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| Section | Objectives |
|---|---|
| Crime Insurance | |
| Aviation Insurance | |
| Cyber Insurance | |
| Reinsurance | |
| Directors' and Officers' Liability Insurance | |
| Risk Assessment for Advanced Commercial Risks | |
| Marine Insurance | |
| Surety Bonding | |
| Business Interruption Insurance |
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NEW QUESTION # 34
An important step in the risk management process is selecting the proper risk management techniques. This procedure relies on the ability of the risk manager to forecast.
A) Identify two (2) forecasts which must be conducted if the organization is to establish meaningful priorities in treating loss exposures. (2 marks) B) Once forecasting has been done, each alternative risk management technique is assessed in accordance with two (2) selection criteria. Identify those criteria. (1 mark) (3 marks)
Answer:
Explanation:
See the answer in Explanation below.
Explanation:
A) Two required forecasts are:
1. The expected frequency and severity of losses.
2. The effect that different risk control and risk financing techniques will have on the frequency, severity and predictability of those losses.
B) The two selection criteria are Effectiveness and Economy.
A third forecast used in the CAIB process is the cost of the risk management techniques.
Reference: IBAC CAIB 3 Student Resource Guide (2013), Chapter 6 - Step Three: Select Risk Management Technique(s), Forecasting, reference p. 6-23.
NEW QUESTION # 35
What is the name of the bond that protects governments in the event that duties and taxes collected by the principal are not remitted to the government? (1 mark)
Answer: D
Explanation:
Comprehensive Explanation: A Customs and Excise Bond guarantees that the principal will comply with the applicable tax and customs requirements, including payment or remittance of duties and taxes owed to the government.
Reference: IBAC CAIB 3 Student Resource Guide (2013), Chapter 5 - Miscellaneous Bonds: Customs and Excise Bonds.
NEW QUESTION # 36
Your travel agent, Wanda Off, is concerned about the loss of business that might result if her building were to be destroyed by a fire or major storm.
A) Upon your recommendation, Wanda agreed to purchase the Extra Expense Endorsement Form. State the purpose of this coverage form and provide an example of an expense insured. (2 marks) B) Wanda purchased $20,000 coverage under a 40/70/90/100% form. She had a fire loss this past winter but was able to resume operations at alternative premises until her building was repaired 80 days later. What would the insurer's maximum liability have been in this situation? (1 mark) (3 marks)
Answer:
Explanation:
See the answer in Explanation below.
Explanation:
A) The Extra Expense Endorsement pays necessary extra costs to keep the business operating as normally as possible after an insured loss. An example would be the cost of renting temporary office space while the damaged premises are being repaired.
B) The business operated at temporary premises for 80 days, so the 90% limit applies. $20,000 x 90% =
$18,000. The insurer's maximum liability is $18,000.
Reference: CAIB 3 Training & Study Pack - Business Interruption: Extra Expense Endorsement and monthly
/period limitation.
NEW QUESTION # 37
In reviewing Directors' and Officers' Liability Insurance policy forms, brokers must take care to compare the differences in coverage between insurers. There are many elements to review - list six (6) of those elements.
(3 marks)
Answer:
Explanation:
See the answer in Explanation below.
Explanation:
Six items a broker should compare are:
1. Who is included in the definition of insured.
2. The definition of a wrongful act.
3. Policy limits and deductibles/retentions.
4. Whether defence costs are inside or outside the limit.
5. Exclusions and coverage extensions.
6. Claims-made provisions, including prior acts/retroactive dates and the Extended Reporting Period.
Reference: CAIB 3 Training & Study Pack - Directors' and Officers' Liability: comparing D & O policy forms.
NEW QUESTION # 38
What can be done to avoid coverage gaps when dealing with silent cyber exposures? (3 marks)
Answer:
Explanation:
See the answer in Explanation below.
Explanation:
1. Review existing policies to see where cyber coverage is unclear or silent.
2. Use clear wording or endorsements to show whether cyber losses are covered or excluded.
3. Purchase and coordinate a separate cyber policy for exposures that are not clearly covered elsewhere.
Reference: CAIB 3 Training & Study Pack - Cyber Insurance: silent cyber and coordination of coverage.
NEW QUESTION # 39
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