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Paper I - Principles and Practice of Insurance
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Question 1 of 30
1. Question
How Shall insurance intermediaries be aware of insurance companies?
I. By getting information of their infrastructure
II. By getting information on statistics of company staff
III. By getting information of their various departments and personnel behind the marketing process
IV. By getting information of company’s personal dataCorrect
Whilst an insurance intermediary is unlikely to have close contact with the internal organisation of insurance companies, it is good to understand something of their infrastructure and to be aware of the various departments and personnel behind the marketing process
Incorrect
Whilst an insurance intermediary is unlikely to have close contact with the internal organisation of insurance companies, it is good to understand something of their infrastructure and to be aware of the various departments and personnel behind the marketing process
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Question 2 of 30
2. Question
What are the TWO offenses under UNTAMO?
I. to make any property or financial services available for the benefit of Insurance Agent
II. collect property or solicit financial (or related) services for the benefit of a terrorist
III. to make any property or financial services available to or for the benefit of a terrorist
IV. to kill insurance agent & broker without any causeCorrect
It is an offence under the UNATMO for any person to make any property or financial services available, by any means, directly or indirectly, to or for the benefit of a terrorist or terrorist associate except under the authority of a licence granted by S for S. It is also an offence for any person to collect property or solicit financial (or related) services, by any means, directly or indirectly, for the benefit of a terrorist or terrorist associate.
Incorrect
It is an offence under the UNATMO for any person to make any property or financial services available, by any means, directly or indirectly, to or for the benefit of a terrorist or terrorist associate except under the authority of a licence granted by S for S. It is also an offence for any person to collect property or solicit financial (or related) services, by any means, directly or indirectly, for the benefit of a terrorist or terrorist associate.
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Question 3 of 30
3. Question
With the assignment of the insurance contract, both the assignor and the assignee need to have:
I. identity verification documents
II. insurable authority in the subject matter of insurance
III.insurable interest in the subject matter of insurance
IV. a legal document to verify possible risksCorrect
With assignment of the insurance contract, both the assignor and the assignee need to have insurable interest in the subject matter of insurance at the time of assignment; otherwise the purported assignment will not be valid.
Incorrect
With assignment of the insurance contract, both the assignor and the assignee need to have insurable interest in the subject matter of insurance at the time of assignment; otherwise the purported assignment will not be valid.
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Question 4 of 30
4. Question
Select TWO important areas of advertising:
I. Selection of international marketing agencies
II. the extent to which TV or other media are to be involved
III. co-ordination of advertising campaign
IV. A Market surveyCorrect
Advertising: closely interconnected with the above, this enormously important area includes:
(i) selection of external agencies (if used);
(ii) the extent to which TV or other media are to be involved;
(iii) co-ordination of advertising campaigns;
(iv) expenditure analysis and control.
Incorrect
Advertising: closely interconnected with the above, this enormously important area includes:
(i) selection of external agencies (if used);
(ii) the extent to which TV or other media are to be involved;
(iii) co-ordination of advertising campaigns;
(iv) expenditure analysis and control.
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Question 5 of 30
5. Question
What is the accurate way to measure the attainment of the procedures?
I. Increasing Complaints
II. Regular audits
III. Conducting surveys
IV. Calculating registrationsCorrect
Monitoring and Audit Monitoring and Audit
‧ Effective procedures should be set up to monitor complaints and to make regular reports for senior management’s review.
‧ To measure the attainment of the procedures, regular audits should be conducted by competent and independent staff. Based on the results of the audits, improvements to the procedures, where necessary, should be made by competent staff.Incorrect
Monitoring and Audit Monitoring and Audit
‧ Effective procedures should be set up to monitor complaints and to make regular reports for senior management’s review.
‧ To measure the attainment of the procedures, regular audits should be conducted by competent and independent staff. Based on the results of the audits, improvements to the procedures, where necessary, should be made by competent staff. -
Question 6 of 30
6. Question
What are the traits of an Actuary?
I. He has a strong financial background
II. He is an expert in predicting future trends based on available data
III. He keeps himself healthy & fit
IV. He is a highly skilled biologistCorrect
An actuary may be thought of as a highly skilled mathematician. His particular expertise is not only in the collation and presentation of numerical information, but also in projecting and predicting future trends, based on available data and assumptions. It will immediately be understood, therefore, that such an expert has a very important role to play in insurance.
Incorrect
An actuary may be thought of as a highly skilled mathematician. His particular expertise is not only in the collation and presentation of numerical information, but also in projecting and predicting future trends, based on available data and assumptions. It will immediately be understood, therefore, that such an expert has a very important role to play in insurance.
