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IF1 ALL CHAPTERS IN ONE > ALL CHAPTERS > Flashcards

ALL CHAPTERS Flashcards

1
Q

When is a collective policy issued?

A

When a risk is co insured

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2
Q

An example of a peril in motor insurance?

A

A lightning strike

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3
Q

What does the time delay between the receipt of premiums and the occurrence of claims create?

A

Premium reserve

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4
Q

What does a money policy provide cover for?

A

Loss, destruction or damage

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5
Q

What does credit insurance provide?

A

Cover for businesses against the risk of their debtors being unable to meet their obligations

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6
Q

What does marine freight insurance cover?

A

Liability for damaged goods carried

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7
Q 
Which is the most difficult for insurers to evaluate and quantify?
A. Physical hazard
B. Moral hazard
C. Peril 
D. Risk
A

A. Moral hazard

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8
Q

What is the role of a members agent?

A

Advising their clients on the advantages and disadvantages of investing at Lloyds

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9
Q

What must an independent intermediary be capable of?

A

Offering advise on the basis of a fair analysis of the market

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10
Q 
IPT is 20% for what insurance?
A. Pecuniary 
B. Employers liability
C. Travel 
D. Household
A

C. Travel

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11
Q

What is the function of a managing agent?

A

Providing their specialist expertise they have to offer in their niche area

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12
Q

Companies that manage one or more Lloyds syndicates on behalf of members are known as?

A

Managing agents

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13
Q

The Motors Insurance Bureau is financed by…

A

A levy on authorised UK motor insurers

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14
Q

Under contract certainty rules, when must the signing down of lines be done?

A

Prior to inception

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15
Q

What area do Mutual Indemnity associations mainly operate in?

A

Marine insurance

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16
Q

What area do protection and indemnity associations mainly operate in today?

A

Marine insurance

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17
Q

When is acceptance of an offer complete?

A

When the letter of acceptance is posted

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18
Q

Example of short period contact?

A

Travel insurance

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19
Q

When a policyholder cancels their motor mid-term, they are no longer required to make a statutory declaration or any statement acknowledging the policy has been ceased. What act brought this to law?
A. Insurance Act
B. The Deregulation Act 2014
C. CIDRA

A

B. The Deregulation Act 2015

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20
Q

A person who is risk averse transfers their risk by…

A

Insurance

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21
Q

Who provides financial backing for Lloyds?

A

Names

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22
Q 
A company manufacture ink cartridges, but due to a manufacturing fault the cartridges leave, causing damage to the property. What insurance would cover this?
A. Product liability 
B. Business interruption
C. Employers liability 
D. Building insurance
A

A. Product liability

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23
Q

External elements that can threaten the assets or earning capacity of a company are dealt by…

A

Risk management

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24
Q 
Within Lloyds who is responsible for setting guidelines for all syndicates to safeguard standards of underwriting and risk management?
A. Names
B. FCA
C. Lloyds Franchise Board 
D. PRA
A

C. Lloyds Franchise Board

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25
Q

Definition of a risk

A
  • Possibility of loss
  • Unpredictability
  • The chance of gain for example gambling
  • Uncertainty
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26
Q

Risk management

A

Risk identification - Risk analysis - Risk control

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27
Q

Types of risk

A
  • Financial and non financial
  • Pure
  • Speculative
  • Particular
  • Fundamental
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28
Q

Example of a peril

A
  • Lightning
  • Overflow of water tanks
  • Fire
  • Explosion
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29
Q

Example of physical hazard

A
  • Security
  • High value sports car
  • Age of a car
  • Construction of a building
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30
Q

Example of moral hazards

A
  • Carelessness of a driver
  • Convictions
  • Previous claims history if suspicion of fraud
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31
Q

The FCA say that all firms carrying out insurance must be either…

A
  • Authorised

- Exempt from authorisation

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32
Q

Proprietary companies

A

Owned by shareholders

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33
Q

Mutual companies

A

Owned by its policyholders

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34
Q

Mutual indemnity associations

A

Owned by its policyholders

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35
Q

Captive companies

A

Owned by non insurance parent company

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36
Q

Societas Europeas

A

Owned by a parent company.

