5 - Legal And Regulatory Requirements Flashcards
What insurance is compulsory for private individuals?
Third party motor
Public liability for dangerous dog ownership
What insurance is compulsory for professions and businesses?
Motor insurance
Employers liability
(Professional indemnity in some cases)
The minimum employers liability limit is £5m, but what is offered as a minimum by insurers?
£10m
Why is public liability insurance necessary in certain businesses?
Indemnifies insurers against claims from:
1. The use of their equipment/property
2. Injury to members of the public whilst in use of equipment/property
Which type of compulsary insurance usually falls within another policy?
Ownership of dangerous animals
Why is compulsory insurance important?
Protects innocent victims and provides funds for their compensation
What is long tail business?
When losses can take time to be notified and claims take time to develop
Why are most compulsory insurances required even after a business stops?
To continue to protect customers even if it takes time for a claim to be made
Under the employers liability (compulsory insurance) regulations 1998, what will the impact be if the insured breaches a policy warranty?
Underwriters still have to settle claims, but can then take action against the insured to return some of the money.
Why is the duty of good faith complicated in compulsory insurance?
The cover is for third parties, so has to be in place regardless of the actions/negligence of the insured.
What is workers’ compensation in the USA?
Employer’s liability insurance
Is motor insurance compulsory in the USA?
Only for commercial vehicles, not private
Under the consumer rights act, what does is prevented?
Unfair terms - which will no longer be binding on the consumer, but the consumer can choose to claim upon if beneficial to them
What is an example of a potentially unfair term?
Making the insurer’s commitments subject to compliance with a particular formality, eg. following the claims process correctly
What is privity of contract?
Only the two parties involved in a contract can enforce the terms of the contract
What role does the contracts (rights of third parties) act 1999 play?
Ensures a third party has the right to enforce a term of a contract, ignoring privity of contract
To what insurance does the contracts (rights of third parties) act 1999 not apply?
Cargo
What is freely assignable insurance?
When the person making the claim may not be the one who bought the insurance, eg. In cargo insurance
What are the rates of insurance premium tax (IPT)?
Standard = 12%
Higher = 20%
What insurances would fall under the higher IPT?
Travel insurance and warranties, eg. On a new car
Who collects the IPT from the insured?
Typically the broker, who pays the insurer through Xchanging
What does the insurer do with the tax paid by the insured?
Held in an account and paid to HMRC on a quarterly basis
What do regulators want the Senior Managers and Certification Regime to achieve?
- To encourage staff to take personal responsibility
- Improve conduct at all levels
- Make sure it is clear who does what in a firm
Who does the Senior Managers Regime apply to?
Certain roles known as senior management functions (SMF)
What does the Senior managers Regime require?
Any firms planning a new appointment of an SMF must submit an application to FCA & PRA
Who does the certificate regime apply to?
Individuals who are capable of causing significant harm to a firm, but not an SMF
What are the three parts of SM&CR?
- Senior managers Regime
- Certificate regime
- Rules of conduct
What are the two tiers of the rules of conduct?
First tier - individual conduct rules
Second tier - senior manager conduct rules
A key function in a regulated firm is one that
Is part of an effective system of governance.