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Question 7 of 30
7. Question
Identify TWO dishonest claims among them:
I. a cheap watch stolen and saying that it was an expensive one
II. a car met a serious accident & car was poorly damaged
III. to elaborate swindles involving arson or faked death certificates
IV. a building was on fire & everything was burntCorrect
Insurance fraud may take any of a large number of forms. Usually, we tend to associate the term with dishonest claims, from relatively ‘small’ matters, such as having a cheap watch stolen and saying that it was an expensive one, to elaborate swindles involving arson or faked death certificates. There have even been examples of large life insurance being arranged and then having the person concerned murdered for the insurance money.
Incorrect
Insurance fraud may take any of a large number of forms. Usually, we tend to associate the term with dishonest claims, from relatively ‘small’ matters, such as having a cheap watch stolen and saying that it was an expensive one, to elaborate swindles involving arson or faked death certificates. There have even been examples of large life insurance being arranged and then having the person concerned murdered for the insurance money.
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Question 8 of 30
8. Question
Select TWO types of defense for any person charged with any of the offenses according to Insurance Ordinance:
I. The disclosure was not required but he still disclosed on any personal bias
II. The disclosure was required or authorised by or under any enactment, by any rule of law or by an order of a court
III. He disclosed the personal data for the purpose of affecting his personal relationships
IV. He disclosed the personal data for the purposes of a prescribed news activity or a directly related activityCorrect
Defence: The Ordinance provides the following defence to any person charged with any of the offences:
(1) he reasonably believed that the disclosure was necessary for the purpose of preventing or detecting crime; (2) the disclosure was required or authorised by or under any enactment, by any rule of law or by an order of a court; (3) he reasonably believed that the data user had consented to the disclosure; or (4) he disclosed the personal data for the purposes of a prescribed news activity or a directly related activity; and had reasonable grounds to believe that the publishing or broadcasting of the personal data was in the interest of the public
Incorrect
Defence: The Ordinance provides the following defence to any person charged with any of the offences:
(1) he reasonably believed that the disclosure was necessary for the purpose of preventing or detecting crime; (2) the disclosure was required or authorised by or under any enactment, by any rule of law or by an order of a court; (3) he reasonably believed that the data user had consented to the disclosure; or (4) he disclosed the personal data for the purposes of a prescribed news activity or a directly related activity; and had reasonable grounds to believe that the publishing or broadcasting of the personal data was in the interest of the public
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Question 9 of 30
9. Question
Select one restriction among them as highlighted under a rateable proportion clause?
I. Insurance agent & broker liability to its rateable share of the loss
II. insurer’s liability to its rateable share of the profit
III. insurer’s liability to its rateable share of the loss
IV. insurer’s liability to its rateable share of the rules & regulation of insuranceCorrect
Rateable Proportion Clause (or Contribution Condition), restricting the insurer’s liability to its rateable share of the loss. The effect is that, where there is double insurance and each of the relevant policies contains such a clause, the insured could no longer claim all of his loss from one insurer alone.
Incorrect
Rateable Proportion Clause (or Contribution Condition), restricting the insurer’s liability to its rateable share of the loss. The effect is that, where there is double insurance and each of the relevant policies contains such a clause, the insured could no longer claim all of his loss from one insurer alone.
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Question 10 of 30
10. Question
Select TWO important areas of advertising:
I. Selection of international marketing agencies
II. the extent to which TV or other media are to be involved
III. co-ordination of advertising campaign
IV. A Market surveyCorrect
Advertising: closely interconnected with the above, this enormously important area includes:
(i) selection of external agencies (if used);
(ii) the extent to which TV or other media are to be involved;
(iii) co-ordination of advertising campaigns;
(iv) expenditure analysis and control.
Incorrect
Advertising: closely interconnected with the above, this enormously important area includes:
(i) selection of external agencies (if used);
(ii) the extent to which TV or other media are to be involved;
(iii) co-ordination of advertising campaigns;
(iv) expenditure analysis and control.
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Question 11 of 30
11. Question
Which type of business consists of a very wide range of different types of insurance, with seventeen classes in the Insurance Ordinance?