Cost efficient way to merge companies across the EU.

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37
Q

Protected cell companies

A

A company with a non-cellular part (the core) and unlimited amount of cells.

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38
Q

What is a managing general agent?

A

A Managing General Agent is a specialist intermediary who has delegated authority to act for one or more insurers and sets like the insurer.

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39
Q

Who forms a syndicate?

A

Individual members (names) or corporate members invest money to form a syndicate

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40
Q

Who does a syndicate employ?

A

Syndicates employ a managing agent

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41
Q

Who does a managing agent appoint?

A

A managing agent appoints an underwriter to accept risks

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42
Q

How are risks placed at Lloyds?

A

Risks are placed by slips.

Underwriters sign the slip confirming the percentage they will be accepting.

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43
Q

What is contract certainty?

A

Contract certainty is achieved by the complete final agreement of all terms (including signing down lines) between the insured and insurers before inception.
There must be evidence of this done within 30 days of inception.

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44
Q

Benefits of reinsurance

A
  • Protect portfolio
  • Provide improved customer service
  • Provide support for insurers entering new areas of business
  • Increase capacity
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45
Q

Retroceding

A

A reinsurer transferring some of their own risk

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46
Q

Retrocession

A

The process of a reinsurer transferring a risk

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47
Q

Motor Insurance Bureau

A
  • Private company that has an agreement with the government
  • Compensates victims of negligent, uninsured or untraced drivers
  • Financed by a levy on authorised motor insurers in the UK
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48
Q

Claims personnel

A

A claims personnel is vital to ensure the proper management of an insurance company.

  • They deal with claims quickly and fairly
  • Distinguish between real and fraudulent claims
  • Determine real costs of claims
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49
Q

Loss adjusters

A

An expert in claims processing from start to finish, they act for the insurer. They deal with larger claims or complex policy wordings.

  • Investigate circumstances of a claim
  • Determine whether loss is covered
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50
Q

Loss assessors

A

A loss assessor is an expert in dealing with insurance claims and acts for the policyholders. They’re appointed by the policyholder to prepare and negotiate a claim on their behalf.

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51
Q

Surveyors

A

Surveyors carry out a variety of functions on behalf on insurers.

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52
Q

Actuaries

A

An actuary may be defined as a professionally qualified person who applied probability and statistical theory to problems of insurance, investment, financial and risk management.

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53
Q

Risk managers

A

They are appointed by firms for taking control of and developing a formal strategy.

  • Provide guidance on best in these areas to management
  • Transfer of appropriately identified risks by contract of insurance
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54
Q

Lloyds syndicate

A
  • A Lloyds syndicate is made up of one or more members to join together as a group to accept insurance risks.
  • Syndicates cover either all or a portion of a risk and are staffed by underwriters.
  • They write a range of policies
  • They employ a managing agent who appoint an underwriter to accept risks
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55
Q

Managing agent

A
  • A managing agent is a company set up to manage one or more syndicates on behalf of members who provide the capital.
  • They employ the underwriters to handle the day to day running of a syndicate.
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56
Q

Contract laws

A

The English law of contract is essentially a law of bargains.

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57
Q

Essentials of a valid contract

A

Offer and acceptance + Consideration

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58
Q

Unconditional or qualified acceptance

A

This is where the offer is not challenged and there is no problem with it

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59
Q

Conditional/qualified acceptance or a counter offer

A

Where the client would put a condition in place to accept it. (Rejection of an offer)

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60
Q

Postal acceptance

A

This is where the acceptance is on the day that the letter is sent

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61
Q

Consideration

A

This is where one party is giving something so one party receives something. A promise of payment is enough for acceptance in this case.

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62
Q

Purpose of a contract

A

The purpose of a contract ‘policy wording’ is so there is evidence of a contract, it essentially covers the insurers back as the policy holder knows what they’re covered for.

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63
Q

When should an insurer send out a renewal letter to the insured?

A

Within good time.

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64
Q

Who can cancel a policy

A

Both the insurer and insured

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65
Q

Breach of warranty

A

This will discharge the insurer from liability under the policy automatically without the need for he insurer to terminate the policy, unless the insurer waives the breach.

