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PCE Part B- Set B 2000

PCE PART B - SET B (questions 1-20)

Sample Questions with Answers

1 ................... insurance contracts are contracts of indemnity.

A Whole life insurance


B Term insurance
C Endowment insurance
D General C9

2 Fire Insurance, Workmens Compensation and ....................... are governed by the


tariffs formulated by PIAM.

A Motor Insurance
B Public Liability Insurance
C Boiler Explosion Insurance
D Contractors All Risk Insurance C10

3 The basic principles governing the conduct of insurance business are :-

I) Insurable interest and subrogation


II) Utmost good faith and indemnity
III) Proximate cause and contribution
IV) Assignment and endorsement

A I and II only
B II and IV only
C I, II, and III only
D All of the above C9

4 The ................ Motor Policy covers only third party bodily injury or death.

A Comprehensive coverage
B Act only coverage
C Third party coverage
D Third party, fire and theft coverage C10

5 The policy form is .....................

A the insurance contract


B the evidence of the insurance contract
C a record of the subject matter insured
D a note of the amount of premium due C12

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PCE Part B- Set B 2000

6 Which of the following statements are correct regarding the general insurance
business?

I)A public liability policy will reimburse the insured for legal costs incurred in
Defending a claim against the insured by a third party.
II) A householders insurance policy is designed to insure the contents of a home
or private dwelling.
III) Money insurance policy provides cover for loss of money belonging to the insured
whilst premises outside business hours.
IV) If there is surplus to the General Takaful Fund after deducting all operational cost,
the surplus shall be shared between the Takaful Company and the participants of the
scheme.

A II and III only


B I and IV only
C I, II and III only
D All of the above C10

7 Which of the following statements are correct regarding characteristics of general


insurance products.

I) General insurance contracts are short-term contracts with usually varying premiums
at renewals
II)General insurance contracts are contracts of indemnity
III)Payment of a claim does not terminate a general insurance contract
IV) The risk to be insured does not necessarily increase with time

A I, II and III only


B II, III and IV only
C I, III and IV only
D All of the above C9

8 All Risks Insurance provides cover for ...........

A Loss, damage or destruction of the insured property by moth and vermin.


B Loss, damage or destruction of the insured property by wear and tear.
C Loss, damage or destruction of the insured property by fire and theft.
D Loss, damage or destruction of the insured property by fire, theft or any
accident or misfortune not specifically excluded.
C10

9 Which of the following is not a factor in the underwriting of a fire insurance risk ?

A Type of construction
B Type of burglar alarm system
C Nature of goods stored
D Situation of risk C11

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PCE Part B- Set B 2000

10 Which of the following is not part of the Gross Premium Rate ?

A Office expenses of the agent


B Office expenses and other overheads of the insurer
C Commissions payable to the agent
D Profit margin for the insurer C11

11 A Personal Accident policy does not cover death, disablement and / or medical
expenses caused ................

A by suicide
B by childbirth, miscarriage or pregnancy
C while committing an unlawful act
D all of the above C10

12 Which of the following statements are false regarding risk assessment, underwriting
and rating.

I) The ultimate objective of underwriting is to maintain existing business.


II) The construction and occupation of a premises are important underwriting and
rating factors in fire classes of insurance.
III) Dishonesty and careless of the insured are forms of moral hazard.
IV) Anti-selection exists where the risk does not represent a randomly selected group
as required under the Law of Large Numbers.

A I only
B II and IV only
C I and III only
D II, III and IV only C11

13 Which of the following statements are correct regarding the general insurance
business?

I) Vehicles used on public roads should be insured under a motor insurance policy.
II) Professional indemnity policy covers the policyholders legal liability arising out of
professional negligence committed by him.
III)Nuclear risk is a general exclusion under all general insurance policies.
IV) Workmens compensation insurance provides an employer with the same sort of
cover as would an employers liability insurance.

A I and II only
B I , II and III only
C II, III and IV only
D All of the above only C10

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PCE Part B- Set B 2000

14 Typical benefits provided by Personal Accident Insurance policy includes death


benefits, ..............., ............... and medical expenses.

A loss of both eyes and limbs, temporary total disablement from usual occupation
B permanent disablement, temporary disablement
C third party coverage, temporary partial disablement from usual occupation
D permanent disablement, 36 critical illnesses coverage C10

15 Underwriting can be defined as a process of assessment and selection of risks


and ............

A issuance of the policy


B issuance of the policy with relevant terms, warranties and conditions
C the determination of premium rates and terms
D All of the above C11

16 ____________ can be defined as a process of assessment and selection of risk, and the
determination of premium, terms and conditions.

A Anti-Selection
B Underwriting
C Subrogation
D Rating C11

17 This section of the policy mentions the parties to the contract.

A Heading
B Recital Clause
C Conditions
D Attestation Clause C12

18 All benefits under the fire policy will be forfeited in the following situations
EXCEPT ....................

A claim is fraudulent
B false declarations are made to support claim
C the loss is due to the willful act of the insured
D insured does not submit claim form within 14 days of the date of loss
C14

19 This section of the policy sets out the insured and the circumstances in which the
insurer will make payment to the insured.