I. General Business
II. Fundamental Business
III. Speculative Business
IV. Small BusinessCorrect
General Business: One of the two major divisions of insurance classified under the Insurance Ordinance. It consists of a very wide range of different types of insurance, with seventeen classes in the Insurance Ordinance
Incorrect
General Business: One of the two major divisions of insurance classified under the Insurance Ordinance. It consists of a very wide range of different types of insurance, with seventeen classes in the Insurance Ordinance
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Question 12 of 30
12. Question
A failure of the expected degree of professional competence, resulting in death, injury or loss to a third party is known as:
I. Individual Negligence
II. Personal Negligence
III. Professional Negligence
IV. Specific NegligenceCorrect
Professional Negligence: A failure of the expected degree of professional competence, resulting in death, injury or loss to a third party. Resulting claims may be covered by various forms of professional indemnity insurance
Incorrect
Professional Negligence: A failure of the expected degree of professional competence, resulting in death, injury or loss to a third party. Resulting claims may be covered by various forms of professional indemnity insurance
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Question 13 of 30
13. Question
If IARB refuses to confirm an application for registration under the Code, the applicant will be:
I. entitled to take the matter to Insurance Managers
II. not entitled to take the matter to Insurance Managers
III. not entitled to appeal to the Appeals Tribunal
IV. entitled to appeal to the Appeals TribunalCorrect
an appeal lies in the following circumstances;
(1) Where the IARB refuses to confirm an application for registration under the Code, the applicant will be entitled to appeal to the Appeals Tribunal; and
(2) Where the IARB determines to impose disciplinary or other action under the Code, the party who is the subject of the disciplinary or other action will be entitled to appeal to the Appeals Tribunal;
Incorrect
an appeal lies in the following circumstances;
(1) Where the IARB refuses to confirm an application for registration under the Code, the applicant will be entitled to appeal to the Appeals Tribunal; and
(2) Where the IARB determines to impose disciplinary or other action under the Code, the party who is the subject of the disciplinary or other action will be entitled to appeal to the Appeals Tribunal;
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Question 14 of 30
14. Question
Which statement holds true with the decision of Appeals tribunal?
I. the Appeals Tribunal may not deny the IARB’s decision being appealed or substitute such other decision
II. the Appeals Tribunal may confirm, accept & implement the ICAC’s decision being appealed
III. the Appeals Tribunal may confirm, vary or reverse the ICAC’s decision being appealed or substitute such other decision
IV. the Appeals Tribunal may confirm, vary or reverse the IARB’s decision being appealed or substitute such other decisionCorrect
the Appeals Tribunal may confirm, vary or reverse the IARB’s decision being appealed or substitute such other decision, consistent with the powers of the IARB, as it thinks fit.
Incorrect
the Appeals Tribunal may confirm, vary or reverse the IARB’s decision being appealed or substitute such other decision, consistent with the powers of the IARB, as it thinks fit.
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Question 15 of 30
15. Question
A requirement upon all insurance brokers, under Section 69 of the Insurance Ordinance, is that they have to submit
I. all the statistics of employees performance
II. an evidence for all the incurred breaches throughout the year
III. an annual audited financial statement representing a false picture of the business profit or loss for the period then ended
IV. an annual audited financial statement representing a true and fair picture of the business profit or loss for the period then endedCorrect
A requirement upon all insurance brokers, under Section 69 of the Insurance Ordinance, is that they have to submit an annual audited financial statement representing a true and fair picture of the business profit or loss for the period then ended.
Incorrect
A requirement upon all insurance brokers, under Section 69 of the Insurance Ordinance, is that they have to submit an annual audited financial statement representing a true and fair picture of the business profit or loss for the period then ended.
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Question 16 of 30
16. Question
A form of property insurance cover where all causes of loss are insured unless specifically excluded is known as:
I. A total Risk
II. A partial Risk
III. All risks
IV. Half risksCorrect
‘All Risks’ A form of property insurance cover where all causes of loss are insured unless specifically excluded.
Incorrect
‘All Risks’ A form of property insurance cover where all causes of loss are insured unless specifically excluded
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Question 17 of 30
17. Question
What things are to be followed while making a valid contract?
I. Intention to break the rules of the contract
II. Intention to create personal relation
III.Intention to create legal relation
IV. Intention to escape from the country after signing the contractCorrect
Intention to create legal relation: to make a valid contract, each party to it must clearly have the intention that it is to have legal consequences
Incorrect
Intention to create legal relation: to make a valid contract, each party to it must clearly have the intention that it is to have legal consequences
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Question 18 of 30
18. Question
Which statement best describes a ratification?
I. Ratification is the giving of power of attorney for a given act
II. Ratification is the giving of house authority for a given act
III.Ratification is the giving of a company authority for a given act
IV. Ratification is the giving of retrospective authority for a given actCorrect
Ratification is the giving of retrospective authority for a given act. That is to say, authority was not possessed at the time of the act, but the principal subsequently confirms the act, effectively backdating approval. It can be done in writing, verbally, or by conduct.