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66
Q

Breach

A

A breach is a deliberate or reckless/non deliberate careless act.

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67
Q

Warranty

A

A rule/term of the policy that you have to abide by (specific to your policy)

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68
Q

What is an agent?

A
  • An agent is one who is authorised by a principal to bring that principal into a contractual relationship with another third party.
  • Whoever the agent is working for, they are termed the agents principal.
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69
Q

Agent by consent

A
  • Both partied enter into legally enforceable agreement done by express appointment where the terms are written down.
  • Insurers issue a TOBA to each agent, stating terms, conditions and the extent to the agents authority.
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70
Q

Agency by necessity

A
  • Arises where a person is entitled with someone else’s goods and it becomes necessary to act a certain way in order to preserve the property in an emergency.
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71
Q

Agency by ratification

A

Ratification refers to a situation where an agent cats without authority but the principal accepts the facts as having been done by an agent on their behalf.

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72
Q

When is an independent intermediary considered to be an agent of the insured?

A
  • Gives advice on cover of the placing of insurance of helping arrange it.
  • Gives advice on how to make a claim/assisting them with it.
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73
Q

When is an independent intermediary considered to be the agent of the insurer?

A
  • An insurer authorises an intermediary to receive and handle proposal forms on its behalf and confirm cover.
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74
Q

What is express authority?

A

Arises from the terms of an agency agreement, which may be oral or writing.

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75
Q

What is implied authority?

A

If the agent has to undertake a certain action in order to carry out express instructions, they will have implied authority to do so.

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76
Q

Duties of a principal

A
  • Remuneration = Pay agreed commission.

- Indemnity = Reimbursement of all expenses incurred when acting on behalf of the principal.

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77
Q

What is insurable interest?

A

The legal right to insure arising out of a financial relationship recognised at law, between the insured and the subject matter of insurance.

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78
Q

Subject matter of insurance

A

The item or event that is insured.

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79
Q

Subject matter of contract

A

The financial interest a person has in the subject. matter of the insurance

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80
Q

Legal relationship

A

The relationship between the insured and the subject matter of the insurance must be recognised at law. If there is no legal relationship there’s no insurable interest.

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81
Q

Financial value

A

The insurable interest in the subject matter interest in the subject matter of insurance must have financial value.

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82
Q

How is insurable interest created?

A
  • Common law
  • Contract
  • Statute
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83
Q

What is common law?

A

We all owe duties to each other and have certain rights under common law. This is the most straightforward, by ownership.

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84
Q

Contract

A
  • These are situations in which we accept greater liabilities than those imposed by common law.
  • These occur when we enter into a contract that gives us greater responsibilities.
  • A landlord is normally liable for the maintenance of the property they own, however the landlord may make the tenant liable under the terms of the lease.
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85
Q

Statute

A
  • There are few statutes (acts of parliament) which impose a particular duty on certain groups.
  • Where these statutes apply they make tenants responsible for the upkeep of the buildings they occupy.
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86
Q

When must insurable interest exist for general insurance?

A

At inception and at the time of the claim.

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87
Q

When must insurable interest exist for a marine insurance policy?

A

Only at the time of a claim, it doesn’t have to exist at inception.

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88
Q

When must insurable interest exist for life assurance?

A

Only at inception, it doesn’t have to exist at the time of the claim.

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89
Q

What is utmost good faith?

A

Utmost good faith is a positive duty to voluntarily disclose, accurately and fully, all material facts to the risk being proposed, whether requested or not.

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90
Q

Who does utmost good faith apply to?

A

Both the proposer and insurer.

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91
Q

Who has the duty to disclose all material facts about the risk?

A

The proposer has to disclose all material facts about the risk to the insurer.

92
Q

After inception of her life policy, an insured is diagnosed with diabetes. When, if at all, should they disclose this information to her life insurer?

A

There is no requirement to disclose

93
Q 
Under common law, the duty of disclosure starts...
A) When the contract is signed 
B) When negotiations begin
C) When the first premium is paid
D) When negotiations end
A

B) When negotiations begin

94
Q

Misrepresentation

A

Providing information which is wrongly stated or exaggerated.

95
Q

Utmost good faith is defined as?

