Insurance and Risk Management MCQ with Answers for the preparation of academic and competitive exams of MBA, BBA, MCOM, BCOM.
Are you studying insurance and risk management and looking for multiple choice questions to test your knowledge? You’re in the right place!
These questions cover the basics of insurance and risk management such as definitions, principles, and types of insurance policies.
Insurance and risk management MCQ Questions and answers
1) ___ risk is defined as the relative variation of actual loss from expected loss.
a) Subjective risk
b) Pure loss
c) Objective risk
d) Expected risk
Ans: C
2) ___ refers to the cause of the loss or the contingency that may cause a loss.
a) Risk
b) Peril
c) Danger
d) Hazards
Ans: B
3) A physical hazard is a condition stemming from the material characteristics of an object
a) True
b) False
Ans: A
4) Unemployment can result from:
a) Business cycle downsizing
b) Seasonal factors
c) Imperfection in the Labor market
d) All of the above
Ans: D
4) The law of large numbers can be applied more easily to ___ than speculative risk
a) Pure Risk
b) Objective Risk
c) Acceptable Risk
d) Subjective Risk
Ans: A
5) Risk management is synonymous with Insurance management
a) True
b) False
Ans: B
6) Higher the percentage of ___ in GDP, lower the insurance penetration.
a) agriculture
b) insurance
c) banking
d) all of above
Ans: A
7) ___ insurance is the one where the loss is not due to physical damage but the result of dishonesty of employees as a result of physical damage.
a) Liability
b) Pecuniary
c) Motor
d) Personal
Ans: B
8) ___ is an essential part of the bailor-bailee relationship.
a) The delivery of goods
b) The utmost good faith
c) The duty of full disclosure
d) All of above
Ans: A
9) The consent will be free when it is not caused by:
a) coercion
b) undue influence
c) fraud
d) all of above
Ans: D
10) ___ contract means that only one party makes a legally enforceable promise.
a) aleatory contract
b) unilateral
c) conditional
d) personal
Ans: B
11) ACV stands for actual cash value.
a) True
b) False
Ans: A
12) The rate-making function in a life insurance company is performed by ___.
a) production sales management
b) insurance department
c) actuarial department
d) underwriter
Ans: C
14) Which of the following licensing criteria is used for :
a) promoter & director’s background
b) product profit
c) rural & social sector focus
d) all of the above
Ans: D
15) The idea of an insurance ombudsman was mooted in the year :
a) 1998
b) 1938
c) 1986
d) 1990
Ans: B
16) ___ is a contract between two or more insurance companies by which a portion of the risk of loss is transferred to another insurance company.
a) double insurance
b) reinsurance
c) treaty insurance
d) banc-assurance
Ans: B
17) Insurance Ombudsman is open to all individuals whose claim amount is less than:
a) Rs. 1 Crore
b) 20 crores
c) 20 lakhs
d) 10 lakhs
Ans: C
18) ___ is the distribution of insurance products through the bank’s distribution channels.
a) double insurance
b) reinsurance
c) treaty insurance
d) banc-assurance
Ans: B
19) According to ___ model, an insurance company markets its products almost exclusively through the distribution channel of its banking parents.
a) the partnership model
b) the joint venture model
c) the captive model
d) none of above
Ans: C
20) The general insurance corporation is a holding company, which has ___ subsidiary companies.
a)10
b)12
c) 4
d) 6
Ans: C
21) The first insurance was established in Athens.
a) True
b) False
Ans: A
22) Under which method, both the parties are found into a contract for any specific risk.
a) facultative
b) treaty
c) pooling
d) all of the above.
Ans: A
23) LIC (Mauritius) Ltd. Was set in ___
a) 1990
b) 2001
c) 2009
d) 1998
Ans: B
24) The doctrine of subrogation is the supplementary principle of ___.
a) insurance
b) surety
c) Bailment
d) Indemnity
Ans: C
25) A risk manager can ignore those pure risks that are not insurable.
a) True
b) False
Ans: B
26) A lien can be placed on one’s income and financial assets to satisfy a legal judgment. This results in ___
a) pure risk
b) liability risk
c) dynamic risk
d) acceptable risk
Ans: B
27) According to___ principle, life insurance can be effected on the lives of third parties provided the proposer has an insurable interest in the third party.
a) insurable interest in own life
b) insurable interest in property insurance
c) insurable interest in other’s life
d) none of above
Ans: C
28) The insurer according to which of the following principle, becomes entitled to all the rights of insured subject matter after payment because he has to pay the actual loss of the property.
