Insurance and Risk Management MCQ with Answers

Insurance and Risk Management MCQ with Answers

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!

This article provides a comprehensive set of MCQs related to insurance and risk management along with the answers. Whether you are preparing for an exam or just want to brush up your knowledge, this article is sure to provide valuable insights.

These questions cover the basics of insurance and risk management such as definitions, principles, and types of insurance policies.

Insurance and Risk Management MCQ

What is Insurance and Risk Management

Insurance and risk management are two important aspects of modern life that have become increasingly relevant in recent years. Insurance is a type of financial protection that provides coverage against various types of losses or damages.

It can be used to cover everything from property damage and personal injuries to business liabilities and natural disasters.

Risk management, on the other hand, involves identifying potential risks and developing strategies to minimize those risks as much as possible. This can include anything from implementing safety procedures in the workplace to investing in security measures for your home or business.

By combining insurance with effective risk management techniques, individuals and businesses can protect themselves against unexpected events that could otherwise result in significant financial losses.

Overall, insurance and risk management are crucial components of any comprehensive financial plan.

What is a captive insurance company?

A captive insurance company is a specialized type of insurance company that is wholly owned and controlled by the parent company, which uses it to insure its own risks.

This means that the parent company has complete control over the terms and conditions of the policies issued by the captive, as well as any claims made against those policies. Captive insurance companies can be an attractive option for businesses looking to manage their risk exposure in a more efficient and cost-effective way.

One of the main benefits of a captive insurance company is that it allows businesses to tailor their coverage to meet specific needs that may not be adequately addressed by traditional insurers.

For example, a business may face unique risks related to its industry, geographic location or operations that are not covered by standard commercial policies. By setting up a captive insurance company, businesses can create customized policies that provide comprehensive coverage for these specific risks.

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.
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

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