A

A positive duty to voluntarily disclose all material facts, whether requested or not.

96
Q 
How does the continuing duty of disclosure on the insured under a motor policy usually arise?
A) Its an FCA rule
B) Its a statutory requirement 
C) It is a common law requirement 
D) Its a policy condition
A

D) Its a policy condition

97
Q

Which of the following convictions would be spent under the Legal Aid, Sentencing and Punishment of Offender Act 2012?
A) A fine imposed 6 months ago
B) A community order completed 9 months ago
C) A 5 year custodial sentence imposed 9 years ago
D) A 2 year custodial sentence imposed 8 years ago

A

D) A 2 year custodial sentence imposed 8 years ago

98
Q 
One of the reasons why commercial insurance contracts are subject to the duty of utmost good faith is because they are 
A) Intangible products 
B) Tangible products 
C) Material products
D) Physical products
A

A) Intangible products

99
Q

To comply with the duty of disclosure a proposer must ensure that any info they supply is…

A

True to the best of their knowledge or belief

100
Q

Meaning of intangible

A

Unable to be touched, it is not a physical product.

For example an insurance policy

101
Q

Meaning of proximate cause?

A

Proximate cause of an occurrence is always the dominant cause of a loss. There is always a direct link between the proximate cause and the resulting loss.

102
Q

Insured peril

A

Those names in the policy as covered. The insured would be covered if this type of peril occurred as it is covered under the policy terms.

103
Q

Expected or excluded peril

A

Those names in the policy as specified not covered.

The insured would not be covered if this type of peril occurred.

104
Q

Uninsured or unnamed peril

A

Those perils not mentioned at all in the policy conditions. The insured would be covered if this type of peril occurred.

105
Q 
Julie falls from her horse and is injured. She is taken to hospital where she dies due to an infection caught at the hospital. What is the proximate cause of her death?
A) The fall from her horse 
B) The infection 
C) Riding her horse 
D) Her stay in the hospital
A

B) The infection

106
Q

Is the proximate cause the dominant cause?

A

Yes

107
Q

What would the insurer typically look at to establish the proximate cause?

A

An insurer would typically look at the peril and loss to establish the proximate cause of the loss.

108
Q

Is a single event ALWAYS the direct cause of a loss?

A

No, a loss can sometimes occur following a train of events.

109
Q

Why is it necessary to find the proximate cause?

A

It is necessary to find the proximate cause of a loss where the events before the loss, as not all perils are insured.

110
Q

If a loss is due to an uninsured/unnamed peril, for example water damage putting out a fire, are the insurers liable to pay if the proximate cause was an insured peril?

A

Yes the insurers are liable to pay the claim.

111
Q

Definition of Indemnity

A

Financial compensation sufficient to place the insured in the same financial position after the loss as they enjoyed immediately before the loss.

112
Q

What are the four methods of indemnity?

A
  • Cash replacement
  • Repair
  • Replacement
  • Reinstatement
113
Q

Cash replacement

A

Most claims are settled with a cash payment.

114
Q

Repair

A

This is often an the method of indemnity for cars or bikes.

115
Q

Replacement

A

Glass/household contents.

116
Q

Reinstatement

A

The method of indemnity for buildings.

117
Q

What is a benefit policy?

A

A benefit policy is not a policy of indemnity as they cover things such as loss of limb, sight, sickness etc. A price cannot be placed on the loss of limb/sight so the principle of indemnity does not apply.

118
Q

Can people have more than one benefit policy?

A

Yes

119
Q

Examples of benefit policies

A
  • Accident and sickness policies
  • Critical illness policies
  • Payment protection policies
  • Hospital cash plans
120
Q

How is indemnity applied for household goods?

A

‘New for old’ policies

121
Q

What is an agreed value policy?

A

The value of the subject matter of insurance is agreed at the start of the contract and the sum insured is fixed accordingly. The value is reviewed at each renewal.

122
Q

What may an insured take out an agreed value policy for?

A

A policyholder might take out an agreed value policy for things such as works of art, marine insurance and vintage motor cars.

123
Q

Why might an insurer provide less than full indemnity?