a) doctrine of subrogation
b) subrogation is the substitution
c) subrogation up to the amount of payment
d) subrogation may be applied for payment
Ans: B
29) A contract of ___ means the insured must accept the entire contract, with all of its items and conditions.
a) conditional
b) adhesion
c) unilateral
d) personal
Ans: B
30) Which of the following is the challenge for bancassurance in India?
a) challenge in work culture
b) effective mining of the database
c) threat of cannibalization
d) all of above
Ans: D
31) There is no hazard of direct competition to conventional banking products.
a) True
b) False
Ans: B
32) which of the following is the main objective of IRDA:
a) To take care of the policyholder interest
b) To open the insurance sector for private sectors
c) to supervise the activities of intermediaries
d) all of above
Ans: D
33) Life insurance and general insurance are divided on the basis of:
a) nature of insurance
b) risk point of view
c) business point of view.
d) none of above
Ans: C
34) The ___ principle states that the business and individual should ensure potentially serious losses before relatively minor losses.
a) measurable loss
b) determinable loss
c) catastrophic hazards
d) large loss
Ans: D
35) ___ are used as a valuable tool/aid to rate making & underwriting.
a) engineering services
b) market research
c) personnel management
d)legal advice.
Ans: A
36)___ helps lower the cost of insurance as well as increase its availability.
a) deductible decisions
b) objective decisions
c) selective decisions.
d) all of the above
Ans: A
37) “defective products” is an example of which loss exposure:
a) property loss exposure
b) human resource loss exposure
c) crime loss exposure
d) liability loss exposure
Ans: D
38) Without the payment of premium, the insurance contract cannot start.
a) True
b) False
Ans: A
40) ___ is a memorandum specifying some of the details of the property or liability policy to be issued by the company.
a) binder
b) subrogation
c) indemnity
d) endorsement
Ans: A
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41) ___ risk are those resulting from changes in the economy and ___ risk are those that affect the entire economy.
a) pure, Fundamental
b) acceptable, pure
c) dynamic, financial
d) dynamic, fundamental
Ans: D
42)___ method is the oldest method of reinsurance and there is ___ on reinsurance.
a) Facultative, no restrictions
b) Treaty, restriction
c) Pooling, Restriction
d) treaty, no restriction
Ans: A
43) ___ happens when an insurance company has undertaken more risk burden on its shoulders than its bearing capacity ___ is a device to reduce the risk.
a) reinsurance, reinsurance
b) double insurance, reinsurance
c) double insurance, double insurance
d) reinsurance, double insurance
Ans: D
44) Which of the following is the advantage of reinsurance for insurers?
1. Insurers can share their risk with other insurance.
2. It reduces the situation of certainty by the distribution of risks among other insurers
a) only 1
b) only 2
c) none
d) both 1 & 2
Ans: A
45) In the ___ or ___method a fixed share or quota of the risk is reinsured.
a) Quota or fixed share treaty
b) excess of loss or quota
c) fixed share or surplus treaty
d) none of the above
Ans: A
46) Bailment is an agreement between a person ___who owns or lawfully possesses goods and another person, ___ who is given possession of the goods for a specific purpose.
a) bailee, bailor
b) endorser, endorsee
c) bailor, bailee
d) none of above
Ans: C
47) ___ is a corollary of the indemnity principle. It is ___ concept that legally differentiates insurance from gambling.
a) indemnity, subrogation
b) endorsement, binders
c) subrogation, indemnity
d) binders, endorsement.
Ans: C
48) A consumer disputes redressal forum to be known as the ___ to be established by the ___ with the prior approval of the central government in each district of the state.
a) state consumer protection, state government.
b) District forum, district government
c) central council, local government.
d) district forum, state government.
Ans: D
49)1. the jurisdiction of the district forum is to entertain the complaints whose value of goods or services or compensation is less than Rs. 500000.
2. consumer protection act came into force in India in 1996.
a) 1-T,2-F
b) 1-F,2-T
c) 1-T,2-T
d) 1-F,2-F
Ans: A
50) What kind of insurance company is People First Insurance Inc?
a) Stock company
b) Captive insurance company
c) Mutual insurance company
d) Lloyd’s insurance market
Ans: C
Read More MCQ on Insurance and Risk Management
Conclusion
Insurance and risk management MCQs with answers can be a helpful tool in preparing for exams or providing a refresher on the basics of the subject. Insurance is an important topic to understand, as it’s integral to managing personal finances, protecting businesses, and enabling our economy to function.
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