CIIN Certificate CF4 - Insurance Claims Handling Process (Nigeria)

In the context of a general insurance claim, the principle of indemnity is best described as:

• APlacing the insured in the same financial position they enjoyed immediately before the lo…
• BPaying the insured the full new replacement cost of any damaged item regardless of its age
• CRestoring the insured to the financial position they were in when the policy first incept…
• DAllowing the insured to profit from a loss to compensate for the inconvenience suffered

Proximate cause is most accurately defined as the:

• AFirst event in any chain of events leading to a loss
• BActive, efficient cause that sets in motion a chain of events producing a result without…
• CFinal event that immediately precedes the damage
• DCause that the insured believes is responsible for the loss

Which of the following must an insured be able to demonstrate at the time of a loss for a general insurance claim to be valid?

• AA profit motive
• BInsurable interest in the subject matter of the insurance
• CMembership of the Chartered Insurance Institute of Nigeria (CIIN)
• DPrior approval from NAICOM

The duty of utmost good faith between insurer and insured at the claims stage chiefly requires the insured to:

• APay an additional premium before any claim is settled
• BPresent the claim honestly and not exaggerate or fabricate any part of it
• CAccept whatever settlement figure the insurer first offers
• DUse only repairers nominated by the insurer

Fair treatment of insurance customers during claims handling in Nigeria is most concerned with ensuring that:

• AClaims are settled fairly, promptly and in line with the customer's reasonable expectatio…
• BEvery claim is paid in full irrespective of policy terms
• CPremiums are reduced after each claim is made
• DCustomers must exhaust NAICOM proceedings before any payment

Under a contract of insurance, the primary obligation of the insurer following an admitted, valid claim is to:

• ACancel the policy immediately
• BProvide the indemnity or benefit promised by the policy
• CRecover its costs from the policyholder
• DReport the claim to the police in every case

The phrase 'condition precedent to liability' in a policy means that the relevant condition:

• AHas no effect on whether a claim is paid
• BMust be complied with before the insurer becomes liable to pay the claim
• CApplies only after the claim has been settled
• DCan be waived by the insured at will

Which statement about the burden of proof in a property insurance claim is correct?

• AThe insurer must prove the loss did not occur
• BThe insured must first prove the loss was caused by an insured peril; the insurer must th…
• CNeither party has any duty to prove anything
• DThe loss adjuster carries the full burden of proof

A 'measure of indemnity' for damaged business stock held for resale is normally based on:

• AThe retail selling price including the trader's profit margin
• BThe cost to the insured of replacing the stock, not the selling price
• CThe original cost of the stock when the business was first set up
• DThe insured value stated in the schedule regardless of actual cost

Which of the following claims types would a household buildings policy typically respond to?

• ADamage to the structure of the home caused by an insured peril such as a storm
• BA drop in the resale value of the property because of a market downturn
• CWear and tear to the roof tiles over many years
• DThe cost of a planned kitchen upgrade chosen by the owner

A public liability policy primarily provides cover for the insured's legal liability for:

• ADamage to the insured's own property
• BInjury to third parties or damage to third-party property arising from the insured's busi…
• CThe insured's own personal accident and sickness
• DLoss of the insured's business profits following a fire

Employers' liability and Group Life Assurance requirements in Nigeria are significant for claims handlers mainly because they:

• AAre optional cover that few employers purchase
• BRespond to injury, disease or death of employees arising from employment, with Group Life…
• CCover only damage to the employer's premises
• DReplace the need for any public liability cover

Business interruption (BI) insurance is designed to indemnify the insured for:

• APhysical repair of the damaged building only
• BLoss of gross profit and increased cost of working that follow an insured material damage…
• CThe cost of recruiting new staff at any time
• DRoutine fluctuations in turnover unrelated to any damage

Under a comprehensive private motor policy, accidental damage to the policyholder's own vehicle is normally settled subject to a/an:

• AAverage condition reducing every payment
• BPolicy excess that the insured must bear
• CCompulsory referral to the Road Accident Victims' Compensation Fund arrangements for unin…
• DMaximum of the third party's insurer's limit

A personal accident policy generally pays benefits on the basis of:

• AIndemnity for the exact financial loss suffered
• BFixed pre-agreed sums (benefits) for specified injuries, regardless of actual financial l…
• CReinstatement of the insured's property
• DAverage where the sum insured is inadequate

Which of the following is an example of a pecuniary insurance claim?