A Recital Clause
B Operative Clause
C Conditions
D Attestation Clause C12

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PCE Part B- Set B 2000

20 The minimum premium charged under a policy for private car is ..................

A RM 10
B RM 40
C RM 50
D None C11

21 .............. rates are used where there is a lack of large numbers of similarly insured
risks or credible statistics.

A Individual
B Class
C Merit
D Tariff C11

22 Which of the following statements are some factors which may reveal physical
hazards in Fire Insurance.

I) height of building
II) type of occupany
III) age of proposer
IV) hobbies

A I and II only
B II and IV only
C I, II and IV only
D All of the above C11

23 Which of the following statements are true.

Type of insurance Minimum premium


I) Fire policy 50
II) Householder policy 25
III) Commercial vehicle 40
IV) Workmen Compensation Insurance 40

A I only
B II and III only
C I, III and IV only
D All of the above C11

24 The gross premium rate of general insurance is made up of 4 components. There are :

A Investment margin, profit margin, commissions margin and contingency


margin
B Mortality rate, loading, commissions margin and knock for knock margin
C Pure premium rate, expenses and commissions margin, contingency margin
and profit margin
D Profit margin, expenses margin, knock for knock margin and loading

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PCE Part B- Set B 2000

C11

25 Risks with abnormal hazards are acceptable subject to the following underwriting
measures.

I) Risk Improvement
II) Warranties
III) Excess
IV) Franchise

A I and III only


B I and IV only
C I, II and III only
D All of the above C11

26 Authorized agents can be suspended if they are found to have breached


the ....................

A PIAM regulations
B Inter-Company Agreement
C Code of practice and conduct
D Utmost good faith and integrity C15

27 Which of the following is not a desirable physical risk factor for fire insurance ?

A Sprinkler system
B Open fire burning in the vicinity
C Fire extinguishers
D Fire proof doors C11

28 Which of the following statements are correct regarding insurance documents.

I) Insurers are required by law to provide printed proposal forms to the public
II) Sum insured is the maximum limit of liability under the policy
III) Cover note is evidence that a policy document has been issued
IV) A renewal certificate is sometimes issued where upon renewal there are no
changes to the policy terms and conditions

A I and III only


B II and IV only
C II, III and IV only
D All of the above
C12

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PCE Part B- Set B 2000

29 If it is intended to modify the terms and conditions of the policy, it is done by


an .............

A Exclusions
B Endorsement
C Conditions
D Modification C12

30 A condition which has to be fulfilled if the contract is to remain valid is known as a


condition .....

A Conditions precedent to contract


B Conditions subsequent to contract
C Conditions precedent to liability
D Conditions subsequent to liability C12

31 What is Cash-Before-Cover ?

A Coverage is provided even before premium is collected


B Insurer will not assume liabilities unless the premium for policies has been
paid
C To consider and to approve appeals for exemptions from the terms of the
regulations
D To issue, renew or extend certificates of Registration to approved persons
C15

32 In general, all claim forms seek the following information except ..................

A the identity of the insured and claimant


B the insureds interest in the loss
C the identity of the claimants solicitors
D the extent of the loss C13

33 Under a motor policy, the insurer can repudiate liability for a property damage claim
in the following situations EXCEPT .................

A there was no loss or damage reported by the insured


B the loss or damage was caused by a peril specifically excluded from the policy
C the insured and the claimant are two different persons
D the policy was rendered void due to a breach of policy condition or warranty
C13

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PCE Part B- Set B 2000

34 Under section I of private motor car policy, the insurer undertakes to indemnify the
insured against loss or damage to the motor vehicle caused by ....................

I) malicious act
II) accidental collision or overturning, collision or overturning as a result of wear and
tear
III) direct sea route across the straits between the island of Penang and the mainland
IV) damage to property belonging to third parties

A I, II and III only


B II, III and IV only
C I, III and IV only
D All of the above C14

35 Which is the minimum motor cover made compulsory by the Road Transport Act 1987
for any motorist ?

A Act only
B Third party
C Comprehensive
D Third party, fire and theft C14

36 The insurer normally consider .................... as a last resort and therefore would try to
bring about an out-of-court settlement unless it involves a huge claim or an import
point of principle.

A negotiation
B mediation
C litigation
D arbitration C13

37 When the sum insured under a policy is inadequate as compared to the value of the
property at the time of loss, insurers will involve the ................... condition.

I) reinstatement
II) average
III) subrogation
IV) litigation

A I and II only
B I and IV only
C III only
D II only C13

38 On receipt of an intimation of a fire loss, the insurer need not ascertain ..................

A whether the policy is in force


B the perils causing the loss or damage
C the age of the policyholder
D whether premium due has been paid

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PCE Part B- Set B 2000

C13

39 This provides for the signature on the policy by an authorized official of the insurer.

A Heading
B Recital Clause
C Declaration
D Attestation Clause C12

40 When informed of a claim by the policyholder, the agent must not ....................

I) inform the insurer immediately


II) pass on to the insurer all information received from the policyholder
III) advise the policyholder of the requirements of the insurer in order to file a proper
claims
IV) assess the loss and advise the policyholder of the amount of settlements

A I and II only
B II and III only
C II and IV only
D IV only C13

41 .................... is one of the method of settling a claim.

