IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE

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 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
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QUESTIONS BASED ON UNDERWRITING PRACTICES, TYPES OF LOSSES, LAYOUT AND

LAWS RELATING TO INSURANCE BUSINESS

Question 1 The process of underwriting is –

1. To classify the subject matter according to their degree of insurability
2. To evaluate the risks to which they are exposed
3. To finalise their acceptance along with the terms and charge appropriate rates of
premium
(a) Only 1
(b) Only 2
(c) Only 3
(d) Both 1 and 2
(e) All 1, 2 and 3

Correct Answer All 1, 2 and 3

Answer Explanation Underwriting is the process of; “Classifying the subject matter according to their
degree of insurability, Evaluation of risks to which they are exposed and to decide
on their acceptance along with the terms and conditions and charge appropriate
rates of premium”. The underwriter has to ensure that the risk is assessed correctly
& the premium is charged accordingly.

Question 2 Name the clause in an insurance policy which describes the condition or type of loss
which is not covered by the policy?
(a) Express warranty
(b) Implied warranty
(c) Guarantee
(d) Inclusion
(e) Exclusion

Correct Answer Exclusion

Answer Explanation Exclusion is a clause contained in an insurance policy which describes the condition
or type of loss that is not covered by the policy.

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Question 3 Which of these is exclusion under marine insurance for the proposal mentioned
below?
1. Breakage
2. Loss as a result of sunken cargo
3. Damage due to water
(a) Only 1
(b) Only 2
(c) Only 3
(d) Both 1 and 2
(e) Both 2 and 3

Correct Answer Only 1

Answer Explanation Under marine insurance, acceptance of some types of proposals is subject to
imposition of exclusions. Breakage is excluded under the proposal of transformers
in marine insurance.

Question 4 Warranties are special conditions based on the statements made by the ______ .
(a) Underwriter
(b) Insurer
(c) Insured
(d) Broker
(e) Agent

Correct Answer Insured

Answer Explanation Warranties are special conditions based on the statements made by the insured.

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Question 5 A discount in the premium which is given on the renewal of the policy if no claim is
made in the previous year is known as ______ .
(a) Premium Redemption
(b) Bonus
(c) Deductible
(d) Contribution
(e) Malus

Correct Answer Bonus

Answer Explanation Bonus is usually a discount in the premium which is given on the renewal of the
policy if no claim is made in the previous year. This is rate monitoring for existing
customers.

Question 6 Under the process of arbitration for resolving of disputes, if the parties cannot agree
upon a single arbitrator within _____ days of any party invoking arbitration, the
same shall be referred to a panel of three arbitrators.
(a) 7
(b) 15
(c) 21
(d) 30
(e) 45

Correct Answer 30
Answer Explanation If the parties cannot agree upon a single arbitrator within 30 days of any party
invoking arbitration the same shall be referred to a panel of three arbitrators, one
to be appointed by each of the parties and the third arbitrator to be appointed by
such two arbitrators.

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Question 7 Which act makes it compulsory for owners of inland vessels to insure against legal
liability for death or injury of third parties?
(a) The carriage of goods by sea act
(b) Marine insurance act
(c) Merchant shipping act
(d) Indian ports act
(e) Inland steam vessels act

Correct Answer Inland steam vessels act

Answer Explanation The Inland Steam Vessels (Amendment) Act 1977 makes it compulsory for owners or
operators of inland vessels to insure against legal liability for death or bodily injury
of third parties or of passengers carried for hire or reward.

Question 8 Which are the specific requirements imposed under the contract, the violation of
which can lead to adverse effect on the policy liability for a loss?
(a) Exclusions
(b) Policy document
(c) Warranties
(d) Conditions
(e) Guarantees

Correct Answer Conditions

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Question 9 Perils which can be a cause of ________ are covered under an insurance policy.
1. Injury 2. Loss 3. Damage
(a) Only 1
(b) Only 2
(c) Only 3
(d) Both 2 and 3
(e) All 1, 2 and 3

Correct Answer All 1, 2 and 3

Answer Explanation The perils classified under the non-life insurance can be broadly divided under
various loss producing events. These perils include Damage, Injury & Loss.

Question 10 Which of the following is unlikely to be a rating or underwriting factor in fire

insurance?
(a) Fire Extinguishers
(b) Building security
(c) Construction
(d) Deductible
(e) None of the above

Correct Answer Building security

Answer Explanation Building security like watchmen, camera's etc. are not underwriting factors in fire
insurance.

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Question 11 Which among the following is a result of failure to consider adverse features of a
risk?
1. Moral hazard
2. Premiums that are low
3. Adverse selection
(a) Only 1
(b) Only 2
(c) Only 3
(d) Both 2 and 3
(e) All 1, 2 and 3

Correct Answer Only 2

Answer Explanation If an insurer charges too little premium, it could become insolvent when large claim
on account of frequency or severity of claim are filed.
Question 12 A written proposal is essential in all forms of insurance cover except ________ .
(a) Fire insurance
(b) Marine insurance
(c) Term insurance
(d) Miscellaneous insurance
(e) Burglary insurance

Correct Answer Marine insurance

Answer Explanation As per Regulation 4 of the Insurance Act, except in cases of a marine insurance
cover, where current market practices do not insist on a written proposal form, in
all cases a proposal for grant of a cover, either for life business or for general
business, must be evidenced by a written document.

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Question 13 As per the Insurance Act, any claim equal to or exceeding ______ shall be admitted
for payment by the insurer only if a report on the loss has been obtained from a
Surveyor.
(a) Rs. 20,000
(b) Rs. 25,000
(c) Rs. 50,000
(d) Rs. 75,000
(e) Rs. 1,00,000

Correct Answer Rs. 20,000

Answer Explanation Section 64UM of the Insurance Act provides that no claim in respect of a loss which
has incurred in India equal to or exceeding Rs.20,000 on any policy of insurance shall
be admitted on payment or settled by the insurer unless he has obtained a report
on the loss from a person who holds the license to act as a surveyor or loss assessor.

Question 14 What is/are the powers and functions of IRDA as stated in the Insurance Act ?
1. To levy fees and other charges for carrying out the purposes of the proposed Act
2. To ensure the profits of the insurance companies
3. To promote the efficiency in the conduct of insurance business
4. To regulate investment of funds by insurance company
(a) Only 3
(b) 1,2 and 3
(c) 2,3 and 4
(d) Only 4
(e) 1, 3 and 4

Correct Answer 1, 3 and 4

Answer Explanation IRDA has various powers to regulate, promote and ensure orderly growth of the
insurance and reinsurance business. To ensure profits of the insurance companies in
NOT one of them.

