Canadian Accredited Insurance Broker (CAIB) Two Practice Exam

Which of these is a function of a survey in insurance?

1. Eliminating all coverage needed for the business

2. Assisting in identifying loss exposures

3. Providing coverage recommendations based on speculation

4. Confirming coverage from competitors

The correct answer is: Assisting in identifying loss exposures

A survey in insurance primarily serves the function of assisting in identifying loss exposures. This is essential for insurers and brokers to effectively understand the specific risks associated with a business or property. By conducting thorough surveys, they can pinpoint various hazards or potential areas of risk that may lead to financial losses. This detailed understanding is crucial in determining the most appropriate coverage options and limits for the insured party. Identifying loss exposures allows for tailored risk management strategies, which enhance the insurer's ability to mitigate losses and improve the overall risk assessment process. Such knowledge enables the insurer to provide more accurate quotes and recommendations for coverage that align with the actual risks faced by the business. The other choices do not accurately reflect the purpose of a survey. For instance, eliminating all coverage needed for a business does not serve the risk management goals insurance seeks to achieve. Providing recommendations based on speculation lacks the fundamental supported analysis that a survey is designed to provide, and confirming coverage from competitors is unrelated to the direct function of surveying a client's specific risks and needs. Thus, the role of a survey is fundamentally about understanding and managing loss exposures effectively.