100+ Free IAI SA3 Practice Questions

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2026 Statistics

Key Facts: IAI SA3 Exam

Syllabus Domains

SA3 syllabus

35%

Largest Domain Weight

SA3 syllabus

3h 15m

Exam Duration

SA3 format

150%

IRDAI Solvency Control Level

IRDAI regulations

74%

Insurer FDI Cap

Insurance Act 2021

100

Practice Questions

OpenExamPrep

IAI Subject SA3 is the General Insurance Specialist Advanced Fellowship subject of the Institute of Actuaries of India, examined as a written application-style paper of 3 hours 15 minutes focused on the Indian general insurance market. The current syllabus weights general insurance markets, catastrophe modelling and emerging risks most heavily at 35%, reserving, pricing, capital modelling and reinsurance at 30%, financial management, monitoring and strategies at 25%, and the regulatory, legislative and taxation environment at 10%. IAI does not publish a fixed question count or cut score; the pass mark is set each diet. This free prep builds knowledge over 100 MCQs across all four domains.

Sample IAI SA3 Practice Questions

Try these sample questions to test your IAI SA3 exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1Under IRDAI regulations, every general insurer in India must at all times maintain a control level of solvency expressed as a minimum solvency ratio of:

A.100%

B.120%

C.150%

D.200%

Explanation: The IRDAI (Assets, Liabilities, and Solvency Margin of General Insurance Business) Regulations require insurers to maintain a control level solvency ratio of 150%, i.e. Available Solvency Margin of at least 1.5 times the Required Solvency Margin. Falling below triggers regulatory action.

2In the Indian general insurance solvency framework, the Required Solvency Margin (RSM) for a class of business is determined as:

A.The premium-based RSM1 only

B.The claim-based RSM2 only

C.The higher of the premium-based RSM1 and the claim-based RSM2

D.The lower of RSM1 and RSM2

Explanation: IRDAI computes RSM as the higher of RSM1 (a percentage of gross/net premiums) and RSM2 (a percentage of gross/net incurred claims), subject to the prescribed minimum. Taking the higher figure ensures the margin reflects whichever of volume or experience is more onerous.

3An Indian general insurer reports Available Solvency Margin of Rs 750 crore against a Required Solvency Margin of Rs 500 crore. Its solvency ratio is:

A.67%

B.133%

C.150%

D.250%

Explanation: Solvency ratio = ASM / RSM = 750 / 500 = 1.50, i.e. 150%. This exactly meets the IRDAI control level, leaving no buffer above the minimum, so the appointed actuary would likely flag a need to strengthen capital.

4The Indian Motor Third Party Declined Risk Pool (DR Pool) for commercial vehicle 'Act only' insurance was dismantled with effect from:

A.1 April 2007

B.1 April 2012

C.1 April 2016

D.1 April 2020

Explanation: IRDAI dismantled the Declined Risk Pool from 1 April 2016, after it had replaced the earlier Indian Motor Third Party Pool in 2012. Despite dismantling, insurers must not deny motor third-party cover to any vehicle owner.

5In India, the premium rates for motor third-party (Act only) liability insurance are:

A.Set freely by each insurer through filed rates

B.Determined entirely by the GIC Re reinsurance treaty

C.Notified/regulated by IRDAI rather than freely priced

D.Fixed by the Motor Vehicles Act schedule with no actuarial input

Explanation: Unlike Own Damage (which is risk-rated under File and Use), motor third-party premiums in India are notified/regulated by IRDAI based on actuarial analysis of pooled experience. This reflects the compulsory, unlimited-liability nature of the cover under the Motor Vehicles Act.

6Which body acts as the Indian reinsurer with statutory obligatory cession rights from domestic general insurers?

A.SEBI

B.LIC of India

C.GIC Re (General Insurance Corporation of India)

D.NABARD

Explanation: GIC Re is the national reinsurer and historically received a statutory obligatory cession from every Indian general insurer. The Order of Preference rules also give Indian reinsurers and FRBs priority before cessions to overseas reinsurers.

7An actuary projects ultimate claims for a long-tailed liability class. The chain ladder method assumes that:

A.Each accident year has identical ultimate losses

B.Claims inflation is zero across all years

C.Future development factors are independent of accident year and proportional to claims to date

D.Case reserves are always adequate

Explanation: The basic chain ladder assumes development is multiplicative and stable across accident years, so cumulative claims to date scale up by age-to-age factors independent of the accident year. Distortions such as changing mix, inflation or claims handling violate this assumption.

8The Bornhuetter-Ferguson reserving method is generally preferred over the chain ladder for recent immature accident years because it:

A.Ignores the loss ratio entirely

B.Always produces lower reserves than chain ladder

C.Blends an a priori expected loss ratio with observed development, reducing leverage on sparse data

D.Requires no development pattern

Explanation: BF weights an a priori expected ultimate (premium times expected loss ratio) with the chain-ladder projection using the proportion unreported. For green years where few claims have emerged, this dampens the volatility that pure chain ladder would magnify from a small reported amount.

9For a recent accident year, premium is Rs 100 crore, the a priori expected loss ratio is 70%, and the chain-ladder development factor to ultimate is 4.0 (so 25% of claims are reported). Reported claims are Rs 20 crore. The Bornhuetter-Ferguson ultimate is:

A.Rs 70.0 crore

B.Rs 80.0 crore

C.Rs 72.5 crore

D.Rs 90.0 crore

Explanation: BF ultimate = reported + a priori * (proportion unreported) = 20 + (100*0.70)*(1 - 0.25) = 20 + 70*0.75 = 20 + 52.5 = Rs 72.5 crore. The unreported proportion of 75% applies to the a priori expected loss of Rs 70 crore.