A

An insurer may provide less than full indemnity due to:

  • Choice of cover
  • Poor insurance arrangements
  • Full cover not requested
  • Certain policy terms
124
Q

What is the formula for average?

A

Sum insured divided by the value at risk times by the loss

125
Q

What is the formula for sum insured?

A

Sum insured divided by the total sum insured times by the loss

126
Q

What is an excess/deductible?

A
  • An amount that is deducted from each claim paid.
  • It may be voluntarily paid, which would lower the premium
  • If there is underinsurance the excess is deducted last of all.
127
Q

What is a First Loss policy?

A

A first loss policy occurs when the policyholder considers that the full value of the insured subject matter is not really all at risk. The policy is issued on a sum insured that is less than the full value.

128
Q

What is the Enterprise Act 2016?

A

The act entitles customers to claim for damages in respect of late claims payment.

129
Q

What is Contribution?

A

Contribution is the right of an insurer to recover part of a claim payment where two or more policies cover the same interest, the same risk and are in force when the loss occurs.

130
Q

What do policies have to have in common for contribution?

A
  • The policies must cover a common insurable interest
  • The policies must cover a common peril which gives rise to a loss
  • The policies must cover a common subject matter
131
Q

Contribution - Common Insurable Interest

A

Contribution only applies where the policies cover a common interest in the subject matter. For example same interest in owner, user or bailee.

132
Q

Contribution - Common Peril

A

The peril which causes a loss must be common to both contracts.

133
Q

Contribution - Common Subject Matter

A

For contribution to apply, each insurer must provide cover in respect of the subject matter of insurance which suffers loss or damage.

134
Q

Non-contribution clause

A

“This policy shall not apply in respect of any claim where the insured is entitled to indemnity under any other insurance”

135
Q

What is a Market Agreement?

A

A Market Agreement is an agreement between insurers to deal with a claim in a specific way. The propose is to save costs and time as well as promoting good relationship between insurers.

136
Q

Contribution condition - Rateable proportion

A
  • The share of any claim by an insured when two or more insurers cover the same risk.
  • Usually in proportion to respective sums insured (sum insured method)
137
Q

What is subrogation?

A

“The right of an insurer, following payment of a claim, to take over the insureds rights to recover payment from a third party responsible for the loss”

138
Q

How does subrogation arise?

A
  • Tort
  • Contract
  • Statute
  • Subject
139
Q

Tort

A
  • A breach of duty towards other.

- The most common way is hat a third party has been negligent; they have breached their common law duty to someone else

140
Q

Contract

A
  • A breach of contract entitles the aggrieved party to compensation
141
Q

Statute

A
  • The Riot Damages Act 1886 states that the police are responsible for riot damage. So for example if your car is damaged in a riot, you could put a claim into your insurance company and they could subrogate against the police.
  • The Riot Damage Act 2016 states that the insurers only have 42 days to lodge a claim with the police.
142
Q

Insurers subrogation rights

A

Insurers are also not entitled to recover more than they’ve paid out.

143
Q

Subrogation waiver

A

This is where the insured has waived its rights in holding another party responsible.

144
Q

Compulsory insurance

A

Insurance is made compulsory by the government passing an Act of Parliament. Certain forms are made compulsory for two reasons: to provide funds for compensation and in response to national concerns.

145
Q

Types of compulsory insurance

A
  • Motor Insurance
  • Employers liability
  • Public liability insurance - riding insurance
  • Liability insurance - Dangerous animals/dogs
  • Professional indemnity insurance (Solicitors/insurance intermediaries)
146
Q

Motor insurance

A
  • The Road Traffic Accident 1988 stipulates that its illegal to cause or permit the use of a vehicle on a public road unless a policy is in force.
  • A policy needs to be in force covering third party property damage and third party bodily injury or death
147
Q

What act states that when a motor policy is cancelled mid-term the policy holder is no longer required to return the certificate or make a statutory declaration acknowledging the policy has ceased to effect?