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Question 15 The essential elements in a contract of insurance are –

1. Offer and Acceptance
2. Probability
3. Consideration
4. Agreement between parties
(a) 1 and 2
(b) 2 and 3
(c) 1, 2 and 3
(d) 1, 3 and 4
(e) All 1, 2, 3 and 4

Correct Answer
Answer Explanation The essential elements in a contract of insurance are :
- Offer and Acceptance
- Consideration
- Agreement between parties
- Capacity of the parties
- Legality of the contract

Question 16 Sometimes at the time of loss, the total value of stocks is greater than the total
value declared for insurance purpose. This additional condition is called as _______ .
(a) Uninsured coverage
(b) Minimal loss coverage
(c) Granted coverage
(d) Customized coverage
(e) Partial average coverage

Correct Answer Partial average coverage

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Question 17 Which Act defines the rights and liabilities of truck owners who carry goods for
public hire in respect of loss of goods carried by them?
(a) Multi-Modal Transportation Act
(b) Public Liability Insurance Act
(c) The Carriers Act
(d) The Bill of Lading Act
(e) Workmen’s Compensation Act

Correct Answer The Carriers Act

Answer Explanation The Carriers Act – 1865 defines the rights and liabilities of truck owners or operators
who carry goods for public hire in respect of loss or damage to goods carried by
them.

Question 18 Which of these layout factors is/are recommended for jute storage go downs?
1. Automatic fire alarm system
2. Design of sprinkler systems capable of dealing with high piled storage
3. The piles of bamboo and baggasse should be stored in fenced yard
4. Limiting the size of individual jute piles and separation of piles by aisles
(a) Only 1, 2 and 4
(b) Only 2, 3 and 4
(c) Only 2
(d) Only 1 and 2
(e) All 1, 2, 3 and 4

Correct Answer Only 1, 2 and 4

Answer Explanation The precaution of ‘The piles of bamboo and baggasse should be stored in fenced
yard’ is not for Jute go down but for Paper industry storage.
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Question 19 An insurer wants to correspond to the insured with respect to claims but it wants to
leave the question of ultimate liability under the policy open. What should it do?
(a) It should mark the correspondence as ‘Without Prejudice’
(b) It should mark the correspondence as ‘Without Binding’
(c) It should mark the correspondence as ‘Without Recourse’
(d) It should mark the correspondence as ‘Without Limit’
(e) It should mark the correspondence as ‘With Recourse’

Correct Answer It should mark the correspondence as ‘Without Prejudice’

Answer Explanation Claims correspondence with the insured relating to a claim is marked ‘Without
Prejudice' and these words have the effect of leaving the question of ultimate
liability under the policy open.

Question 20 Which department has to be constituted in order to ensure that all underwriting is
done in compliance with the ‘F&U’ guidelines?
(a) Compliance department
(b) Grievance department
(c) Price management department
(d) Technical audit department
(e) Regulatory department

Correct Answer Technical audit department

Answer Explanation The Technical audit department has the responsibility of bringing in self-discipline in
underwriting. The department should have audits as per the directions of the Board.

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Question 21 Select which of the given options is one of the four basic functions in the process of
underwriting -
(a) Client loyalty
(b) Business development
(c) Customer care
(d) Selection of risks
(e) Claims management

Correct Answer Selection of risks

Answer Explanation The process of underwriting involves four basic functions. One of such functions is
‘Selection of risks’. Others being Classification & rating, Policy forms and Retention
& Reinsurance.

Question 22 ______ is an example of Express Warranties in case of Marine insurance.

(a) The ship should not deviate from its normal course of journey
(b) The ship under voyage must be seaworthy at the commencement of the voyage
(c) The venture of voyage should be a legal one
(d) The sailing of the ship will be conducted with the help of an armed guard
(e) Voyage on sail should take lawful goods and commodities

Correct Answer The ship under voyage must be seaworthy at the commencement of the voyage
Answer Explanation The warranty implies that the ship should be seaworthy at the commencement of
the voyage, or if the voyage is carried out in stages at the commencement of each
stage.

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Question 23 From the given options select those covered under 'pure premium’.
(a) Operating expenses
(b) Claim cost
(c) Underwriting expenses
(d) Both 1 and 2
(e) Both 2 and 3

Correct Answer Claim cost

Answer Explanation Pure premium is the premium which is sufficient to pay for the losses incurred. No
other expenses are taken into account in calculating the pure premium. The formula
for calculating the pure premium i.e. L / V X 100 (loss divided by value) also suggests
that no expenses are to be accounted in its calculation.

Question 24 Which of these statement(s) is INCORRECT?

1. A Proposal Form is compulsory in case of marine insurance
2. If a wrong answer is given in a proposal form, it will give the right to insurers to
avoid the contract
3. The Schedule contains information applicable to a particular contract
(a) Only 1
(b) Only 2
(c) Only 3
(d) Both 1 and 2
(e) Both 2 and 3

Correct Answer Only 1

Answer Explanation Proposal form is compulsory in all classes of insurance with the exception of marine
cargo insurance.

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Question 25 In accordance to the File and Use guidelines, what are large risks?
(a) Large risks are those which are Rs 100 crores or more per event for liability
insurance
(b) Large risks are those which cannot be managed
(c) Large risks are those which cannot be predicted
(d) Large risks are those which cannot be controlled
(e) Large risks are those which cannot be quantified

Correct Answer Large risks are those which are Rs 100 crores or more per event for liability
insurance

Question 26 What is the maximum commission payable to an insurance intermediary as per the
Insurance Act?
(a) 10%
(b) 20%
(c) 25%
(d) 30%
(e) 45%

Correct Answer 30%

Answer Explanation As per the Insurance Act, no intermediary or insurance intermediary shall be paid by
way of commission, fee or as remuneration in any form, an amount exceeding thirty
percent of the premium payable.

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Question 27 If the policy contains the ‘Agreed Bank Clause’, ________ .

(a) discharge given by the Bank is final and the amount of the claim can be paid directly
to the Bank
(b) discharge given by the Bank is final but the amount of the claim cannot be paid
directly to the Bank
(c) discharge given by the Bank is NOT final
(d) discharge given by the Bank can be considered as final
(e) discharge given by the Bank has no meaning until the Bank receives the claim
amount

Correct Answer discharge given by the Bank is final and the amount of the claim can be paid directly
to the Bank
Answer Explanation Agreed Bank Clause - All policies in which a Bank/ Financial Institution has interest
shall be issued in the name of Bank/ Financial Institution and Owner or Mortgagor
and shall contain a suitable clause to protect their mutual interest.
If the policy contains the ‘Agreed Bank Clause’ discharge given by the Bank is final
and the amount of the claim can be paid directly to the Bank.

