BCP Claims and Underwriting 2

Question 1

What is 'co-insurance' in the Singapore insurance market?

Accepted Answer

When two or more insurers share the same risk, each covering a specified percentage

Answer

Co-insurance involves multiple insurers sharing a single risk, with each taking a specified percentage. One insurer acts as the lead, issuing the policy and handling claims on behalf of all.

Question 2

What is 'reinsurance' as practised in Singapore's insurance market?

Accepted Answer

Insurance purchased by an insurer from another insurer to spread its risk

Answer

Reinsurance allows primary insurers to transfer portions of their risk to reinsurers, reducing their exposure to large or catastrophic losses. Singapore is a major reinsurance hub in Asia.

Question 3

What is 'moral hazard' in insurance underwriting in Singapore?

Accepted Answer

The risk that the insured may act dishonestly or take greater risks because they have insurance

Answer

Moral hazard refers to the tendency of insured individuals to be less careful or even dishonest because they know they are protected by insurance. Underwriters assess this risk during evaluation.

Question 4

In Singapore, what is the Financial Industry Disputes Resolution Centre (FIDReC)?

Accepted Answer

An independent body that resolves disputes between consumers and financial institutions including insurers

Answer

FIDReC is Singapore's independent dispute resolution scheme that handles complaints from consumers against financial institutions, including insurance companies, through mediation and adjudication.

Question 5

What does 'average clause' mean in a Singapore property insurance policy?

Accepted Answer

If the property is underinsured, the claim payout is proportionally reduced

Answer

The average clause penalises underinsurance. If the sum insured is less than the actual value of the property, the claim payout is reduced in proportion to the degree of underinsurance.

BCP Insurance Practice Test

BCP Insurance Practice Test

BCP Claims and Underwriting 2