2. The Non-life Insurance Market

Question 1

A … company is a company that instead of transferring the risk to an insurer, they set up a fund from which they can pay claims.

Answer 1

captive insurance

Question 2

After initial assessment the loss adjuster will do three things?

Answer 2

1. Obtain quotes
2. Find contractors
3. Liaise with police

Question 3

In terms of the …, Lloyds must appoint a representative and deputy representative, whose duty it is to give the Registrar a list of names and addresses of Lloyd’s correspondents in South Africa, and act as defendant or respondent in court proceedings.

Answer 3

Short Term Insurance Act

Question 4

Insurance has two fundamental characteristics namely?

Answer 4

1. The transfer of financial consequences from an individual to a group.
2. The sharing of losses on some equitable basis by all members of the group.

Question 5

Lloyd’s maintains a … in South Africa as extra security for its South African policyholders.

Answer 5

Trust Account

Question 6

Self-insurance is when the client … for his own account.

Answer 6

accepts part or all of the risk

Question 7

Three other players in the short term insurance market are:

Answer 7

1. Loss adjusters
2. Motor assessors
3. Risk managers

Question 8

The Financial Intermediaries Association’s main purpose is to … the common interest of it’s members.

Answer 8

represent, protect, promote and further

Question 9

The four advantages of multi-peril policies are:

Answer 9

1. there is only one renewal date
2. there is one premium
3. it is cheaper to issue
4. there is only one document

Question 10

The initial role of the loss adjuster is to?

Answer 10

assess the damage, find entry point or method if theft, get supporting documentation

Question 11

The operations of Lloyd’s are …

Answer 11

worldwide

Question 12

The four players in the short term insurance market are:

Answer 12

1. Buyers
2. Intermediaries
3. Insurers
4. Re-insurers

Question 13

The short term insurance market consists off two pillars namely?

Answer 13

1. Personal lines

2. Commercial lines

Question 14

The South African Insurance Association (SAIA) has two functions namely:

Answer 14

1. Representing the interest of the short term industry to government.
2. Promoting co-operation between the public and short term insurers.

Question 15

The … is someone that will inspect you car after an accident and determine whether a claim is payable or not. He could from time to time also negotiate with panel-beaters on your behalf.

Answer 15

motor assessor

Question 16

The {{c1::P&I Club}} operates in the marine market and insures:

Answer 16

1. liabilities for cargo
2. liabilities for crew and passengers
3. liabilities to third parties

Question 17

The … is the best known form of mutual indemnity association.

Answer 17

Protection And Indemnity Associations (P&I Club)

Question 18

Three advantages of self-insurance are:

Answer 18

1. as the fund grows so does the percentages for self-insurance that results in further premium discounts.
2. the premiums does not increase with other people’s claims.
3. there is a very strong incentive to reduce claims and control losses.

Question 19

Three disadvantages of self-insurance are:

Answer 19

1. a catastrophic loss would deplete the fund.
2. capital could be tide-up that could have been used for business development.
3. the basic principle of spreading the risk is not adhered to.

Question 20

… is when you are willing to pay for losses up to a certain amount. You will therefore get a discounted premium.

Answer 20

Catastrophe cover

Question 21

… is an insurance policy where more than one individual are insured on the same policy.

Answer 21

Collective insurance

Question 22

… is among the largest property and liability insurers (including reinsurance) in South Africa.

Answer 22

Lloyd’s

Question 23

… is not and insurance company, but in fact an association of underwriters.

Answer 23

Lloyd’s

Question 24

… are different from a mutual company in that the association only accepts business from members of a particular trade.

Answer 24

Mutual Indemnity Associations

Question 25

… is where the insured has no fund and where there are no guidelines.

Answer 25

Non-insurance

Question 26

… basically means when one insurance company shares the risk with another insurance company in order to reduce the risk if a claim arises.

Answer 26

Re-insurance

Question 27

… can be included in a multi-peril policy.

Answer 27

Various sections