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100+ Free CII 820 Practice Questions

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Key Facts: CII 820 Exam

30 Credits

Credit Value

CII Qualification Framework

Level 6

Qualification Level

Advanced Diploma in Insurance

50%

Pass Mark

CII Coursework Regulations

CII 820 is a Level 6 Advanced Diploma unit worth 30 credits focusing on strategic claims leadership, actuarial reserving, dispute resolution, and counter-fraud management. The 100 practice MCQs provided here serve as an English-language study adaptation to test technical concepts for coursework preparation.

Sample CII 820 Practice Questions

Try these sample questions to test your CII 820 exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1What is the primary strategic objective of aligning an insurer's claims philosophy with its corporate underwriting risk appetite?
A.To ensure claims payments automatically equal 100% of collected gross written premiums.
B.To establish consistent indemnity decisions that support product pricing assumptions, protect capital profitability, and uphold market reputation.
C.To eliminate the need for legal representation in all third-party liability disputes.
D.To transfer 100% of operational claims handling responsibility to external reinsurance syndicates.
Explanation: Aligning claims strategy with corporate underwriting risk appetite ensures that indemnity decisions match the risk parameters and pricing models established during underwriting, preventing unpriced leakage while protecting financial performance and brand reputation.
2Under FCA FG22/5 guidelines on the Consumer Duty, how must a general insurer structure its claims settlement handling process?
A.Claims handling must be structured to deliver good outcomes for retail customers, avoiding unreasonable delays, burdensome processes, or unjust barriers to valid claims.
B.Claims must be paid immediately upon notification without verifying policy cover or investigating potential non-disclosure.
C.Claims handlers must prioritize insurer operational cost reduction over the fair treatment of policyholders.
D.Claims handling rules apply strictly to commercial corporate risks while completely exempting retail motor and home insurance.
Explanation: FCA Consumer Duty (Principle 12 and FG22/5) mandates that firms must act to deliver good outcomes for retail customers, ensuring claims processes do not create unreasonable barriers, excessive delays, or unfair repudiations.
3In general insurance claims management, how is 'claims leakage' defined?
A.The statutory tax paid on reinsurance recoveries received from international reinsurers.
B.Financial losses incurred by an insurer due to unforced overpayments, inefficient handling processes, unrecovered subrogation, or poor claim decisions.
C.The reduction in case reserves resulting from successful litigation defenses.
D.The premium refund issued to policyholders following mid-term cancellation.
Explanation: Claims leakage refers to avoidable financial losses incurred during claims settlement due to procedural errors, unnecessary legal costs, over-indemnification, missed subrogation, or inadequate fraud detection.
4When an insurer outsources commercial claims handling to a Third-Party Administrator (TPA), what is the primary operational risk regarding regulatory compliance?
A.The insurer retains ultimate regulatory accountability for TPA conduct and Consumer Duty compliance despite delegating operational execution.
B.The TPA assumes full legal liability for all PRA capital solvency requirements.
C.Outsourcing automatically revokes the insurer's FCA permission to issue insurance contracts.
D.The TPA is legally prohibited from communicating directly with policyholders or loss adjusters.
Explanation: Under FCA SYSC rules, outsourcing operational functions to a TPA does not relieve the insurer of ultimate regulatory responsibility for compliance, customer treatment, and governance oversight.
5What is the primary function of a Service Level Agreement (SLA) in a delegated claims handling contract?
A.To specify operational metrics, key performance indicators (KPIs), response times, and authority limits expected from the service provider.
B.To transfer all underwriting profit to the claims service provider.
C.To waive policy deductibles for all claims managed by external vendors.
D.To restrict policyholders from filing complaints with the Financial Ombudsman Service.
Explanation: A Service Level Agreement establishes clear operational standards, turnaround times, settlement limits, and quality benchmarks that external service providers must maintain.
6In modern claims operations, what does Straight-Through Processing (STP) entail?
A.Automated end-to-end processing and settlement of low-complexity, high-frequency claims using digital algorithms without manual human intervention.
B.Manual review of every claim by a senior claims director before payment confirmation.
C.Bypassing policy conditions to settle high-value commercial claims within 24 hours.
D.The physical routing of paper claims files between regional branch offices.
Explanation: Straight-Through Processing leverages automated business rules and digital data integration to adjudicate and pay straightforward claims rapidly without human claims handler touchpoints.
7How does incorporating ESG (Environmental, Social, and Governance) principles impact an insurer's property claims supply chain strategy?
A.By encouraging sustainable repair techniques, recycled materials, lower carbon footprint logistics, and ethical contractor labor standards.
B.By requiring insurers to deny claims arising from natural weather events.
C.By increasing policy deductibles by 50% for commercial buildings constructed before 2000.
D.By transferring supply chain risk management entirely to local municipal councils.
Explanation: Integrating ESG into claims philosophy promotes eco-friendly repair methods (repair over replace), sustainable supply chains, reduced waste, and fair labor practices among repair contractors.
8Under FCA guidance on fair treatment of vulnerable customers (FG21/1), what action is required from a claims department upon identifying a vulnerable claimant?
A.Provide tailored support, flexible communication channels, and suitable adjustments to ensure they suffer no detriment during the claims journey.
B.Immediately transfer the claim file to external legal loss adjusters for investigation.
C.Request a statutory financial indemnity bond before processing the loss.
D.Automatically reduce the final claim settlement figure by 10% to account for administrative oversight.
Explanation: FCA guidance requires firms to identify customer vulnerability and adjust claims handling processes to provide appropriate support, clear communication, and flexible procedures that prevent customer detriment.
9In strategic claims auditing, how does 'process leakage' differ from 'decision leakage'?
A.Process leakage stems from procedural inefficiencies such as administrative delays and uncollected deductibles, whereas decision leakage arises from incorrect coverage interpretations or excessive settlement amounts.
B.Process leakage occurs only in motor insurance, whereas decision leakage occurs strictly in marine hull claims.
C.Process leakage represents criminal fraud, whereas decision leakage represents natural catastrophic property damage.
D.Process leakage is recoverable from reinsurers, whereas decision leakage is paid directly by the Financial Services Compensation Scheme.
Explanation: Process leakage involves operational bottlenecks, fee overcharges, or missed recoveries, while decision leakage involves errors of judgment regarding liability, policy interpretation, or quantum calculation.
10Which governance mechanism is most effective for an insurer to control claims leakage when delegating high settlement limits to a Third-Party Administrator (TPA)?
A.Implementing structured authority limits, mandatory peer reviews for high-value claims, periodic random claims audits, and financial benchmarking.
B.Allowing the TPA unrestricted settlement authority without setting audit parameters.
C.Requiring the TPA to submit paper receipts for every expense under £50 while ignoring claims over £100,000.
D.Replacing all written claims guidelines with verbal instructions delivered during quarterly catch-ups.
Explanation: Effective delegated authority governance requires defined settlement thresholds, mandatory peer reviews for large claims, robust file audits, and continuous performance metrics.

