CIIG Certificate - independent subject foundations common mistakes
CIIG Certificate - independent subject foundations · Understand the traps and how to avoid them.
Assuming any loss is covered because a premium was paid
Protection depends on the actual insured event, scope, exclusions and conditions.
What to do instead
Read the wording and evidence, identify the relevant coverage and distinguish a covered loss from a payment request.
Applying a deductible without reading its convention
Deductibles, limits and aggregation can be arranged in different contractual orders.
What to do instead
Write the supplied calculation sequence and apply the stated cap or layer without importing an unstated policy rule.
Treating insurance as physical loss prevention
A financing arrangement does not automatically remove a physical or operational hazard.
What to do instead
Compare prevention, reduction, retention and transfer as different tools and explain the residual exposure.
Calling an inconsistency proof of fraud
Incomplete records or an unusual pattern can have several explanations.
What to do instead
Preserve evidence and investigate through the authorized process, distinguishing a risk signal from a substantiated finding.
Equating a reserve with cash
A recognized liability or estimated obligation does not establish a matching liquid asset.
What to do instead
Review assets, payment timing and uncertainty separately from the estimate of the obligation.
Treating all premium receipts as earned profit
Coverage, claims and expenses occur across different periods.
What to do instead
Distinguish written, earned and unearned amounts within the specified model before evaluating the result.
Ignoring reinsurance counterparty risk
Transferring exposure under a contract does not guarantee collection from the reinsurer.
What to do instead
Review the actual terms, retained exposure, recovery assumptions and concentration rather than removing every risk from analysis.
Using a combined ratio as a complete solvency test
An underwriting performance measure does not incorporate every asset, capital or liquidity consideration.
What to do instead
State the component denominators, then evaluate investment results, reserves, assets and capital separately.
Producing a one-sided evaluation that lists benefits only, or adds a token 'however, there are disadvantages' sentence at the end, without reaching a supported judgement.
Under time pressure, candidates write what comes to mind first and treat evaluation as a conclusion bolted on. They have not been trained to weigh counter-arguments against each other or against stated criteria, so the judgement is vague ('it depends') rather than decisive.
What to do instead
Use a fixed evaluation routine: state the decision, give the strongest argument for, the strongest against, then explicitly weigh them against the firm's objective and constraints, and finish with a ranked recommendation and a condition ('this holds provided demand stays above X'). Build the habit of writing the judgement first as a one-line plan, then writing the body to support it.
Writing strategy answers that recommend growth (e.g. entering a new market or acquiring a competitor) without assessing the firm's existing resources, core competences, or the risk of the option against alternatives.
Candidates equate strategy with expansion and treat any growth option as automatically good. They skip the resource-based and risk analysis that distinguishes a justified strategic recommendation from an aspirational one, and they do not compare options against each other.
What to do instead
Adopt a fixed structure for strategy questions: identify the firm's current position and resources, list two or three realistic options, assess each against resources, risk, and fit with objectives, then recommend one and state the main implementation risk and how to mitigate it. Always name the option you rejected and why.
Treating allocated costs as automatically avoidable
An accounting allocation can remain even after an activity is discontinued.
What to do instead
Compare future cash flows with and without the decision, documenting which capacity or contract payments actually change.
Confusing margin and markup
One uses selling price as its denominator while the other uses cost.
What to do instead
Write the denominator explicitly and check the relation between price, cost and profit before calculating the percentage.