CRIS CRIS Risk Financing & Insurance Programs 2

Question 1

What is the primary purpose of a construction wrap-up insurance program?

Accepted Answer

To consolidate coverage for all project participants under a single program, reducing gaps and overlaps

Answer

Wrap-up programs centralize insurance purchasing for a project, eliminating coverage gaps, reducing duplicate premiums, and improving claims coordination.

Question 2

Which coverage is commonly EXCLUDED from most OCIP/CCIP wrap-up programs?

Accepted Answer

Professional liability (errors & omissions)

Answer

Professional liability is typically excluded from wrap-up programs because design errors are project-specific and require separate, firm-specific E&O policies.

Question 3

A self-insured retention (SIR) differs from a deductible primarily in that:

Accepted Answer

With an SIR the insured defends and pays claims up to the retention amount before insurer involvement; a deductible is reimbursed to the insurer after payment

Answer

Under an SIR, the insured handles claims and legal defense within the retained amount independently; the insurer's duty to defend only triggers above the SIR.

Question 4

Which metric is most commonly used to evaluate the financial performance of a captive insurance company?

Accepted Answer

Combined ratio (loss ratio + expense ratio)

Answer

The combined ratio measures underwriting profitability; a combined ratio below 100% indicates the captive is paying out less in losses and expenses than it collects in premiums.

Question 5

Fronting arrangements in captive programs are used primarily to:

Accepted Answer

Allow the captive to issue policies through a licensed admitted carrier while retaining the risk

Answer

A fronting insurer issues the policy on behalf of the captive in states requiring admitted paper, while the captive assumes the risk through a reinsurance agreement.

CRIS - Construction Risk and Insurance Specialist Practice Test

CRIS - Construction Risk and Insurance Specialist Practice Test

CRIS CRIS Risk Financing & Insurance Programs 2