Question 28 As per the rules of Central Government, what are the qualifications of an
Ombudsman?
1. He should be of the rank of a high court judge and/or
2. He should have rich experience in the industry, civil services etc.
3. He should not be more than 55 years of age
(a) Only 1
(b) 1 and 2
(c) 1 and 3
(d) 2 and 3
(e) All 1, 2 and 3

Correct Answer 1 and 2

Answer Explanation The requirement is: The Ombudsman should not be more than 65 years of age.

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Question 29 According to IRDAI Regulations, the design and rating of insurance products should
______.
1. Be Reasonable
2. Have Convoluted policy wordings
3. have arbitrary premiums
(a) Only 1
(b) Only 2
(c) Only 3
(d) Both 1 and 2
(e) Both 2 and 3

Correct Answer Only 1

Answer Explanation The insurance products designed by an insurer can neither charge arbitrary
premium nor the policy wording can be convoluted (difficult/ complicated to
understand) policy wordings. The premium should be reasonable & policy wordings
should be easy to understand by the policy holders.

Question 30 In a building, fire tends to spread vertically more than horizontally. To overcome
this, an ideal arrangement would be to have ______ .
(a) Small floor openings
(b) Fire extinguishers in all floors
(c) Have lifts instead of stairs
(d) Have ropeways instead of stairs
(e) Hoists and staircases in the open

Correct Answer Hoists and staircases in the open

Answer Explanation To restrict to the minimum the damage caused by fire, it is essential to confine it to
the floor on which it occurs as fire tends to spread vertically more than horizontally.
Unprotected floor openings, staircases allow flame and smoke to be carried upward.
An ideal arrangement would be to have no floor openings and access to the various
floors being obtained by hoists and staircases in the open.

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Question 31 As per the principal of segregation, if two or more factories are situated in the same
compound, they attract ______ premium of all such manufacturing blocks.
(a) 10%
(b) 15%
(c) 20%
(d) Highest
(e) Lowest

Correct Answer Highest

Answer Explanation As per the principal of segregation, if two or more factories are situated in the same
compound, or independent products are manufactured in the same compound, they
are deemed to represent a common combined hazard and attract the highest rate
of premium of all such manufacturing blocks.

Question 32 Insurance Ombudsman has been mandated to perform the function of award
making up to ______ in respect of personal lines of insurance from any person.
(a) Rs. 2 lakhs
(b) Rs. 5 lakhs
(c) Rs. 10 lakhs
(d) Rs. 20 lakhs
(e) Rs. 25 lakhs

Correct Answer Rs. 20 lakhs

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Question 33 Information on _______ is most likely to be sought in a proposal form.

(a) detailed description of Risk
(b) matters not material to the risk
(c) the proposers personal life
(d) Both 1 and 3
(e) All 1, 2 and 3

Correct Answer detailed description of Risk

Answer Explanation Proposal form solicits information material to the risk. It is a very important
document & based upon the description & details of the proposed risk, the insurers
decides the rates, T & C of the policy. The most important information desired is
detailed description of the risk to be covered.

Question 34 Which of the following statements is/are true with respect to ships which go
missing?
1. A ship is declared missing only if no news has been received after a lapse of a
reasonable period
2. A missing ship is considered as an ‘Actual total loss’ by a marine peril
3. The Cargo on board the missing ship is not considered as an ‘Actual total loss’ as it
can be salvaged later
(a) 1 and 2
(b) 1 and 3
(c) 2 and 3
(d) Only 2
(e) All 1, 2 and 3

Correct Answer 1 and 2

Answer Explanation The Cargo on board the missing ship is also deemed to be an ‘Actual total loss’.

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Question 35 In the process of sale of an insurance policy, the insurer or its agent or any
intermediary shall act according to the code on conduct prescribed by –
1. The Insurance Authority
2. The councils that have been established under section 64C of the Insurance Act
3. The recognized professional body or association of which the agent or
intermediary is a member
(a) Only 1
(b) Only 3
(c) 1 and 3
(d) 2 and 3
(e) All 1, 2 and 3

Correct Answer All 1, 2 and 3

Answer Explanation In the process of sale of an insurance policy, the insurer or its agent or any
intermediary shall act according to the code on conduct prescribed by all the three
mentioned above.

Question 36 An insurance contract is an Aleatory contract. What does this signify?

(a) It depends upon a contingency
(b) It imposes reciprocal obligations
(c) It depends upon compliance of certain conditions
(d) The obligation to pay does not run with the property
(e) It is not executed until payment of sum after a loss

Correct Answer It depends upon a contingency

Answer Explanation The contract of insurance is aleatory, in so far as it depends upon a contingency, on
the occurrence of which, it is intended to provide relief though such a contingency
may never occur, eg. an accident, natural disaster etc.

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Question 37 The complaints registered to the Ombudsman can be about –

1. The costs of policy
2. Dispute about premium paid or payable in terms of the policy
3. The attitude of the insurance agent
(a) Only 1
(b) Only 2
(c) Only 3
(d) Both 1 and 2
(e) Both 2 and 3

Correct Answer Only 2

Answer Explanation As a measure of grievance redressal, if an individual insured is aggrieved by certain
personal lines of insurance products/ services including loss settlement delay or
other issue, complaint can be lodged with ‘Ombudsman’. The grievance may be in
the form of any dispute about premium paid or payable in terms of the policy.

Question 38 Any complaint made to the Ombudsman should be in _____ .

1. Writing 2. Email 3. Verbal
(a) Only 1
(b) Only 2
(c) 1 and 2
(d) 2 and 3
(e) All 1, 2 and 3

Correct Answer Only 1

Answer Explanation Any complaint made to the Ombudsman should be in writing, signed by the insured
or his legal heirs.

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Question 39 While filing a class rated product with IRDAI which documents need to be attached?
1. The Prospectus
2. Profit & Loss statement of the last 3 years
3. The history of planned underwriting losses
(a) Only 1
(b) Only 2
(c) Only 3
(d) Both 1 and 2
(e) Both 2 and 3

Correct Answer Only 1

Answer Explanation Various documents and certificates are required to be filed or attached for filing a
product with the IRDA consists of prospectus along other documents like proposal
form, claim form etc.

