MCQ on Insurance and Risk Management with Answers
26. The amount for a share that an option buyer pays to the seller is known as ___.
a) Call option
b) Put option
c) Option price
d) Send option
Answer: (c)
27. ___ offers the rights to buy a specified asset like stocks at a particular price during a specified period.
Answer: Call option
28. The main aim of the VAR approach in risk management and capital regulation is to avoid capital requirements close to the underlying risks of assets in a portfolio. (True/false).
Answer: False
29. Regulators distinguished that ___ are the risk management tools for insurance organizations.
Answer: Derivatives
30. ___ is defined as the maximum potential change in the value of the financial instruments portfolio with a provided probability for a certain time period.
Answer: Value at Risk (VAR)
31. ___ safeguards the financial segments from political risks.
Answer: Consumer protection
32. ___ is still the leading channel in India for distributing insurance products.
a) Brokers
b) Agency power
c) Insurance market
d) National market
Answer: (b)
33. The ___ division has marvelous growth potential in the insurance market.
Answer: Health insurance
34. Public insurance is also known as ___ as helps the people below the poverty line or people who cannot face their basic risks by themselves.
Answer: Social insurance
35. In a private sector company, usually the transfer of risk is done through a contract and they are voluntary. (True/False).
Answer: True
36. Involuntary insurance comes under ___ sector.
Answer: Public
37. IRDA is basically a team of eight members. (True/False)
Answer: False
38. IRDA supports competence in the insurance industry.(True/False)
Answer: True
39. IRDA is permitted to oversee the performance of the ___ Committee.
Answer: Tariff Advisory
40. ___ have to analyze risk by gathering information from various sources and writing policies to manage it.
Answer: Underwriters
41. An insurance agent represents the ___.
a) Insured
b) Insurer
c) Government
d) Adjustment bureau
Answer: (b)
42. Loss adjustors should be experts in ___ and ___ skills.
Answer: Analytical, people management
43. The only public sector life insurance company in India is ___.
Answer: Life Insurance Corporation of India
44. The ___ is formed with four subsidiary companies.
a) Life insurance Corporation of India
b) ICICI Prudential Life Insurance Company
c) General Insurance Corporation of India
d) Bajaj Allianz General Insurance Company
Answer: (c)
45. One reason for the formulation of the private sector was to give better coverage on ___and ___.
Answer: Products, services
46. According to the Malhotra committee, private companies should have an initial capital of ___ to work in the insurance industry.
Answer: Rs 1 billion
47. The Insurance (Laws) Amendment Bill 2008 was amended with the help of three other acts namely, Insurance Act 1938, General Insurance Business (Nationalisation) Act 1972, and Insurance Regulatory and Development Authority Act 1999. (True/False).
Answer: True
48. The LIC (Amendment) Bill 2009 was formed to increase the capital of LIC from ___ to ___.
Answer: Rs.5 crores to Rs.100 crores
49. Insurance regulations mainly concentrate on preventing ___.
Answer: Insolvencies
50. The basic regulations which deal with the insurance business in India are the ___ and the ___.
Answer: Insurance Act, 1938, IRDA Act, 1999