• ARepair of a fire-damaged warehouse roof
• BPayment under a fidelity guarantee policy for losses caused by an employee's dishonesty
• CCompensation for a customer injured in a shop
• DReplacement of stolen office computers

A travel insurance medical-expenses claim from a policyholder taken ill abroad would typically involve which associated service?

• AA reinsurance broker placing facultative cover
• BA medical assistance company arranging and authorising treatment and repatriation
• CAn actuary setting the policy premium
• DA surveyor inspecting a commercial property

In a household contents claim for an item subject to wear, the difference between the 'new for old' and 'indemnity' basis of settlement is that new for old:

• AAlways pays less than indemnity
• BPays the cost of an equivalent new replacement without deduction for wear and tear, where…
• CApplies only to buildings, not contents
• DRequires the insured to pay an additional excess

Which associated service provider would an insurer most likely instruct to investigate the cause of a serious factory fire?

• AA forensic fire investigator or specialist loss adjuster
• BA claims call-centre agent only
• CA premium finance company
• DA reinsurer's underwriting committee

Goods in transit (GIT) insurance provides cover for:

• AInjury to members of the public near a delivery vehicle
• BLoss of or damage to goods while they are being carried, typically by road, rail, sea or…
• CThe vehicle's own accidental damage
• DThe driver's personal accident benefits only

A legal expenses insurance claim would most commonly cover the insured's:

• ARepair costs after a flood
• BLegal costs of pursuing or defending certain disputes, such as an employment or contract…
• CMedical treatment following an accident
• DLoss of trading stock after a burglary

When handling a third-party property damage claim under a motor policy, the insurer's liability to the third party arises because the policy provides:

• AFirst-party accidental damage cover only
• BCompulsory third-party cover for the insured's legal liability to other road users
• CPersonal accident benefits to the third party
• DCover with no minimum legal requirement

Credit insurance protects a business against the risk of:

• AIts premises being damaged by fire
• BNon-payment of trade debts by its customers, for example through insolvency
• CInjury to its employees at work
• DTheft of its company vehicles

A glass policy on a retail shop front typically settles a breakage claim by:

• APaying the insured the resale value of the goods on display
• BArranging or paying for replacement of the broken glass on a reinstatement basis
• CDeducting average for under-insurance of stock
• DReferring the matter to the Road Accident Victims' Compensation Fund arrangements

The first notification of loss (FNOL) stage of a claim is important mainly because it:

• AIs the point at which the policy is first underwritten
• BCaptures the initial details of the loss, triggers the claims process and shapes the cust…
• CDetermines the premium for the following year only
• DReplaces the need to check the policy cover

When considering whether a claim is valid, the claims handler must first confirm that:

• AThe insured has made previous claims
• BA valid policy was in force at the date of loss and the loss is covered by an insured per…
• CThe insured belongs to a trade association
• DThe premium for next year has been paid

A policy exclusion operates to:

• AExtend the cover beyond the insured perils
• BRemove or limit cover for specified perils, property, losses or circumstances
• CIncrease the sum insured automatically
• DGuarantee that all claims are paid

Under Nigerian insurance law, where an insurer discovers after a loss that the insured failed to disclose a material fact when the policy was taken out, the insurer may:

• ANever rely on the non-disclosure once a loss has occurred
• BSeek to avoid liability on the claim if it can show the undisclosed fact was material and…
• CAutomatically pay the claim in full regardless of the non-disclosure
• DRefer the matter to the Nigerian Insurers Association for a binding ruling

Under the Nigerian Insurance Industry Reform Act 2025 (NIIRA 2025), where a business insured breaches a policy warranty that is not a 'fundamental term' and the breach does not amount to fraud, the insurer's ability to decline a resulting claim on that ground is:

• AAutomatic - any breach of warranty fully discharges the insurer's liability from the mome…
• BRestricted - the insurer cannot repudiate the claim on that ground alone and must indemni…
• CUnaffected in all circumstances, however serious the breach
• DTransferred automatically to the broker who arranged the policy

A claims handler reviewing supporting documentation for a theft claim would expect to see, among other things:

• AA reinsurance treaty schedule
• BA crime reference number from the police and evidence of ownership of the stolen items
• CThe insurer's annual accounts
• DA copy of the loss adjuster's employment contract

The main purpose of accurate claim file administration is to ensure that:

• AThe file is never reviewed again
• BDecisions, correspondence and payments are properly recorded so the claim can be handled…
• CThe customer never receives any updates
• DThe reserve is always set at zero

A policy 'excess' differs from a 'franchise' in that an excess:

• AIs paid by the insurer in addition to the claim
• BIs the first part of each claim borne by the insured and is deducted from every payment,…
• COnly applies to liability claims
• DIncreases the sum insured

When two or more insurers may be liable for the same loss, the claims handler should consider the principle of:

• ASubrogation
• BContribution
• CProximate cause
• DInsurable interest

A 'without prejudice' communication during the consideration of a liability claim means that the:

• AInsurer admits full legal liability
• BStatement is made in an attempt to settle and cannot generally be used as evidence of lia…
• CClaim must be paid in full immediately
• DLetter automatically becomes a binding contract

Where a household policy requires a claim to be notified 'as soon as reasonably practicable', a long, unexplained delay in notification may:

• AHave no effect at all on the claim
• BPrejudice the insurer's position and, depending on the wording and effect, allow the insu…
• CAutomatically void the entire policy from inception
• DIncrease the claim payment

A reservation of rights letter is used by an insurer to:

• AConfirm the claim will definitely be paid in full
• BTell the insured that it is continuing to investigate or handle the claim without admitti…
• CCancel the policy with immediate effect
• DDemand an increased premium

When interpreting an ambiguous policy term in a consumer contract, the courts may apply the contra proferentem rule, which means the ambiguity is generally construed:

• AIn favour of the party who drafted the wording, usually the insurer
• BAgainst the party who drafted the wording, usually the insurer
• CIn favour of the broker
• DBy ignoring the disputed clause entirely

The main reason an insurer sets up a claim reserve as soon as a claim is notified is to:

• AReward the insured for claiming quickly
• BMake a realistic estimate of the ultimate cost of the claim so the insurer can hold suffi…
• CReduce the sum insured for the next policy
• DAvoid having to investigate the claim

Which document would best help a claims handler establish the precise terms and limits applying to a particular claim?

• AThe insurer's marketing brochure
• BThe policy schedule together with the policy wording
• CThe claimant's bank statement
• DA newspaper report of the incident

An insured under a commercial property policy fails to comply with a condition requiring a working intruder alarm to be set. The most likely effect on a subsequent theft claim depends on whether the condition is:

• AA mere suggestion with no contractual force
• BA condition precedent or a term relevant to the loss, and whether the breach is connected…
• CAn exclusion that broadens cover
• DA premium payment clause

When validating the value of a claimed item, a claims handler asking for receipts, valuations or photographs is mainly trying to establish:

• AThe insured's credit score
• BProof of ownership and the value or replacement cost of the item
• CThe insurer's reinsurance arrangements
• DThe broker's commission

A claims handler notices that a reported incident date falls one day before the policy incepted. The correct action is to:

• APay the claim in full without comment
• BInvestigate further, because a loss occurring before cover began would not be covered, an…
• CCancel the policy immediately
• DRefer the claim straight to the police as fraud

The 'sum insured' on a property policy mainly functions as the:

• AGuaranteed amount paid for every claim
• BMaximum amount the insurer will pay, and the basis on which premium is calculated and ave…
• CMinimum excess for each claim
• DFee charged by the loss adjuster

A 'material fact' in the context of a claim investigation is one that would:

• AOnly matter to the insured
• BInfluence a prudent insurer's judgement in deciding whether and on what terms to accept t…
• CAlways be disclosed in the marketing literature
• DBe irrelevant to the claim decision

Where a claim is covered but the insured has a high voluntary excess, the practical effect on settlement is that the:

• AInsurer pays more than the loss
• BInsured bears the agreed excess and the insurer pays the balance of the agreed loss
• CExcess is added to the payment
• DClaim is automatically declined

An insurer's claims handler must apply data protection requirements when handling personal data on a claim. A key obligation is to:

• AShare claimant data freely with anyone who asks
• BProcess personal data lawfully, fairly and only for legitimate, specified purposes connec…
• CDelete the claim file immediately on notification
• DIgnore the claimant's right to access their data

When a claim is repudiated (declined), good practice and regulatory expectations require the insurer to:

• AGive no reason at all
• BExplain clearly the reason for declining and inform the customer of their right to compla…
• CCancel all the customer's other policies
• DReport the customer to a credit agency