Question 40 What are the expenses covered under a Marine claim?

(a) Forwarding charges
(b) Salvage charges
(c) Sue and Labor charges
(d) Extra charges
(e) All of the above

Correct Answer All of the above

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Question 41 If a ship has been damaged by an insured peril and the cost of repairing the damage
would exceed the value of ship, then this is considered as _______ .
(a) Loss of Specie
(b) Actual total loss
(c) Salvage loss
(d) Constructive total loss
(e) Non insurable loss

Correct Answer Constructive total loss

Answer Explanation As per Sec 60 (2) of Marine Insurance Act, there will be a constructive total loss if
the cost of repairing the damage would exceed the value of ship when repaired.

Question 42 If a proposal falls within the lowest risk boundaries of underwriting standards, the
policy is issued on a _____ .
(a) standard basis
(b) sub-standard basis
(c) preferred basis
(d) Proposal to be declined
(e) None of the above

Correct Answer preferred basis

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Question 43 Why do underwriting errors generally occur?

(a) Due to regulatory changes
(b) Due to lack of reinsurance
(c) Due to legal changes
(d) Due to faulty information collection
(e) Due to stiff competition

Correct Answer Due to faulty information collection

Answer Explanation Underwriting activity faces intense pressure in a deregulated market for various
reasons. Due to various pressures and variety of other reason including collection of
faulty information, there could be underwriting errors committed by an
underwriter.

Question 44 In 'Hit and Run' cases, the claims are settled from ________ .
(a) Hit and Run Fund
(b) Motor Insurance Fund
(c) Personal Accident Fund
(d) Solatium Fund
(e) Hedge Fund

Correct Answer Solatium Fund

Answer Explanation In ‘Hit & Run’ cases, accident victims are eligible for compensation through a Special
Fund constituted in terms of Section 163 of the Motor Vehicles Act, 1988 called
‘Solatium Fund’. The amount of Compensation is Rs. 25,000/- in the event of death
and Rs. 12,500/- for grievous injuries.

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Question 45 As per the Indian Contract Act, who CANNOT enter into insurance contracts?
1. NRIs 2. Minors 3. Persons of unsound mind
(a) All 1, 2 and 3
(b) Only 2
(c) Only 3
(d) 1 and 3
(e) 2 and 3

Correct Answer 2 and 3

Answer Explanation The Indian Contracts Act states – ‘Every person is competent to contract who is of
the age of majority according to the law to which he is subject and who is of sound
mind and is not disqualified from contracting by any law to which he is subject’.
Thus, minors and persons of unsound mind cannot enter into insurance contracts.
NRIs (Non Resident Indians) can buy an insurance policy in India.

Question 46 Section 463 of the IPC provides that whoever makes any false document or a part of
a document with intent to cause damage or injury to the public or any other person
or to support any claim or title or to cause any person to part with property or to
enter into any express or implied contract or with the intent to commit fraud or that
fraud may be committed, commits _______.
(a) Forgery
(b) Fraud
(c) False evidence
(d) Manipulation
(e) Dishonesty

Correct Answer Forgery

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Question 47 Which of these statements is INCORRECT with respect to layout of a petrochemical

complex?
(a) Layout is important for a petrochemical complex due to inherent fire and explosion
hazard
(b) The site selected may not be large but should be away from an airport
(c) Allowances have to be made for velocity and direction of wind
(d) There should be a clear space between the risk and neighboring premises
(e) Growth of vegetation is open space should be controlled and a boundary wall be
constructed to break fire

Correct Answer The site selected may not be large but should be away from an airport
Answer Explanation The option - ‘The site selected may not be large but should be away from an airport’
is wrong as a petrochemical complex is very large in size and the site selected should
be large enough to accommodate the complex.

Question 48 What is/are the differences between ATL and CTL?

1. ATL is physical total loss and CTL is commercial total loss
2. In ATL the subject matter is destroyed by a peril insured against and in CTL the
assured is deprived of the possession of the subject matter by a peril insured against
and the cost of recovering it would exceed its value when recovered
3. In ATL, the subject matter undergoes a physical change of character or specie and
in CTL, the subject matter is so damaged that the cost of repairing it would exceed
its value
(a) Only 2 and 3
(b) Only 1 and 2
(c) Only 1 and 3
(d) Only 3
(e) All 1, 2 and 3

Correct Answer All 1, 2 and 3

Answer Explanation All the above three are differences between Actual Total Loss (ATL) and
Constructive Total Loss (CTL).

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Question 49 With respect to Policy Prospectus, which of the following statements is TRUE ?
1. The Prospectus shall show the profit margin for the insurer
2. The Prospectus will explain warranties and conditions associated with the policy
3. The Prospectus shall clearly specify who can avail of the policy
(a) Only 1
(b) Only 2
(c) Only 3
(d) Both 1 and 3
(e) Both 2 and 3

Correct Answer Only 2

Answer Explanation Policy prospectus shall explain warranties and conditions associated with the policy.
Other two points are not required in the prospectus.

Question 50 What is the cause of Moral Hazard?

(a) Difficulty in getting clients
(b) Difficulty in getting full information
(c) Difficulty in distinguishing good risk from bad risk
(d) Likelihood that bad risks are more willing to purchase insurance
(e) All of the above

Correct Answer Likelihood that bad risks are more willing to purchase insurance
Answer Explanation After buying an insurance policy if the insured indulges in behavior which increases
the chances of loss for the insurer it is a case of moral hazard. Bad risks are more
likely to do so.

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Question 51 The contents of the Proposal Form and personal statement contain information
which is relevant to determine ______ .
1. The personal ambitions
2. The behavioral tendencies
3. The Moral hazards
(a) Only 1
(b) Only 2
(c) Only 3
(d) Both 2 and 3
(e) Both 1 and 2

Correct Answer Only 3

Answer Explanation Proposal form is a very important document & based on the details mentioned
therein, the risk is accepted by an insurer of the principle of utmost good faith. Any
misstatement or incorrect information is construed as the violation of the principle
of utmost good faith. It depicts the moral hazard of the proposer.