10IBNR in general insurance reserving most precisely refers to reserves for claims that are:

A.Internally Budgeted Net Reserves

B.Invoiced But Not Recovered from reinsurers

C.Incurred But Not Reported, including pure IBNR and IBNER

D.Indexed Bond Notional Reserves

Explanation: IBNR stands for Incurred But Not Reported and, in broad usage, captures both pure IBNR (events that have occurred but no claim is yet notified) and IBNER (incurred but not enough reported, i.e. development on known claims). Both are required reserves alongside outstanding case estimates.

About the IAI SA3 Exam

IAI Subject SA3 General Insurance Specialist Advanced applies the principles from SP7 and SP8 to complex situations in the Indian general insurance environment, covering markets and catastrophe modelling, IRDAI regulation, reserving, pricing, capital and reinsurance, and financial management.

Assessment

Written specialist-advanced application paper covering the Indian general insurance environment

Time Limit

3 hours 15 minutes

Passing Score

Pass mark is set by the IAI Examination Committee each diet rather than a fixed published percentage

Exam Fee

Set by IAI in the current Specialist Advanced fee schedule; varies by member status and sitting (Institute of Actuaries of India (IAI))

IAI SA3 Exam Content Outline

35%

General insurance markets, catastrophe modelling and emerging risks

Study the structure of Indian and global general insurance markets, product lines, catastrophe modelling with EP curves and return periods, accumulation and PML control, and emerging risks including cyber, silent cyber, and climate physical, transition and liability risk.

10%

Regulatory, legislative and taxation environment

Cover IRDAI regulations, the Insurance Act and Motor Vehicles Act, the motor third-party regime and former pools, FDI limits, GST on premiums, the appointed-actuary role, and the reinsurance order of preference.

30%

Reserving, pricing, capital modelling and reinsurance

Apply chain ladder and Bornhuetter-Ferguson methods, IBNR, UPR and premium-deficiency reserves, stochastic reserving, GLM frequency-severity pricing, required solvency margin and economic capital, VaR and TVaR, and proportional and non-proportional reinsurance design.

25%

Financial management, monitoring and strategies

Work with IFRS 17 measurement, investment and asset-liability management, experience monitoring and actual-versus-expected analysis, profitability and capital management, and strategic decision-making in complex general insurance situations.

How to Pass the IAI SA3 Exam

What You Need to Know

Passing score: Pass mark is set by the IAI Examination Committee each diet rather than a fixed published percentage
Assessment: Written specialist-advanced application paper covering the Indian general insurance environment
Time limit: 3 hours 15 minutes
Exam fee: Set by IAI in the current Specialist Advanced fee schedule; varies by member status and sitting

Keys to Passing

Work through all 100 available questions
Review every answer and explanation
Track weak areas and revisit them
Use our AI tutor for tough concepts

IAI SA3 Study Tips from Top Performers

1Anchor every technical answer in the Indian context: IRDAI solvency control level of 150%, the regulated motor third-party regime, the reinsurance order of preference, and GST and FDI rules.

2Practise reserving methods until chain ladder, Bornhuetter-Ferguson, IBNR, UPR and premium-deficiency calculations are second nature, then focus on when each method breaks down.

3Learn catastrophe modelling vocabulary precisely: EP curves, return periods, the hazard, exposure, vulnerability and financial modules, PML, and Indian perils such as cyclone, flood and earthquake.

4Connect capital concepts together: required solvency margin, economic capital, VaR versus TVaR, diversification, and capital allocation back to lines for pricing.

5Because the real paper is application-based, practise writing structured judgement-led answers on complex scenarios, not just numerical drills.

Frequently Asked Questions

How many questions are on IAI SA3?

SA3 is a written application-style specialist advanced paper, so the Institute of Actuaries of India does not publish a fixed number of questions. The composition varies by sitting and emphasises applied reasoning over multiple-choice recall.

How long is the IAI SA3 exam?

SA3 is examined over a 3 hours 15 minute written paper, in line with the IFoA SA3 format that the IAI subject mirrors for the Indian jurisdiction. Strong time management across longer application questions is essential.

What is the passing score for IAI SA3?

The IAI Examination Committee sets the pass mark for each diet rather than publishing a fixed percentage. Candidates must demonstrate competence across the whole syllabus, including the Indian regulatory environment and complex application scenarios.

Which topics matter most on SA3?

General insurance markets, catastrophe modelling and emerging risks is the largest domain at 35%. Reserving, pricing, capital modelling and reinsurance is 30%, financial management, monitoring and strategies is 25%, and the regulatory, legislative and taxation environment is 10%.

What is the relationship between SA3 and the IFoA?

The IAI SA3 subject mirrors the IFoA SA3 General Insurance Specialist Advanced syllabus but applies it to the Indian general insurance environment, including IRDAI regulation, the motor third-party regime, and India-specific market features.

Is this a multiple-choice exam?

No. The real SA3 exam is a written application paper, not a fixed multiple-choice test. This free bank uses 100 knowledge-based MCQs to help you build and check the technical foundation needed for the application paper.