A

The Deregulation Act 2015

148
Q

Liability insurance for dangerous/wild animals 1976/dangerous dogs 1991

A

Local authority which issues license must be satisfied as to the adequacy of insurance

149
Q

Employee Liability Insurance

A
  • The Employers Liability Act 1969 made it compulsory for employers in Great Britain to effect employers liability insurance.
  • Minimum limit of indemnity is £5 million but in practice insurers provide 310 million.
  • It insures them against their liability to pay compensation to employees who sustain bodily injury or disease, arising out of and in the course of there employment.
150
Q

Public Liability for riding establishments

A
  • The insurance must indemnify the insured against claims arising from the use of the insureds horses.
  • Includes injuries sustained by both persons riding the horses and members of the public.
151
Q

Professional Indemnity Insurance

A
  • The Solicitors (Amendments) Act states that solicitors must hold PI Insurance.
  • The insurance must indemnify the solicitor against claims for financial loss suffered by clients as a result of the solicitor’s professional negligence.
152
Q

Contract (Rights of Third Parties) Act 1999

A
  • Allows those who are not a party to the contract to enforce it (privity of contract) for example driver on a motor policy.
  • Insurance policies often state that this does not apply to the insurance contract.
153
Q

Third Part (Rights Against Insurers) Act 2010

A
  • Protects claim payments from the effects of insolvency.
  • Allows a third party to bring a claim directly against an insurer without having to restore the insolvent company to the register.
154
Q

Consumer Rights Act 2015

A
  • Defines a consumer as one who is ‘reasonably well informed, observant and circumspect’
  • Aims to make things clearer for consumers when trying to understand rights and remedies when things go wrong
  • The terms of contracts must be fair by being transparent and prominent
155
Q

Bribery Act 2010

A
  • Applies to improper payments being received or accepted by a commercial organisation
  • Giving, promising or offering a bribe
  • Requesting, agreeing to receive or accepting a bribe
  • Bribing a foreign public official
  • Failure by a commercial organisation to prevent active bribery being committed on its behalf
156
Q

The Public Interest Disclosure Act 1998 (PIDA)

A
  • Concerned with whistleblowing

- It encourages openness

157
Q

Enterprise Act 2016

A
  • The act entitles customers the right to claim for damages in respect of ate claim payments.
158
Q

Insurance Distribution Directive (IDD)

A
  • Makes it easier to trade cross-boarder
  • Encourages competition
  • Strengthens policyholder protection
159
Q

For a UK based company transacting insurance in the EU they must be authorised by who?

A

The Prudential Regulation Authority (PRA)

160
Q

What is the Prudential Regulation Authority responsible for?

A

The PRA sits within the Bank of England and is responsible for the stability and resolvability of important institutions such as banks, building societies and insurers.

161
Q

What is the Financial Conduct Authority responsible for?

A

The FCA is responsible got conduct of business ad market issues for all firms including insurers and prudential regulation of small firms for example insurance brokerages and financial advisory firms.

162
Q

What are the objectives of the PRA?

A
  • Promote safety and soundness
  • Ensure adverse effect on stability is avoided
  • Minimise the effect of failure of a firm
  • Facilitate competition
  • Protect the policyholder
163
Q

What are the objectives of the FCA?

A
  • Consumer protection
  • Integrity
  • Competition
164
Q 
Changes to the legislation as a result of the Test-Achats judgement affect which types of policy?
A) Income protection 
B) Professional indemnity 
C) Goods in transit 
D) Fire and special perils
A

A) Income protection

165
Q

Which of the following intermediaries must be capable of offering advice on the basis of a fair analysis of the market?
A) Lloyds managing agent
B) An appointed representative of a single insurer
C) An independent intermediary
D) An appointed representative of more then one insurer

A

C) An independent intermediary

166
Q

The case of Castellain V Preston (1883) laid down n important principle with regard to which feature of insurable interest?

A

The subject matter of the contract.

167
Q

Companies that manage one or more Lloyds syndicates on behalf of the members are known as?

A

Managing agents

168
Q

At common law a persons insurable interest in their potential legal liabilities include?
A) Their own legal costs only
B) The claimants damages only
C) The claimants damages and legal costs
D) The claimants legal costs only

A

C) The claimants damages and legal costs

169
Q

Under the law of agency what is an undisclosed principal?

A

Someone for whom an agent acts, while seeming to act on their own behalf.

170
Q

Which act is an example of a statute restricting liability and therefore insurable interest?