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Question 52 Which of these is/are the rights of a consumer as per the Consumer Protection Act?
1. The right to be heard
2. The right to profit
3. The right to choose
4. The right to redress
(a) 1 and 2
(b) 1, 2 and 3
(c) 3 and 4
(d) 1, 3 and 4
(e) 2, 3 and 4

Correct Answer 1, 3 and 4

Answer Explanation Consumer protection rights are –
1. Right to safety
2. Right to be informed
3. Right to choose
4. Right to be heard
5. Right to redress
6. Right to consumer education

Question 53 Chapter _____ of the Motor Vehicles Act provides for compulsory insurance of
motor vehicles.
(a) I
(b) III
(c) V
(d) VI
(e) VIII

Correct Answer VIII

Answer Explanation Chapter VIII of the Motor Vehicles Act provides for compulsory insurance of motor
vehicles. According to this Act, no motor vehicle can be used in pubic places unless
there is in force in relation to that vehicle a policy of insurance issued by an
authorized insurer.
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Question 54 Under the Consumer Protection Act 2002, what does the ‘Right to be informed’
mean?
(a) Right to be given correct facts
(b) Right to have a access to a variety of products
(c) Right to be represented
(d) Right to a fair settlement
(e) Right to acquire knowledge

Correct Answer Right to be given correct facts

Answer Explanation Right to be informed’ means the right to be given the facts needed to make an
informed choice or decision.

Question 55 In which of the below mentioned cases, the proposal needs to be declined?
(a) When the proposal is from a very rich person of the society
(b) When the proposal falls outside normal risk boundaries but is not considered as
high risk
(c) When the proposal falls normal lowest risk boundaries
(d) When the proposal falls outside acceptable risk boundaries
(e) When the proposal falls within lowest risk boundaries

Correct Answer When the proposal falls outside acceptable risk boundaries
Answer Explanation When an underwriter finds that the proposal pertains to a risk which offers a
greater risk than their established guidelines, the proposal is declined.

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Question 56 During the phase of underwriting a proposal, the underwriter has to judge the
probability of operation of peril to be insured in relation to -
(a) Time of the loss
(b) Frequency of the losses
(c) The severity of losses
(d) Both 1 and 2
(e) Both 2 and 3

Correct Answer Both 2 and 3

Answer Explanation Frequency & Severity of losses are the main areas under risk management matrix.
How frequent the occurrence of loss would be & what would be its severity (over a
period of time) has to be assessed for underwriting the proposal for any insurance.

Question 57 The ‘Actual Total Loss’ of the subject matter is said to have occurred ____ .
1. Where it is destroyed by a peril not insured against
2. Where it loses its species
3. Where the assured is irretrievably deprived thereof when ship and cargo is
captured in the time of war
4. Where the goods are in a ship that has been posted as ‘missing’ after a lapse of
reasonable time
(a) 1 and 2
(b) 1, 2 and 3
(c) 2, 3 and 4
(d) 1, 3 and 4
(e) All 1, 2, 3 and 4

Correct Answer 2, 3 and 4

Answer Explanation Only option 1 is wrong. It should be ‘Where it is destroyed by a peril insured against’
- such as sinking in deep water in a storm at sea.

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Question 58 The value of a building is Rs 6,00,000 and this building has been insured for Rs
3,00,000. There was a loss of Rs 1,00,000. As the sum assured is Rs 3,00,000, the
amount of claim of Rs 1,00,000 should be paid in full. Give your judgment.
(a) A claim of Rs. 150000 should be paid
(b) A claim of Rs 50,000 should be paid
(c) The calculation is correct. Rs 1,00,000 should be paid
(d) The calculation is correct only if the value of building is Rs 800000
(e) The calculation is correct because the claim can be paid in full but not more than the
loss

Correct Answer A claim of Rs 50,000 should be paid

Answer Explanation As per the pro-rata average condition, if there is under insurance, that is, if the sum
insured under the policy is less than the value of the property, the amount of loss
payable will be proportionately reduced.
In the above question, the value of property is Rs 6 lakhs and sum assured is Rs 3
lakhs. The claim is Rs 1 lakh.
The claim payable will be 300000 / 600000 x 100000 = Rs 50,000

Question 59 In the 'LABLE CLAUSE' the insurer’s liability is restricted to the cost of ______ .
(a) Concealed Damage
(b) Garbling
(c) Re-labeling
(d) Disposing
(e) Picking

Correct Answer Re-labeling

Answer Explanation Sometimes the labels attached for identification are detached from canned or
bottled goods or may cause discoloring by moisture. Label clause limits the insurer’s
liability to the cost of re-labeling the affected goods.
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Question 60 The insurance Act 1938 has been amended a number of times notably by the
passing of the Insurance Regulatory and Development Authority Act in ____.
(a) 1985
(b) 1999
(c) 1991
(d) 1976
(e) 1989

Correct Answer 1999

Question 61 Who issues the Bill of Lading?

(a) Road transporters
(b) Couriers
(c) Railways
(d) Airlines
(e) Shipping companies

Correct Answer Shipping companies

Answer Explanation The shipping companies issue the Bill of Lading. It is an evidence of the contract of
carriage of goods between the ship owner and the shipper, as an acknowledgement
of the receipt of goods on board the vessel and as a document of title.

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Question 62 The statement(s) which is true with respect to Fire Declaration policy is –
1. Stock Declaration is not required
2. The Policy is given in cases where total loss is impossible
3. Declaration has to be made periodically by the policy holder regarding the actual
values of stock
(a) Only 1
(b) Only 2
(c) Only 3
(d) Both 1 and 2
(e) Both 2 and 3

Correct Answer Only 3

Answer Explanation Fire Declaration policy is issued on stocks which are subject to market fluctuations
in quantity. The insured is required to take the policy for the highest sum insured &
he has to declare periodically the actual values of stock.

Question 63 Who prescribes the form and the manner in which books of accounts of insurance
companies will be maintained in India?
(a) Lloyds
(b) Institute of Chartered Accountants on India
(c) IRDA
(d) Insurance Act
(e) The insurance companies can follow their own guidelines

Correct Answer IRDA

Answer Explanation IRDA – Insurance Regulatory and Development Authority Act prescribes the form
and the manner in which books of accounts will be maintained and statement of
accounts will be rendered by insurers and other insurance intermediaries.

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Question 64 In the ______, the principal hazard is the presence of combustible materials at
various stages i.e. Raw material manufactures and finished product stage.
(a) Jute industry
(b) Oil extraction industry
(c) Textile industry
(d) Petrochemical industry
(e) Paper industry

Correct Answer Paper industry

Answer Explanation In the paper industry, the principal hazard is the presence of combustible materials
at various stages i.e. Raw materials manufacture and finished product stage.
Particularly, layout of storage has to be planned to control the risk exposure.

Question 65 Due to _______ the insurance industry is undergoing drastic changes.