A Good faith
B Subrogation
C Litigation
D Reinstatement C13

42 The knock-for-knock agreement is an agreement which ....................

A provides an independent service for dealing with disputes between insurers and
personal policyholders
B enables insurers to reduce legal and administrative
expenses
C states the new terms and conditions to be imposed by the insurer
D indicates that a valid claim exists C13

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PCE Part B- Set B 2000

43 Arbitration is concerned with dispute between the claimant and the insurer
over .................

I) the facts of law


II) the circumstances of the loss
III) the property which was the subject matter of the insurance
IV) the amount of the loss

A I and II only
B II and IV only
C I, II and III only
D IV only C13

44 Exclusions are inserted into policies for the following reasons except ....................

A cover can be provided under more appropriate policies


B the risks are uninsurable
C the cover is not demanded by insured
D insurer requires additional premium for such cover
C14

45 Under the Inter-Company Agreement, agents are allowed to ....................

A issue or complete insurance policies


B settle or approve claim
C collect premiums
D conduct a loss survey C15

46 Article IV of the Inter-Company Agreement on General Insurance Business (ICAGIB)


member of PIAM shall not permit or authorize their agents to ...................

I) issue or complete insurance policies


II) keep a complete and up-to-date record of all their agents
III) settle or approve insurance claims
IV) provide the Board with any information concerning any of their agents as and
when requested

A I, II and III only


B I and III only
C II, III and IV only
D II and IV only C15

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PCE Part B- Set B 2000

47 What consists in the recital clause ?

I) Insured has proposed to the company


II) Proposal and declaration is basis of contract
III) Insured has paid or agreed to pay premium
IV) Consists of the companys name and address

A I and IV only
B II and III only
C I, II and III only
D All of the above C14

48 Once there is a loss or damage to the property insured, the insurer has the following
right :

I) to pay the claims immediately


II) to enter the building, take and keep possession of it
III) keep such property and examine, sort, arrange, remove or deal with it in any other
manner
IV) sell such property for the account of the owner

A I, II and III only


B II, III and IV only
C All of the above
D None of the above
C14

49 Under a standard basic fire policy, insurance does not cover .......................

I) loss by theft, during or after fire


II) fire and lightning
III) loss proximately caused by subterranean fire
IV)explosion of gas used for illuminating and domestic purpose only

A I and II only
B II and III only
C I and III only
D III and IV only C14

50 If the insured cancels the cover, in which case the insurer has to ......................

A refund the total premium


B refund the premium for the unexpired period according to short period scale
C refund to the insured a pro rata premium on demand
D none of the above C11

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PCE Part B- Set B 2000

51 51. What is the objective of the Inter-Company Agreement ?

A to promote and protect the interests of the general insurance industry


B to issue or complete insurance policies
C to conduct a loss survey or make loss adjustments
D to settle or approve insurance claims
C15

52 What is a tariff ?

A to ensure that price competition among insurers will go below the economic
level
B to determine the class rate and then adjust the rate upwards or downwards
depending on the merits of the risk
C to ensure that price competition among insurers will not go below the
economic level
D to set a minimum premium to be charged C11

53 When underwriting an extra-hazardous risk, the following information will be required


except ...................

A a completed proposal form


B risk inspection report
C past loss experience
D a new cover note
C11

54 PIAM forms an inspection ___________ to conduct an inspection on every member


company as often as deems necessary.

A Task force
B PIAM
C Inter-Company Agreement on agencies
D Board C15

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PCE Part B- Set B 2000

55 Given the following Short Period Premium Rates :

Term Not Exceeding Proportion of Annual Rate


1 week 1/8
1 month 1/4
2 month 3/8
3 month 1/2

If an insured cancels his motor policy after the policy has been in force for 1
months, and his annual premium is RM1600, how much premium refund he is entitled
to ?

A RM200
B RM400
C RM600
D RM1000 C11

56 When approaching a prospective policyholder, the agent must not ....................

A identify the insurer


B surprise the prospective policyholder by calling when
he is unprepared
C explain fully the essential provisions of the cover
D draw attention to any restriction and exclusions C15

57 Under motor policy, if any event occurs which could result in claim , the insured
should

A notify the insurer as soon as possible


B notify or forward immediately any letter claim, writ, summons and process
C immediately notify the police
D all of the above C14

58 A claim notification from the insured under a fire policy must be done
within ....................

A 60 days
B 30 days
C 15 days
D 7 days
C13

59 Which of the following is not commonly found in a motor proposal form?

A Cubic Capacity of the vehicle


B Proposers name
C Driving offences
D Weight of the driver C11

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PCE Part B- Set B 2000

60 ................. are appointed by insurers to investigate and report on claims which are
large and complicated.

A Insurers
B Agents
C Solicitors
D Loss adjusters C13

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