Incorrect
Ratification is the giving of retrospective authority for a given act. That is to say, authority was not possessed at the time of the act, but the principal subsequently confirms the act, effectively backdating approval. It can be done in writing, verbally, or by conduct.
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Question 19 of 30
19. Question
Which statement holds true for a claim form?
I. They are to be issued after one year and in understandable language
II. They are to be issued promptly without charge, and in understandable language
III. They are to be issued at minimal charge, and in difficult language
IV. They are to be issued to insurance brokers onlyCorrect
Claim Forms: to be issued promptly without charge, and in understandable language
Incorrect
Claim Forms: to be issued promptly without charge, and in understandable language
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Question 20 of 30
20. Question
What is an Equitable Doctrine of Contribution?
I. This is a compensation-related doctrine of equity which applies as between insurers in the event of a double insurance
II. This is a claims-related doctrine of equity which applies as between insurers in the event of a triple insurance
III. This is a payment-related doctrine of equity which applies as between insurers in the event of a group insurance
IV. This is a claims-related doctrine of equity which applies as between insurers in the event of a double insuranceCorrect
Equitable Doctrine of Contribution
This is a claims-related doctrine of equity which applies as between insurers in the event of a double insurance, a situation where two or more policies have been effected by or on behalf of the insured on the same interest or any part thereof, and the aggregate of the sums insured exceeds the indemnity legally allowed.
Incorrect
Equitable Doctrine of Contribution
This is a claims-related doctrine of equity which applies as between insurers in the event of a double insurance, a situation where two or more policies have been effected by or on behalf of the insured on the same interest or any part thereof, and the aggregate of the sums insured exceeds the indemnity legally allowed.
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Question 21 of 30
21. Question
Which statement best describes a rateable proportion of an insurer?
I. the ultimate proportion of the insured’s loss that anyone particular insurer is responsible for
II. the aggregate of the insured’s profit that anyone particular insurer is responsible for
III. the sum of the insured’s loss that anyone particular insurer is not responsible for
IV. the ultimate proportion of the insured’s loss that is not linked to any particular insurerCorrect
Rateable Proportions : Where contribution applies, the ultimate proportion of the insured’s loss that any one particular insurer is responsible for is called the ‘rateable proportion’ of that insurer
Incorrect
Rateable Proportions : Where contribution applies, the ultimate proportion of the insured’s loss that any one particular insurer is responsible for is called the ‘rateable proportion’ of that insurer
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Question 22 of 30
22. Question
Which statement holds true for a fundamental risk?
I. Fundamental risks are normally insurable because it is considered financially infeasible for insurers to handle them commercially
II. Fundamental risks are not normally insurable because it is considered financially infeasible for insurers to handle them commercially
III. Fundamental risks are not only insurable but also easy to handle privately
IV. Fundamental risks are not linked to insuranceCorrect
Fundamental risks are not normally insurable because it is considered financially infeasible for insurers to handle them commercially
Incorrect
Fundamental risks are not normally insurable because it is considered financially infeasible for insurers to handle them commercially
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Question 23 of 30
23. Question
The ICCB can only deal with a particular case if:
I. the insurer concerned is an ICCB member
II. the policy concerned is a public insurance policy
III. the insurer concerned is an IA member
IV. the policy concerned is a personal insurance policyCorrect
To summarise, the ICCB can only deal with a particular case if:
(a) the complaint is claim-related;
(b) the claim amount does not exceed HK$800,000;
(c) the insurer concerned is an ICCB member;
(d) the policy concerned is a personal insurance policy
Incorrect
To summarise, the ICCB can only deal with a particular case if:
(a) the complaint is claim-related;
(b) the claim amount does not exceed HK$800,000;
(c) the insurer concerned is an ICCB member;
(d) the policy concerned is a personal insurance policy
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Question 24 of 30
24. Question
Select TWO speculative risks among them:
I. Accident
II. Business Ventures
III. Fire
IV. GamblingCorrect
Speculative Risks offer the potential of gain or loss. Such risks include gambling, business ventures and entrepreneurial activities.
Incorrect
Speculative Risks offer the potential of gain or loss. Such risks include gambling, business ventures and entrepreneurial activities.