A

The Hotel Proprietors Act 1956

171
Q

The insurable interest of a shareholder in a limited company is limited to?
A) The value of the shares that they own
B) Their share of the value of the physical property owned by the company
C) The value of the companies assets, including any goodwill
D) The values of the companies assets excluding any goodwill

A

A) The value of shares that they own

172
Q

Legally when does a valid contract first come into existence?

A

When an offer is accepted unconditionally

173
Q 
A professional body that has equivalent rules to those of the FCA, membership of which allows an intermediary to be exempt from direct authorisation by the FCA is called?
A) Professional association
B) Designated professional body 
C) Market organisation 
D) Trade association
A

B) Designated professional body

174
Q

Which of the following statutes make tenants responsible for the upkeep of the buildings they occupy, giving them insurable interest?
A) The Hotel Proprietors Act 1956
B) The Trutee Act 1925
C) The Settled Land Act 1925
D) The Contracts (Rights of Third Parties) Act 1999

A

C) The Settled Land Act 1925

175
Q

What is the consideration given by insurers when an insurance contract is formed?

A

An agreement to pay claims in accordance with the terms of the policy

176
Q

Where a policy allows the insured to cancel mid-term, what is the generally accepted norm regarding how any return premium is calculated?

A

A pro rata return premium should be given

177
Q

How does the wording of the Lloyds standard fire policy differ from the ABI standard fire policy?

A

It provided marginally more cover for explosion

178
Q 
In the case of Pawsey V Scottish Union and National 1907 the proximate cause of a loss was defined to be? 
A) The final cause
B) The fundamental cause 
C) The active, efficient cause
D) The initial cause
A

C) The active, efficient cause

179
Q 
If a piece of equipment is insured on an indemnity basis, the measure of indemnity is the value of the property at the time and place...
A) It was originally purchased
B) The policy was incepted
C) When the loss occurs
D) Of replacement
A

C) When the loss occurs

180
Q

What type of policy is most likely to be arranged on a first loss basis?

A

Theft

181
Q

The measure of indemnity under a marine policy which has been arranged on a valued basis is determined by the…

A

Value agreed between the insured and the insurer

182
Q

Which of the following is a benefit of using the replacement option as a method of settling commercial glass insurance claim?
A) Further losses are minimised
B) The claim is settled directly by the glazing firm
C) The insured is given the option of upgrading from single to double glazing
D) The policy excess will not apply

A

A) Further losses are minimised

183
Q

What is meant by the term betterment?

A

The allowance made by insurers for improvements made to a property insured during repairs

184
Q

A liability policy provides indemnity to?

A

The insured in respect of their legal liability to pay damages and claimant costs

185
Q

Where buildings are insured on a reinstatement basis the sum insured must be at least what percentage of the actual rebuilding cost to avoid claim payments being reduced?

A

85%

186
Q

What is a benefit of using the replacement option as a method of settling commercial glass insurance claims?

A

Further losses are minimised

187
Q

What is the maximum limit of indemnity provided by a liability policy?

A

The amount stated in the policy

188
Q

A liability policy provides indemnity to the?

A

Insured in respect of their legal liability to pay damages and claimants costs

189
Q 
Under a commercial property damage policy, within what period of time must the insured usually notify their insurer of a claim for riot damage? 
A) 30 days 
B) ASAP
C)14 days 
D) 7 days
A

D) 7 days

190
Q

The purpose of the ABI Memorandum of Understanding - Subrogated motor claims is to:

A

Set out principles bases on honesty and transparency

191
Q

What term is given to a policy condition where the insurer agrees not to pursue damages against a third party.

Contribution waiver
A hold harmless clause
An indemnity clause
A subrogation waiver

A

A subrogation waiver

192
Q

How does the contribution condition in a policy affect an insurers liability for a claim where they’re is more than one policy in force covering the loss?

A

It states that all claims will be shared on a 50/50 basis

193
Q

Which type of policy would USUALLY contain a more specific insurance clause?

