8 - Business Process

Question 1

If an insurer issues a quote, how long will this typically remain valid?

Answer 1

30 days

Question 2

If an insurer issues a quotation and the client agrees but wants to change some of the terms, what is the position of the insurer?

Answer 2

The quotation must be accepted as issued, so the insurer is not bound to accept the client’s changes.

Question 3

What is a broker’s ‘order’ when some of the risk has already been placed elsewhere?

Answer 3

The share, as a percentage, of the risk yet to be placed

Question 4

How does an insurer maintain its written line when lines are signed down?

Answer 4

By requesting ‘line to stand’

Question 5

What are reasons for natural termination of a contract?

Answer 5

1. fulfillment
2. Expiry of policy
3. Cancellation by insurer or insured as per contract

Question 6

If the duty of fair representation is breached, what is the remedy for an insurer?

Answer 6

Different premium - claims reduced by same percentage as underpaid premium
Different Terms - rewritten from inception

Question 7

What happens if an insurer can prove the insured has committed a fraudulent claim?

Answer 7

Be discharged from liability, but sometimes also keep the premium

Question 8

What are the possible incentives of an insurer renewing a policy?

Answer 8

1. Costs less to renew than write from scratch
2. More reliable statistical data

Question 9

Are ‘Days of Grace’ helpful?

Answer 9

No, they a myth that do not extent a contract past expiry

Question 10

How do insurers protect themselves when writing a risk after the risk is incepted?

Answer 10

Using a warranty - “Warranted no known or reported losses”