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IIC Principles and Practice of Insurance Sample Questions (Q66-Q71):

NEW QUESTION # 66
What is a post-loss objective of risk management for an organization?

  • A. Internal obligations
  • B. Peace of mind
  • C. External development
  • D. Stable earnings

Answer: D

Explanation:
Post-loss objectives focus on how an organization continues functioningafter a loss has occurred. One of the most important objectives ismaintaining stable earnings. Even after a major loss event-such as fire, equipment breakdown, or business interruption-the organization aims to minimize financial volatility and continue operating with predictable revenue. Insurance and effective recovery planning help achieve this stability.
Option A (peace of mind) is apre-losspsychological benefit. Option C (internal obligations) is vague and not defined as a post-loss risk management goal. Option D (external development) relates to business growth, which is unrelated to loss response.
Therefore, the recognized post-loss objective isB: Stable earnings.


NEW QUESTION # 67
Which factor could explain poorer performance of renewal clients as opposed to new business clients?

  • A. Reinsurance only being available on renewal policies
  • B. More strict underwriting criteria for renewal risks
  • C. New business clients limit claims in order to keep premiums low
  • D. An automated renewal process

Answer: C

Explanation:
New business clients often want to present themselves aslow-riskto secure better premium rates. As a result, they may be cautious about reporting small claims or may practice better loss prevention-at least initially.
This can make new business perform better from a loss-ratio perspective.
However,renewal clients may become less cautiousover time or more willing to submit smaller claims once they are already insured. Additionally, insurers sometimes relax underwriting scrutiny on renewals compared to new applications, which can further widen performance differences.
Option A (automated renewals) does not inherently affect claims behaviour.
Option B is incorrect-renewal underwriting is typicallyless strict, not more.
Option C is false; reinsurance availability does not differ based on new vs. renewal status.
Thus, the factor most likely contributing to poorer renewal performance isD: New business clients limit claims to keep premiums low, improving their initial results relative to renewals.
If you haveQuestions 85 onward, feel free to send them!


NEW QUESTION # 68
What is the Canadian Insurance Claims Managers Association (CICMA) responsible for?

  • A. Promoting a high standard of ethics in the handling of claims
  • B. Monitoring claims to detect fraudulent valuations
  • C. Analyzing the damageability of vehicles and property
  • D. Assessing automobile personal injury claims

Answer: A

Explanation:
The Canadian Insurance Claims Managers Association (CICMA) is a professional body composed of senior claims managers across the Canadian insurance industry. Its principal purpose is to promote high ethical standards, professionalism, fairness, and integrity in claims handling. CICMA supports education, networking, and the sharing of best practices to ensure consistency and ethical conduct across insurers.
Option A is incorrect because CICMA does not evaluate or adjudicate claims; individual insurers and provincial accident benefit systems handle those tasks. Option B is incorrect because fraud detection is handled by insurers and sometimes by the Insurance Bureau of Canada (IBC). Option C is unrelated-vehicle damageability research is conducted by organizations such as the Insurance Institute for Highway Safety or similar bodies.
CICMA's work emphasizes ethics, professional development, and claims leadership, which align directly with option D.


NEW QUESTION # 69
Why would a policyholder use an intermediary?

  • A. They represent all insurers
  • B. They make reinsurance arrangements for clients
  • C. They have unlimited liability
  • D. They help to identify clients' insurance needs

Answer: D

Explanation:
Intermediaries-such as brokers and agents-play an essential role in helping consumers navigate insurance products. One of their primary functions is toidentify the client's needs, assess exposures, and recommend suitable insurance solutions. This includes advising on appropriate limits, optional coverages, deductibles, and risk management considerations. This consultative role is fundamental to the value they provide.
Option A is incorrect because brokers representmultiple insurersbutnot all insurers; agents often represent only one. Option B is incorrect-intermediaries do not have unlimited liability; their liability relates to negligence or errors in service. Option D is incorrect-reinsurance arrangements are made between insurers and reinsurers, not individual clients. Therefore, the correct reason a policyholder uses an intermediary isC.


NEW QUESTION # 70
A person applies for fire insurance on their house but fails to mention that in winter they leave the house unoccupied for two months while vacationing. What is this an example of?

  • A. Non-disclosure
  • B. Breach of warranty
  • C. Discharge of contract
  • D. Negligence

Answer: A

Explanation:
Insurance contracts are built on the principle of utmost good faith, meaning applicants must disclose all material facts that could influence the insurer's decision to accept the risk or determine the premium. Failing to mention a material fact-such as the home being unoccupied for long periods-is considered non- disclosure. Unoccupancy increases the risk of vandalism, frozen pipes, fire severity, and delayed emergency response, all of which affect underwriting decisions.
Option A, negligence, refers to failure to act with reasonable care, not failure to disclose.
Option C, breach of warranty, applies only after a policy is in force and a condition guaranteed to be true is violated.
Option D, discharge of contract, refers to cancellation or completion of contractual obligations.
Since the issue arises during the application stage and involves withholding a material fact, the correct classification is non-disclosure.


NEW QUESTION # 71
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