CFP CFP InsurTech & Lending Technology 2

Question 1

What is 'embedded insurance' in the InsurTech context?

Accepted Answer

Insurance bundled into non-insurance products or platforms at the point of sale

Answer

Embedded insurance integrates coverage seamlessly into the purchase of a product or service (e.g., travel insurance offered when booking a flight), streamlining distribution.

Question 2

What is a 'parametric insurance' policy?

Accepted Answer

A policy that pays a fixed amount when a specific triggering event occurs, regardless of actual loss

Answer

Parametric insurance pays a predetermined amount when a measurable event (e.g., earthquake above magnitude 6.0) occurs, eliminating lengthy claims investigations.

Question 3

What is 'buy now, pay later' (BNPL) and how is it regulated in the U.S.?

Accepted Answer

A short-term installment loan offered at point of sale; subject to CFPB oversight under TILA

Answer

BNPL is a short-term financing option splitting purchases into installments; the CFPB has asserted that BNPL products are subject to TILA protections including dispute rights.

Question 4

What does 'open banking' enable for lending fintech platforms in the U.S.?

Accepted Answer

Banks to share customer data with third parties via APIs with customer consent

Answer

Open banking allows consumers to share their financial data (bank account history, cash flow) with fintech lenders via secure APIs, improving underwriting accuracy.

Question 5

What is 'algorithmic bias' risk in fintech lending?

Accepted Answer

When AI/ML models systematically disadvantage protected groups in credit decisions

Answer

Algorithmic bias occurs when lending models trained on historical data perpetuate or amplify existing discrimination, potentially violating ECOA and Fair Housing Act standards.

(CFP) Certified Fintech Practitioner Practice Test

(CFP) Certified Fintech Practitioner Practice Test

CFP CFP InsurTech & Lending Technology 2