An employers liability policy
A product liability policy
A fidelity guarantee policy
A household policy

A

A household policy

194
Q 
Which of the following policies would never be subject to subrogation?
A)personal accident 
B)all risks 
C)household 
D)motor
A

A) personal accident

195
Q 
At common law, which of the following is not one of the requirements that must be satisfied before contribution arises?
A) common peril giving rise to the loss 
B) common sum insured 
C) common insurable interest 
D) common subject matter
A

B) common sum insured

196
Q

The principle of contribution supports which other insurance principle?

A

Indemnity

197
Q

Where a landlord/tenant relationship exists, this is most likely to give rise to subrogation in which of the following ways?
A) under the Law of tort
B) where the relationship is covered by statute
C) where there is total loss of subject matter
D) under the terms of the contract

A

D) under the terms of a contract

198
Q

What is meant by the term ‘salvage’?

A

The residual value of any property after insurers have paid out a total loss claim

199
Q

Who are staffed by an underwriter?

A

Syndicates

200
Q

No legal relationship=

A

No insurable interest

201
Q

All risks policy

A

Meaning the policy will cover any loss or damage to the property and/or materials other than certain specific exclusions

202
Q

Three stages of money laundering

A

Placement

Layering

Integration

203
Q

What is placement?

A

The process of putting cash into the financial system and converting it into other financial assets

204
Q

What is layering?

A

Concealing the origins of the money, the criminal will create a series of complex transactions

205
Q

What is integration?

A

Where the criminal finally gets access to they money

206
Q

Who must an authorised person that is regulated by the FSA appoint?

A

A money laundering reporting officer

207
Q

What is the primary objective of the PRA?

A

The Prudential Regulation Authority’s primary objective is to promote the safety and soundness of PRA-regulated persons.

208
Q

What is the PRA responsible for?

A

The PRA is responsible for the Prudential regulation of all ‘important firms’ such as insurers

209
Q

What is the Financial Conduct Authority’s main objective?

A

To protect and enhance confidence in the UK financial system

210
Q

What is the FCA responsible for?

A

The FCA is responsible for the conduct of business and market issues for all firms and prudential regulation of small firms

211
Q

What are the FCA’s three operational objectives?

A

Protection, integrity and completion

212
Q

A UK based company that is wishing to transact insurance in the EU must be authorised by?

A

The Prudential Regulation Authority

213
Q

To be authorised by the PRA a firm must be?

A

A firm must be operated by fit and proper persons and meet capital adequacy requirements

214
Q

ICOBS

A

Insurance: Conduct Of Business Sourcebook

215
Q

What sort of rules does ICOBS contain?

A

ICOBS contains rules concerning financial promotions, identifying clients needs, advising and selling standards and product disclosure

216
Q

What is money laundering?

A

Money laundering is the process by which money that has been obtained illegally is converted into legitimate funds

217
Q

What act establishes a number of offences around the handling of criminal property and the reporting of money laundering

A

The Proceeds of Crime Act 2002

218
Q

What is consumer protection?

A

Securing an appropriate degree of protection

219
Q

What are MLRO’s appointed for?

A

All suspicions that money laundering is taking place must be reported to the MLRO, who must decide whether these suspicions should be reported to the National Crime Agency.

220
Q

Who is an appointed representative?

A

An appointed representative is one for whose regulated activities, an authorised firm accepts responsibility

221
Q

Where there are two policies covering the same loss which both contain a non contribution clause, what is the effect on the two insurers liabilities for any claims that are made?

A

Each insurer is liable for its rateable proportion

222
Q

The principle of contribution supports which other insurance principle?

A

Indemnity

223
Q

When applying the principle of contribution, the two ways in which each insurers rateable proportion of a loss can be calculated are the:

A

Sum insured method and independent liability method

224
Q

Under the subrogation condition which is found in most insurance policies, at what stage in the claims process can an insurer pursue subrogation rights from a responsible third party?
A) When it has settled its own insureds claim
B) As soon as it’s own insured claim is notified
C) When it has agreed to deal with its own insureds claim
D) When it has agreed the amount of its own insureds claim

A

B) As soon as it’s own insureds claim is notified

225
Q

Where a landlord/tenant relationship exists, this is most likely to give rise to subrogation in which way?

A

Under the terms of a contract

IF1 ALL CHAPTERS IN ONE (1 decks)

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