1. Technological changes
2. De-regulation of the insurance sector
3. Globalization
(a) Only 1
(b) Only 2
(c) Only 3
(d) Both 1 and 3
(e) All 1, 2 and 3

Correct Answer All 1, 2 and 3

Answer Explanation The insurance industry is undergoing profound changes as a result of all the above
stated factors i.e. Globalization, De-regulation and Technology. In essence, the
insurance industry is changing its path from ‘Product Oriented Industry’ to
‘Customer Oriented Service Provider’.
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Question 66 Under the Consumer Protection Act, which has a three tier system of redressal of
complaints, the lowest level of jurisdiction is the ______ .
(a) National Commission
(b) State Commission
(c) District forum
(d) International Commission
(e) High Court

Correct Answer District forum

Answer Explanation Under the Consumer Protection Act, the three tier system of redressal of complaints
are –
1- District forum
2 - State commission
3 - National Commission

Question 67 In which ways can Moral Hazard arise?

1. Fraud
2. General economic conditions
3. Carelessness
(a) Only 1
(b) Only 3
(c) 1 and 2
(d) 2 and 3
(e) All 1, 2 and 3

Correct Answer All 1, 2 and 3

Answer Explanation Moral hazard occurs when an individual has an incentive to increase their exposure
to risk because they do not bear the full costs of that risk. For example, when a
person is insured, they may take on higher risk knowing that their insurance will pay
the associated costs.
Moral hazard can rise from various ways like fraud, carelessness, higher claims,
industrial relations, general economic conditions etc.
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Question 68 Insurance companies can invest in which of the following instruments?

1. Blue chip shares only
2. Blue chip shares and Government bonds only
3. In instruments approved under the provision of the Insurance Act.
(a) Only 2
(b) Only 3
(c) 1 and 3
(d) 2 and 3
(e) All 1, 2 and 3

Correct Answer Only 3

Answer Explanation It is a compulsion for insurance companies to invest its assets only in those
instruments approved under the provisions of the Insurance Act enforced. The
annual returns with details of investments are required to be submitted for scrutiny
to the Controller.

Question 69 As per Regulation 7 of the Insurance Act,a general insurance policy shall clearly
state-1. Full description of the property insured
2. Perils covered and not covered
3. Details of the riders attaching to the main policy
4. The commission payable to agents for the particular policy
(a) 1 and 3
(b) 2 and 3
(c) 1,2 and 3
(d) 1,2 and 4
(e) All 1,2,3 and 4

Correct Answer 1,2 and 3

Answer Explanation ‘The commission payable to agents’ is not mentioned in the general insurance
policy.

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Question 70 Commercial fidelity guarantee covers against ________ .

(a) A direct pecuniary loss caused as a result of fraud by an employee
(b) A consequential loss caused as a result of fraud by an employee
(c) Both 1 and 2
(d) A loss arising out of bad accountancy
(e) None of the above

Correct Answer A direct pecuniary loss caused as a result of fraud by an employee

Answer Explanation Commercial fidelity guarantee covers against a direct pecuniary loss caused as a
result of fraud by an employee.

Question 71 Which is a good method for monitoring compliance with respect to underwriting
policies?
(a) Brainstorming
(b) Internal audit
(c) Group discussions
(d) Fish bone analysis
(e) SWOT analysis

Correct Answer Internal audit

Answer Explanation The risk management framework typically consists of various elements such as
willingness & capacity to accept risk. It also calls for monitoring compliance with
respect to underwriting policies and procedure such as internal audit.

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Question 72 List the exclusions under All Risk policies is / are –

1. Wear and Tear of delicate and fragile articles
2. Fire
3. Theft
(a) Only 1
(b) Only 2
(c) Only 3
(d) Both 1 and 3
(e) All 1, 2 and 3

Correct Answer Only 1

Answer Explanation All Risk gives an impression that all risks are covered. However no insurer issues a
policy covering all possible risk. It covers all fortuitous i.e. accidental risks causing
damages, in accidental manner. The policy does not specify perils but states
exclusions. One of the exclusions under All Risk policy is ‘Wear and Tear of fragile
articles’.

Question 73 The process by which oil is extracted from oil seeds, oil cakes and brans is known as
_____.
(a) Chemical Extraction
(b) Oil Extraction
(c) Hexane Extraction
(d) Solvent Extraction
(e) Continuous Extraction

Correct Answer Solvent Extraction

Answer Explanation Solvent extraction as a process, utilizes solvents like Hexane to extract the residual
oil from oil bearing seeds, cakes and brans.
(Hexane is highly flammable and the chances of fire taking place are high)

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Question 74 A surveyor has to submit his report to the insurer in 30 days. However, if the insurer
finds the report incomplete, the surveyor has to resubmit the report with the
additional information in _____.
(a) 1 week
(b) 2 weeks
(c) 3 weeks
(d) 25 days
(e) 4 weeks

Correct Answer 3 weeks

Answer Explanation If an insurer, on receipt of a survey report funds that it is incomplete in any respect,
he shall require the surveyor to furnish an additional report. The surveyor shall
furnish an additional report within 3 weeks of the date of receipt of communication
from the insurer.

Question 75 In an insurance contract, both the parties should agree to the same thing in the
same sense. This is as per the principle of -
(a) Caveat Emptor
(b) Consensus ad idem
(c) Aleatory contract
(d) Proximate clause
(e) Ejusdem generis

Correct Answer Consensus ad idem

Answer Explanation As per the principle of ‘Consensus ad idem’, both the parties should agree to the
same thing in the same sense. In other words, there must be consent arising out of
common intention.

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Question 76 Under the Consumer Protection Act, which has a three tier system of redressal of
complaints, the _________ has jurisdiction if the claim is above Rs 1 crore.
(a) National Commission
(b) State Commission
(c) District Commission
(d) International Commission
(e) High Court

Correct Answer National Commission

Answer Explanation Complaints where the value of goods or services and compensation if any, exceeds
Rs. 1 crore, the authority to approach is National Commission.

Question 77 For the purpose of analyzing of risk factors arising from the layout of a premises,
which are the relevant aspects to be considered?
1. Location of premises vis-à-vis other premises
2. Size and height of building
3. Location of firefighting equipment
(a) Only 3
(b) 1 and 2
(c) 2 and 3
(d) 1 and 3
(e) All 1, 2 and 3`

Correct Answer All 1, 2 and 3

Answer Explanation For the purpose of analyzing of risk factors arising from the layout of a premises, the
relevant aspects to be considered are :
- Location of premises vis-à-vis other premises
- Size and height of building
- Segregation of hazardous processes and storage of hazardous goods
- Location and proper distribution of firefighting equipment etc.

