Financial Regulatory Aspects of Solvency Margin and Investments MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Financial Regulatory Aspects of Solvency Margin and Investments, a fundamental topic in the field of IC 14 Regulations of Insurance Business. Whether you're preparing for competitive exams, honing your problem-solving skills, or simply looking to enhance your abilities in this field, our Financial Regulatory Aspects of Solvency Margin and Investments MCQs are designed to help you grasp the core concepts and excel in solving problems.

In this section, you'll find a wide range of Financial Regulatory Aspects of Solvency Margin and Investments mcq questions that explore various aspects of Financial Regulatory Aspects of Solvency Margin and Investments problems. Each MCQ is crafted to challenge your understanding of Financial Regulatory Aspects of Solvency Margin and Investments principles, enabling you to refine your problem-solving techniques. Whether you're a student aiming to ace IC 14 Regulations of Insurance Business tests, a job seeker preparing for interviews, or someone simply interested in sharpening their skills, our Financial Regulatory Aspects of Solvency Margin and Investments MCQs are your pathway to success in mastering this essential IC 14 Regulations of Insurance Business topic.

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Financial Regulatory Aspects of Solvency Margin and Investments MCQs | Page 5 of 6

Discover more Topics under IC 14 Regulations of Insurance Business

Q41.
When should a Catastrophe Reserve be created?

a.

A Catastrophe Reserve should be created only when a catastrophe occurs

b.

A Catastrophe Reserve should be created annually

c.

A Catastrophe Reserve should be created in accordance with the norms prescribed by the Authority

d.

A Catastrophe Reserve should not be created

Discuss
Answer: (c).A Catastrophe Reserve should be created in accordance with the norms prescribed by the Authority Explanation:A Catastrophe Reserve should be created in accordance with the norms, if any, prescribed by the Authority, according to insurance accounting guidelines.
Q42.
Which of the following are important accounting functions in a general insurance company?

a.

Premium accounting

b.

Commission / brokerage accounting

c.

Claims accounting

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:Premium accounting, Commission / brokerage accounting, and Claims accounting are among the important accounting functions in a general insurance company, along with others such as Accounting of expenses of management, Co-insurance accounting, Re-insurance accounting, Investment accounting, and Accounting of foreign operations.
Q43.
Why is accurate claims reserving crucial for insurers?

a.

Accurate claims reserving ensures higher dividends for shareholders

b.

Accurate claims reserving is essential for the continuing profitability of an insurer

c.

Accurate claims reserving helps reduce government regulations

d.

Accurate claims reserving increases the salary of company management

Discuss
Answer: (b).Accurate claims reserving is essential for the continuing profitability of an insurer Explanation:Accurate claims reserving is critical for the continuing profitability of an insurer, ensuring its financial stability and ability to meet future claim obligations.
Q44.
Who are the stakeholders with varied interests in insurance reserving?

a.

Only shareholders

b.

Only government

c.

Shareholders, government, underwriters, and company management

d.

Only company management

Discuss
Answer: (c).Shareholders, government, underwriters, and company management Explanation:The stakeholders with varied interests in insurance reserving include shareholders, government, underwriters, and company management.
Q45.
What are the two main sets of reserves in insurance?

a.

Claims and liabilities

b.

Premium and investments

c.

Premium and claims

d.

Assets and liabilities

Discuss
Answer: (c).Premium and claims Explanation:The two main sets of reserves in insurance are premium reserves (including unearned premium and unexpired risk) and claims reserves (including open claims reserve and IBNR).
Q46.
At what level is the process of claims reserving carried out?

a.

Executive level

b.

Managerial level

c.

Operational level

d.

Administrative level

Discuss
Answer: (c).Operational level Explanation:The process of claims reserving is carried out at the operational level within insurance companies, where accuracy is critical for effective financial management.
Q47.
Which two basic investment theories do insurance companies typically follow?

a.

Risk-Adjusted Return Theory and Capital Asset Pricing Model

b.

Efficient Market Hypothesis and Arbitrage Pricing Theory

c.

Modern Portfolio Theory and Asset Liability Management

d.

Behavioral Finance Theory and Market Timing Theory

Discuss
Answer: (c).Modern Portfolio Theory and Asset Liability Management Explanation:Insurance companies typically follow two basic investment theories: Modern Portfolio Theory and Asset Liability Management, to manage their investment portfolios effectively.
Q48.
How does Insurance Accounting differ from accounting in other industries?

a.

Insurance Accounting focuses more on revenue generation

b.

Insurance Accounting involves less regulatory compliance

c.

Insurance Accounting is basically the same as other industries but with some differences due to the nature of the insurance sector

d.

Insurance Accounting is less complex than accounting in other industries

Discuss
Answer: (c).Insurance Accounting is basically the same as other industries but with some differences due to the nature of the insurance sector Explanation:Insurance Accounting is basically the same as other industries but with some differences in view of the way the insurance sector works, such as handling premium and claims.
Q49.
Reserves for unexpired risks come under the heading of which of the following?

a.

Accounting reserves

b.

Technical reserves

c.

Unexpired premium

d.

Asset Liability Reserves

Discuss
Answer: (b).Technical reserves Explanation:Reserves for unexpired risks fall under the category of Technical Reserves.
Q50.
IBNR stands for what?

a.

Income Before Net Reported

b.

Incurred But Not Reviewed

c.

Incurred But Not Reported

d.

Investment Before Net result

Discuss
Answer: (c).Incurred But Not Reported Explanation:IBNR stands for Incurred But Not Reported.
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