalAcausesAandAareAwidespreadAinAtheirAeffect.
ParticularARiskA-ACORRECTAANSWERSA-
localisedAorAevenApersonalAinAtheirAcauseAandAeffect.
InsurableARiskACriteriaA-ACORRECTAANSWERSA-1.AFortuitousAEvent
2.AInsurableAInterest
3.AShouldn'tAbeAagainstApublicApolicy
4.AHomogeneousAExposure
HomogeneousAExposuresA-ACORRECTAANSWERSA-
AAsufficientAnumberAofAexposuresAtoAsimilarArisksAwillAenableAanAinsurerAtoAforecastAexpec
tedAextentAofAfutureAlosses.
HowAisAriskAassessed?A-ACORRECTAANSWERSA-FrequencyAandAseverity

, PerilA-ACORRECTAANSWERSA-DefinedAasAthatAwhichAgivesAriseAtoAaAloss
HazardA-ACORRECTAANSWERSA-
DefinedAasAthatAwhichAinfluencesAtheAoperationAofAtheAperil.ACanAbeAphysicalAorAmoral.
PoolingAofARisksA-ACORRECTAANSWERSA-
GathersAtogetherArelativelyAsmallAamountsAofAmoneyAtoAbeAprotectedAfromAsimilarAkindsAof
Aperils.ALawAofALargeANumbers.AmustAbeApreparedAtoAmakeAanAequitableAcontributionAtoAth

eApool.
BenefitsAofAInsuranceA-ACORRECTAANSWERSA-1.AReleasesAcapitalAwithinAcompanies.A
2.AEnterprisesAareAencouragedAtoAstart,AinsuranceAprovidesAsecurity.
3.AEmployeesAareAkeptAinAwork
4.ALossesAareAreduced
5.ANationAbenefitsAfromAinvestmentsAmadeAbyAinsurersAandAbenefitsAfromAinvisibleAexport
s
Co-insuranceA(TypeA1)A-ACORRECTAANSWERSA-
1.ARelatesAtoAriskAsharingAbetweenAinsurers.AEachAInsurerAreceivedA%AofApremium,AtheyA
mustApayA=%AofAclaim.ALeadingAofficeAisAtheAfirstAinsurer.
Co-insuranceA(TypeA2)A-ACORRECTAANSWERSA-
UsedAinArelationAtoAtheAamountAofAaAriskAthatAtheAinsuredAmayAretain
DualAInsuranceA-ACORRECTAANSWERSA-
usedAtoAdescribeAwhenAthereAareAtwoAorAmoreApoliciesAinAforceAwhichAcoverAtheAsameArisk
Self-insuranceA-ACORRECTAANSWERSA-
meansAthatAanAindividualAhasAdecidedAtoAcarryAtheAriskAthemselves
PropertyAInsuranceA-ACORRECTAANSWERSA-CoversAtheAriskAofAactualAproperty.
PecuniaryAInsuranceA-ACORRECTAANSWERSA-CoversAriskArelatingAtoAmoney.
MarineAInsuranceA-ACORRECTAANSWERSA-
covers:A1.APhysicalAdamageAtoAshipsAorAgoods,AliabilityAincurredAandAlossAofAincome.
InsurersAmustAbeAauthorised...A-ACORRECTAANSWERSA-
byAtheAPrudentialARegulationAAuthority.APRAAmustAbeAsatisfiedAthatAtheAapplicantAcomplie
sAwithAtheirAconditions.AMustAbeAdistinguishedAfromAoneAanotherAinAtermsAofAownershipAan
dAfunction.
ProprietaryACompaniesA-ACORRECTAANSWERSA-
UsuallyAregisteredAunderAtheACAA1985.AOwnedAbyAShareholders.ALimitedALiabilityAcompa
nies.
SocietasAEuropaeasA-ACORRECTAANSWERSA-
PublicAEUAcompanyAthatAcanAbeAregisteredAinAanyAmemberAstateAofAEUAandAcabAbeAtransf
erredAtoAotherAmemberAstatesAwithoutAneedAforAliquidation.
MutualACompaniesA-ACORRECTAANSWERSA-
OwnedAbyAtheApolicyholders.ATheyAshareAinAprofitsAbyAhavingAlowerApremiums.ALimitedAby
Aguarantee.

MutualAIndemnityAAssociationA-ACORRECTAANSWERSA-
SelfAmanagedApoolsAofAinsurersAandAalsoAownedAbyApolicyholders.
CaptiveAInsurersA-ACORRECTAANSWERSA-
anAinsurerAownedAbyAaAparentAfirmAforAtheApurposesAofAinsuringAtheAparentAfirm'sAlossAexp
osures