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Question 78 Documentation for insurance also includes ______ .

(a) Cover Note
(b) Vision statement of the insurer
(c) Code of conduct of the insurance agents
(d) Both 1 and 2
(e) All 1, 2 and 3

Correct Answer Cover Note

Answer Explanation Agent’s code of conduct & insurer’s vision statement has nothing to do with the risk
assumed by the insurer based upon the proposal form & the premium collected
thereby. The cover note is issued with limited validity usually 30 days. It is an
evidence of risk cover.

Question 79 Of those listed below the only one which is contained in proposal form is -
(a) Previous insurance if any
(b) Bank guarantee required
(c) The Surety bond required
(d) Both 2 and 3
(e) Both 1 and 3

Correct Answer Previous insurance if any

Answer Explanation Previous insurance history is relevant from underwriting point of view. The risk will
not deteriorate with the presence or absence of bank guarantee or surety bond.
Previous insurance history is important to depict weather the previous insurer has
declined the risk due to adverse claim ratio.

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Question 80 External Exposure hazards fall into which basic two classifications?
(a) Local exposure and Conflagration exposure
(b) Constructional exposure and Occupancy exposure
(c) Local exposure and Occupancy exposure
(d) Constructional exposure and Conflagration exposure
(e) Occupancy exposure and Conflagration exposure

Correct Answer Local exposure and Conflagration exposure

Answer Explanation External Exposure hazards fall into basic two classifications – Local and
Conflagration exposure
Local exposure is that created by a fire in the immediate vicinity of building under
consideration.
Conflagration exposure is that created by fire in buildings or other property so
situated that a fire originating there is likely to involve many buildings and cover a
wide area.

Question 81 A insurance ombudsman has to pass an award within _____ months from the
receipt of the complaint and the award is ______ on the insurance company.
(a) Three , binding
(b) Three , Non-binding
(c) Six , binding
(d) Six, Non binding
(e) Three, Payable

Correct Answer Three , binding

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Question 82 _______ are examples of Internal tariff rated products.

(a) Mega risk insurance
(b) Individual rated products
(c) Liability rated products
(d) Class rated products
(e) Exposure rated products

Correct Answer Class rated products

Answer Explanation Class rated products are standard products that can be sold by any office of the
insurer with the rates, T & C of cover are set out in an internal guide tariff designed
by the insurance company like motor insurance, personal accident insurance (other
than fleet & groups).

Question 83 There is ‘Constructive Total Loss’ when the subject matter is ________ .
1. Reasonably abandoned as actual total loss appears unavoidable
2. In a ship that has been declared as ‘sunked’
3. Reasonably abandoned to prevent actual total loss which will require expenditure
exceeding the saved value
(a) 1 or 2
(b) 2 or 3
(c) 1 or 3
(d) Only 3
(e) All 1, 2 and 3

Correct Answer 1 or 3
Answer Explanation Sec 60 (1) of Marine Insurance Act provides that there is ‘Constructive Total Loss’
when the subject matter is reasonably abandoned because either –
a - actual total loss appears unavoidable or
b - to prevent actual total loss which will require expenditure exceeding the saved
value
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Question 84 ______ is a system of loss settlement in which damaged goods in a ship are landed
at an intermediate port, usually a port of distress, and it is found necessary to sell
the goods at this port in order to prevent the goods becoming a total loss.
(a) Total loss
(b) Salvage loss
(c) Average loss
(d) General average loss
(e) Partial loss

Correct Answer Salvage loss

Answer Explanation In marine insurance, damaged goods are sometime landed at an intermediate port
and sold for whatever they are worth because they would probably be worthless by
the time they arrive at the final destination. This is Salvage Loss.

Question 85 Which of these statement is INCORRECT with respect to storage of coal?

(a) Coal stacks of uniform fine size are more likely to heat than coal stacks of mixed size
(b) Large stocks of coal are very much susceptible to spontaneous combustion
(c) The coal stacking site should be cleared of leaves, grass etc.
(d) Steam or other pipes adjacent to a coal stock should not be allowed
(e) The smaller the coal size, more prone it is to combustion tendencies

Correct Answer Coal stacks of uniform fine size are more likely to heat than coal stacks of mixed size
Answer Explanation The size of coal is often the determining factor as to whether a stack of coal will
heat spontaneously. Coal of mixed size are more likely to heat than uniformly fine
coal because larger the pieces of coal open the texture of the heap and facilitate the
type of ventilation necessary for heating to proceed.
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Question 86 Under ‘Layout-Hazard and Risk Exposures’ , which are the factors is NOT relating to
‘exposing buildings’?
(a) Total mass of combustibles likely to be involved in a single exposing fire
(b) Hydrant systems should be kept charged with water
(c) Wind direction and average velocity of wind
(d) Distance between exposing and exposed building
(e) Accessibility of exposing fire to fire fighting forces

Correct Answer Hydrant systems should be kept charged with water

Answer Explanation Hydrant systems should be kept charged with water is a part of layout for fire
protection systems.

Question 87 Of the given options the only expense which can be classified as a ‘underwriting
expense’• is -
(a) Advertising expenses
(b) Staff salaries
(c) Investment department expenses
(d) CSR expenses
(e) Acquisition expenses

Correct Answer Staff salaries

Answer Explanation The pure premium is to be loaded by underwriting expenses, management expenses
(staff salaries), margin for heavy losses & profit for the insurers, to arrive at the final
premium. None other than staff salaries are underwriting expenses.

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Question 88 _______ is a part of the 'Policy Document'.

1. Surrender Form
2. Claim Form
3. The terms and conditions
(a) Only 1
(b) Only 2
(c) Only 3
(d) Both 1 and 2
(e) Both 2 and 3

Correct Answer Only 3

Answer Explanation Claim form & Surrender forms are issued subsequent to the issue of the policy. They
do not form the policy documents.

Question 89 Identify the statement which is NOT correct with respect to Sue and Labour charges
and Particular Charges?
(a) Sue and labour charges are incurred short of destination whereas particular charges
may be incurred at destination
(b) Sue and labour charges follows upon loss or damage, whereas Particular charges
may be incurred when the loss is threatened or imminent but is avoided by
expenses for that purpose
(c) Particular charges are a type of General Average loss
(d) Both Sue and labour charges and Particular charges are incurred for the benefit of
the common interest and not for a particular subject matter
(e) Payment of Particular charge would be conditional on the percentage of loss
whereas Sue and labour charges would be payable irrespective of insured value

Correct Answer Particular charges are a type of General Average loss

Answer Explanation In respect to Sue and labour charges and Particular charges, all of the above
statements are correct except that particular charges are a type of general average
loss (GA). In fact Sue and labour charges are a form of particular charges. GA losses
arise independently of insurance.