About the CII 820 Exam

The CII 820 Advanced Claims module develops high-level expertise in strategic claims management, technical reserving, complex litigation, dispute resolution, fraud prevention, and operational risk. Note: The official CII 820 assessment consists of written coursework assignments (30 credits). This 100-question local MCQ bank is an English-language study adaptation for practice and self-assessment and does not replace official CII written coursework sittings.

Assessment

Coursework assessment (3 written assignments). This 100-question practice bank provides an English-language study adaptation covering Claims Strategy, Reserving, Litigation, and Fraud Detection.

Time Limit

Self-paced / 120 minutes practice mode

Passing Score

50%

Exam Fee

£260 - £360 (Chartered Insurance Institute (CII))

CII 820 Exam Content Outline

25%

Claims Strategy & Philosophy

Strategic alignment, FCA Consumer Duty, outsourcing TPA governance, claims leakage control, customer experience, and ESG integration.

25%

Claims Reserving & Financial Management

Actuarial reserving methods (Chain Ladder, Bornhuetter-Ferguson), IBNR, case reserving, Solvency UK technical provisions, discount rates, and reinsurance allocations.

25%

Complex Litigation & Dispute Resolution

Civil Procedure Rules (CPR), Pre-Action Protocols, Part 36, ADR, arbitration, Financial Ombudsman Service (FOS), subrogation, and cross-border jurisdiction.

25%

Fraud Detection & Operational Risk

Insurance fraud topologies, counter-fraud databases (IFB, IFR, CUE), Proceeds of Crime Act (POCA), UK GDPR exemptions, operational controls, and claims audit.

How to Pass the CII 820 Exam

What You Need to Know

  • Passing score: 50%
  • Assessment: Coursework assessment (3 written assignments). This 100-question practice bank provides an English-language study adaptation covering Claims Strategy, Reserving, Litigation, and Fraud Detection.
  • Time limit: Self-paced / 120 minutes practice mode
  • Exam fee: £260 - £360

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

CII 820 Study Tips from Top Performers

1Master actuarial reserving calculations, including link ratio accumulation in Chain Ladder and loss ratio weighting in Bornhuetter-Ferguson.
2Understand Civil Procedure Rules (CPR) Part 36 tactical mechanics and how cost penalties affect litigation strategy.
3Familiarise yourself with counter-fraud legislation, including POCA 2002 reporting thresholds and Section 12 Insurance Act 2015 remedies.

Frequently Asked Questions

What is the format of the official CII 820 assessment?

The official CII 820 module is assessed via coursework (typically 3 written assignments totalling 10,000 words). This practice bank of 100 multiple-choice questions provides an English-language study adaptation to reinforce technical principles, legal precedent, calculations, and regulatory rules required in coursework writing.

How many credits is CII 820 worth towards the Advanced Diploma?

CII 820 carries 30 credits at Level 6 towards the Advanced Diploma in Insurance (ACII).

Does CII 820 involve numerical calculations?

Yes. Candidates must understand actuarial reserving formulas (e.g. Chain Ladder development factors, Bornhuetter-Ferguson expected loss ratios, IBNR estimation, discount factors, financial leakage ratios, and excess of loss reinsurance recovery allocations).

Do these practice questions replace required CII coursework assignments?

No. These 100 local MCQs are an English-language study adaptation designed for practice and revision. Official qualification requires enrolling with the CII and submitting written coursework assignments.