BCP Insurance Contracts & Underwriting

Question 1

What are the four essential elements of a valid insurance contract in Singapore?

Accepted Answer

Offer, acceptance, consideration, and legal capacity (with insurable interest)

Answer

Offer, acceptance, premium payment, and policy issuance

Answer

Written policy, agent signature, MAS approval, and premium receipt

Answer

Proposal form, survey report, premium invoice, and cover note

Question 2

What is 'risk selection' in the underwriting process?

Accepted Answer

The process of evaluating and deciding which risks to accept, decline, or modify

Answer

Selecting the cheapest premium to offer

Answer

Selecting which claims to pay

Answer

Choosing which agents to appoint

Question 3

What is a 'proposal form' in the insurance context?

Accepted Answer

The insured's formal application for insurance, providing material facts for underwriting assessment

Answer

A marketing brochure from the insurer

Answer

A form completed after a claim is made

Answer

A government registration form for insurers

Question 4

What is the underwriting significance of a 'moral hazard' assessment?

Accepted Answer

It assesses the character, integrity, and attitude of the insured toward risk and potential claims

Answer

It assesses the physical condition of the property

Answer

It calculates the probability of a catastrophic loss

Answer

It determines the appropriate premium rate

Question 5

What is an 'endorsement' on an insurance policy?

Accepted Answer

A document that modifies the terms, conditions, or coverage of an existing policy

Answer

The insurer's confirmation that the premium has been paid

Answer

The insured's signature on the policy

Answer

A government certification of the policy's validity

Question 6

What is the difference between 'renewal' and 'replacement' of an insurance policy?

Accepted Answer

Renewal continues the existing policy on (possibly revised) terms; replacement involves taking out a new policy with potentially different coverage

Answer

They mean the same thing in Singapore insurance practice

Answer

Renewal is compulsory; replacement is optional

Answer

Replacement can only be done if the original policy was cancelled