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Question 90 The 'proposal form' will seek to have information ______ .

1. Which is relevant to the risk
2. Which is not relevant to the risk
3. on the proposer's personal life
(a) Only 1
(b) Only 2
(c) Only 3
(d) Both 1 and 2
(e) Both 1 and 3

Correct Answer Only 1

Answer Explanation The important factor affecting the risk is the information relevant to the risk. Other
factors are not at all going to effect the underwriting decision of accepting or
rejecting the proposal.

Question 91 As per the ‘Contra proferentem’ rule, where there is an ambiguity in the wordings of
an insurance contract, it will be constructed against the ______ .
(a) Insured
(b) Insurer
(c) TPA
(d) Agent
(e) Actuary

Correct Answer Insurer

Answer Explanation As per the ‘Contra proferentem’ rule, where there is an ambiguity in the wordings of
an insurance contract, it will be constructed against the drafter i.e. the insurer. The
onus is on the insurers to use words with clear meanings in their policy drafting and
if they do not, the insured will be given benefit of the doubt

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Question 92 While issuing a policy on sub standard basis, what are the options exercised by the
insurer?
(a) Issue the policy with some exclusions
(b) Issue all risk cover policy
(c) Issue policy with the lower premium
(d) Both 1 and 2
(e) Both 2 and 3

Correct Answer Issue the policy with some exclusions

Answer Explanation Sub-standard risk carries higher of risk than the normal ones. They fall within the
underwriting standards but with additional degree of care. It includes charging
higher premium or with certain exclusions.

Question 93 An insurance contract is a Synallagmatic contract. What does this signify?

(a) It is not executed until payment of sum after a loss
(b) The obligation to pay does not run with the property
(c) It depends upon a contingency
(d) It imposes reciprocal obligations
(e) It depends upon compliance of certain conditions

Correct Answer It imposes reciprocal obligations

Answer Explanation An insurance contract is a Synallagmatic contract in the sense it imposes reciprocal
obligations. Insurance contracts are bilateral being in nature of mutual agreements
imposing obligations of a reciprocal nature upon the insurer and the insured.

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Question 94 As per Regulation 10 of the Insurance Act, the insurer has to respond within ____
days to any communication received from the policy holder in matters such as
recording change in address, issuance of duplicate policy etc.
(a) 5
(b) 7
(c) 10
(d) 30
(e) 15

Correct Answer 10
Answer Explanation The various aspects of Policyholder’s Servicing are dealt with by Regulation 10
which mentions –
An insurer carrying on life or general business, as the case may be, shall at all times,
respond within 10 days of the receipt of any communication from its policyholders
in all matters such as :
- recording change of address
- issuance of duplicate policy etc.

Question 95 In case of BURGLARY INSURANCE policy on a first loss basis, which is/are the prime
underwriting safeguards?
(a) Policy can be issued for as low as 10% of total value
(b) Damage to premises by burglars is excluded
(c) Policy is also available for small sum insured
(d) Cover is available to all locations where the goods are stored
(e) Property damage is also covered

Correct Answer Damage to premises by burglars is excluded

Answer Explanation There are various underwriting safeguards in case of burglary insurance policy on a
first loss basis. One of them is damage to premises by burglars is excluded.
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Question 96 While checking the records of a town for car thefts, it was observed that for every
1000 cars insured, which were valued at Rs 7 lakh each, on an average 5 cars were
stolen ever year. Calculate the pure premium that needs to be charged.
(a) Rs. 7500
(b) Rs. 3500
(c) Rs 12,500
(d) Rs. 14,000
(e) Rs. 4,500

Correct Answer Rs. 3500

Answer Explanation Pure premium refers to the premium which is sufficient to meet the losses.
Value of 5 stolen cars @ Rs. 7,00,000 per car is Rs. 35,00,000 when divided by 1000
insured cars, the premium comes to 3500000/ 1000 = 3500 i.e. each car owner is
required to contribute Rs. 3500 to cover the loss of 5 cars i.e. Rs.35,00,000.
Formula: L / V X 100. L is losses; V is value of all the cars. Pure premium is also
known as ‘Burning Cost’.

Question 97 As per the Insurance Act, ____ % of the commission receivable by the agent can be
given as rebate to the proposer (insured) as an inducement to take out insurance.
(a) 0.50%
(b) 1%
(c) 5%
(d) 10%
(e) NIL

Correct Answer NIL

Answer Explanation The Insurance Act prohibits use of rebates as an inducement to any person to take
out insurance.

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Question 98 If the sugar or cement, which is transported in a ship, gets damaged by sea-water as
to lose its character as sugar or cement, this is known as _____ .
(a) Loss of Character
(b) Loss of Material
(c) Loss of Nature
(d) Loss of Construction
(e) Loss of Specie

Correct Answer Loss of Specie

Answer Explanation Sugar, if damaged by sea water becomes useless as it loses its character. Cement, if
damage by sea water will become useless concrete. Fish, fruits and other perishable
goods can get damaged by fermentation / putrefaction caused by sea water and
lose their original character. In such cases an actual total loss occurs. This type of
loss is known as ‘Loss of Specie’.

Question 99 The factor(s) which needs to be considered while making underwriting decisions
includes –
1. The marketing expenditure
2. Intermediaries and commissions offered
3. The capability of staff
(a) Only 1
(b) Only 2
(c) Only 3
(d) Both 1 and 2
(e) Both 1 and 3

Correct Answer Only 2

Answer Explanation Decisions based on the underwriting approaches of the company, an insurer has to
factor intermediaries and commissions offered. The practice has to be followed
through underwriting manual & rating tables.
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Question 100 If the Consumer Forum is satisfied about the allegations in the complaint, it can
issue an order directing the opposite party to –
1. Replace the goods with new goods of similar description
2. To pay such amount as may be awarded by it as compensation
3. To discontinue the unfair trade practice

(a) Only 1
(b) Only 2
(c) Only 3
(d) 1 and 2
(e) All 1, 2 and 3

Correct Answer All 1, 2 and 3

Answer Explanation The Consumer Forum can issue any one or more of the above orders.

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