Canadian Accredited Insurance Broker (CAIB) Two Practice Exam

What is the purpose of conducting a survey in commercial property insurance?

1. To determine the underwriting profit

2. To assist in identification of losses or exposures

3. To reduce the insurance premiums offered

4. To replace the role of underwriting altogether

The correct answer is: To assist in identification of losses or exposures

Conducting a survey in commercial property insurance primarily serves to assist in the identification of losses or exposures. This process enables insurers to gain a comprehensive understanding of the property being insured, including its physical condition, the nature of its operations, and potential risks that may not be immediately obvious. By identifying these exposures early on, underwriters can make more informed decisions regarding coverage, terms, and conditions, ensuring that the insured's unique risks are adequately addressed. Surveys provide valuable data that can lead to more accurate risk assessments. This ultimately aids in the creation of tailored insurance solutions designed to effectively protect the insured against potential losses. The insights gained from these surveys can also contribute to improved risk management practices for the insured, as they may highlight areas that require attention or improvement. The other options you mentioned, such as determining underwriting profit, reducing premiums, or replacing underwriting, do not accurately capture the primary intent of conducting surveys in this context. While the findings from a survey can influence profit assessments or premium adjustments indirectly, their core purpose is to identify risks and exposures.