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Question 25 of 30
25. Question
Elimination of the chance of loss of a certain kind by not exposing oneself to the peril is:
I. Loss prevention
II. Risk avoidance
III. Risk Transfer
IV. Risk ManagementCorrect
risk avoidance: elimination of the chance of loss of a certain kind by not exposing oneself to the peril (e.g. abandoning a nuclear power project so as to eliminate the risk of nuclear accidents);
Incorrect
risk avoidance: elimination of the chance of loss of a certain kind by not exposing oneself to the peril (e.g. abandoning a nuclear power project so as to eliminate the risk of nuclear accidents);
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Question 26 of 30
26. Question
Choose the correct statement among them:
I. The IA took over the functions of the ICAC to regulate the insurance industry in Hong Kong and the OCI was disbanded the other day
II. The IA took over the statutory functions of the IBAN to regulate insurance industry in Hong Kong and the OCI was disbanded on the same day
III. The IA took over the statutory functions of the OCI to regulate the insurance industry outside Hong Kong and the OCI was disbanded after a couple of days
IV. The IA took over the statutory functions of the OCI to regulate the insurance industry in Hong Kong and the OCI was disbanded on the same dayCorrect
The IA took over the statutory functions of the OCI to regulate the insurance industry in Hong Kong and the OCI was disbanded on the same day
Incorrect
The IA took over the statutory functions of the OCI to regulate the insurance industry in Hong Kong and the OCI was disbanded on the same day
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Question 27 of 30
27. Question
What is the minimum paid-up capital required for any statutory insurance business (either alone or together with any insurance business)?
I. HK $100 million
II. HK $20 million
III. HK $25 million
IV. HK $26 millionCorrect
Minimum paid-up capital required:
(a) HK$10 million: if carrying on only General or only Long Term business, but not any statutory (or compulsory) insurance business;
(b) HK$20 million: if carrying on any statutory (or compulsory) insurance business, either alone or together with any other insurance business;
Incorrect
Minimum paid-up capital required:
(a) HK$10 million: if carrying on only General or only Long Term business, but not any statutory (or compulsory) insurance business;
(b) HK$20 million: if carrying on any statutory (or compulsory) insurance business, either alone or together with any other insurance business;
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Question 28 of 30
28. Question
Which statement holds true under provisions of the Insurance Ordinance?
I. All insurance agents must be registered
II. Only few insurance agents shall be registered
III. Insurance agents don’t need any registration
IV. Insurance agents re-apply for registration after five yearsCorrect
Registration: all insurance agents must be registered under the provisions of the Insurance Ordinance and governed by the Code of Practice for the Administration of Insurance Agents.
Incorrect
Registration: all insurance agents must be registered under the provisions of the Insurance Ordinance and governed by the Code of Practice for the Administration of Insurance Agents.
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Question 29 of 30
29. Question
Which TWO things shall be considered by insurers to handle complains or inquiries?
I. Participation in Insurance workshops
II. Shall handle inquires in a fair & timely manner
III. Report to police stations for disputes
IV. Comply with the code of ‘Practice for the Administration of Insurance Agents’Correct
Insurers should handle inquiries in a fair and timely manner, have in place documented internal complaint-handling procedures for resolving complaints by policyholders, and:
(a) comply with the Code of Practice for the Administration of Insurance Agents, which provides an external mechanism for dealing with complaints against insurance agents; and
(b) participate in the Insurance Claims Complaints Bureau (‘ICCB’), which adjudicates insurance claims disputes between insurers and individual policyholdersIncorrect
Insurers should handle inquiries in a fair and timely manner, have in place documented internal complaint-handling procedures for resolving complaints by policyholders, and:
(a) comply with the Code of Practice for the Administration of Insurance Agents, which provides an external mechanism for dealing with complaints against insurance agents; and
(b) participate in the Insurance Claims Complaints Bureau (‘ICCB’), which adjudicates insurance claims disputes between insurers and individual policyholders. -
Question 30 of 30
30. Question
Select the most appropriate statement regarding UNATMO:
I. The UNATMO criminalises any act of providing or collecting property and of making property or financial (or related) services available to terrorists or terrorist associates
II. The UNATMO offends any act of providing or collecting property and of making property or financial (or related) services available to terrorists or terrorist associates
III. The UNATMO encourages any act of providing or collecting property and of making property or financial (or related) services available to terrorists or terrorist associates
IV. The UNATMO is not linked with any act of providing or collecting property and of making property or financial (or related) services available to terrorists or terrorist associatesCorrect
The UNATMO criminalises any act of providing or collecting property and of making property or financial (or related) services available to terrorists or terrorist associates
Incorrect
The UNATMO criminalises any act of providing or collecting property and of making property or financial (or related) services available to terrorists or terrorist associates
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