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IF 1 Insurance , Legal And Regulatory > Ch 2 The Insurance Market > Flashcards

Ch 2 The Insurance Market Flashcards

1
Q

What is HMRC ?

A

Her Majesty’s Revenue and Customs (HMRC) refers to the tax authority of the U.K. government.

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2
Q

Tax on general insurance premium is levied by

A

GOVERMENT

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3
Q

Who are exempt from IPT ?

A

Most long-term insurances, together with reinsurance and insurance on ships, aircraft and
goods-in-transit (internationally), are exempt from IPT.

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4
Q

Tax percentage levied on electrical appliances

A

20%

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5
Q

Tax rate for travel insurance

A

20%

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6
Q

EL insurance in the UK must be placed with an

A

Authorised insurer

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7
Q

In some province of Canada the liability aspects of motor insurance must be insured with the

A

Provincial government agency

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8
Q

Insurance Market structure

A

Buyers (policyholders/ insurerd)
Insurers ( sellers)
Intermediaries ( those who bring buyers and sellers together)
Comparison websites (aggregators)
Reinsurers (a further means of spreading risks )

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9
Q

Under which buyer they have a separate legal existence from those who owns the co

A

Limited liability companies

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10
Q

Which buyer do not have a separate legal existence

A

Partnership, each of the partners being jointly and severally liable

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11
Q

Who are the major buyers of insurance

A

Public bodies and includes local authorities and schools

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12
Q

Some public bodies are exempt from compulsory insurance requirements

A

Police forces..as an example do not have to insure their motor vehicles

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13
Q

Whenndo most exempt bodies still choose to insure risk

A

Where there is a real castrophe potential

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14
Q

Which buyer may act for members by arranging group covers or schemes

A

Charities, association and clubs

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15
Q

In which buyer the insured name is expressed as committee and members for teh time being

A

Unincorporated associations

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16
Q

Any insurers wishing to transact insurance in uk must be authorised by

A

PRA (Prudential Regulation Authority ) and FCA (Financial Conduct Authority )

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17
Q

Who can be distinguished from one another in terms of ownership and function

A

Insurers

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18
Q

FCA strategic objective

A

Is to make sure that the relevant makets function well

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19
Q

Types of insurers defined by ownership

A

Proprietary cos
Mutual companies
Captive companies
Protected cell cos
Lloyd’s

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20
Q

Which cos have a share value in the recognised financial exchanges

A

Publicly quoted companies

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21
Q

Co which are owned by the shareholders

A

Proprietary companies

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22
Q

Under which cos, company’s profit after expenses and reserves , belong to shareholders

A

Proprietary companies

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23
Q

Proprietary cos are limited or unlimited liability cos

A

Limited liability Co s as shareholders liability for teh Cos debt is limited to the nominal value of teh shares they own

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24
Q

Mutual cos are owned by the

A

Policyholders

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25
Q

Under mutual cos, share in the profits of the co by the way of

A

Lower premium

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26
Q

Mutual cos are limited by

A

Guarantee, with a policyholders maximum liability usually limited to their premium

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27
Q

Who are self managed pools of insurers

A

Mutual indemnity associations

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28
Q

Which insurer is a tax efficient of transferring teh risk

A

Captive insurance

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29
Q

Which insurers do not offer insurance to general public

A

Captive insurers

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30
Q

Who created a new kind of captive insurer, the protected cell company

A

In 1997, Guernsey

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31
Q

PCC operates in two parts

A

Cores
Unlimited number of cells

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32
Q

Which entity has a single board of directors..is a single entity …

A

Protected cell companies

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33
Q

Types of insurers defined by function

A

Composite cos
Specialist insurers

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34
Q

Which companies represent major part of the company market

A

Composite companies

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35
Q

Which issuers tend to issue policies for only one class of insurance

A

Specialist insurers

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36
Q

Type of insurance that has its roots in the Islamic financial service industry

A

Takaful

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37
Q

Takaful in Ana Arabic word meaning

A

Guaranteeing each other

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38
Q

On which type of transactions..takaful insurance Co is based on the ruling of sharia law

A

Financial and commercial transactions

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39
Q

Takaful insurances embraces the islamic principles of

A

Mutuality and cooperation
Shared responsibility
Joint indemnity
Common interest
Solidarity

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40
Q

Takaful insurance products need to be approved by

A

Islamic scholars ( to ensure they are compliant )

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41
Q

Who is the 1st one to offer Islamic insurances policies for building and contents

A

Major high street bank

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42
Q

Who acts as a guarantor to the insurance sector for terrorism risks and flood risks

A

The State

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43
Q

What is levied by the government on general insurance premium in the UK

A

Insurance premium tax (IPT)

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44
Q

What % of IPT is for domestic and electrical appliances

A

20%

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45
Q

Who are exempt from IPT

A

Long-term insurances, together with reinsurance and insurance on ships, aircraft and goods in transit ( internationally)

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46
Q

When should insurer account to HM revenue and customs (HMRC)

A

Quarterly

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47
Q

What is MIb s purpose ( Motor Insurers Bureau )

A

Was to enter the agreement with the government to compensate the victims of negligent, uninsured or untraced motorist

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48
Q

MIB

A

It’s a pvt co ..limited by guarantee

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49
Q

MIB functions on

A

2 separate agreements
1.Untraced Drivers Agreement
2.Uninsured Drivers Agreement

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50
Q

Uninsured Drivers Agreement

A

Is concerned with TP perpsnal injury or TP property damage,when there is no motor insurance policy I’m force

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51
Q

Who is able to reinsurer a risk that it holds because it stands to lose financially as a result of any claim payment

A

Insurer

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52
Q

The insurer is able to pass any ( or all ) of the risk to another insurer as

A

Reinsurance

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53
Q

Reinsurance may be used to share losses

A

On a risk by risk basis

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54
Q

Do insurer and reinsurer has a contractual relationship

A

NO

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55
Q

Who prefer to see stability in insurance companies

A

INVESTORS

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56
Q

Who helps by spreading the cost of very large losses over a period of time

A

Reinsurance

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57
Q

When insurers arrange reinsurance on a single known risk its known as

A

Facultative reinsurance

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58
Q

Insurers arrange facilities to enable them to place a range of risks that fall within the agreed criteria .These arrangements are called

A

TREATIES

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59
Q

When insurer decides to underwrite a new class of business they must register their intention to do so with the

A

PRA

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60
Q

What would create significant problems for the placing of insurance risks

A

The practice of each insurer accepting only its own net share

61
Q

Extra capacity provided particularly by which arrangements

A

TREATY ARRANGEMENTS

62
Q

Once new class of business is agreed by PRA then they would need support of

A

REINSURERS

63
Q

Who usually offer cover to cos owned by the same parent co

A

CAPTIVES

64
Q

Reinsurer are limited or unlimited

A

Often limited liability cos with substantial amounts of paid up capital

65
Q

Reinsurance accepts risk from

A

Insurer ( also known as reinsured) or through reinsurance broker

66
Q

Main Types of reinsurance

A

Specialist reinsurance cos that do not transact original ( direct) insurance business
Lloyd’s syndicates
Insurance cos that also act as reinsurer

67
Q

Reinsurance is provided to

A

Insurance cos
Lloyd’s syndicates
Other reinsurers

68
Q

Reinsurers they too seek to transfer some of their risks to other Reinsurers.This is called

A

Retroceding and the risk placed in this way is called retrocession

69
Q

The insurer who buys the reinsurance cover is known as

A

Reinsured , cedant or the ceding office

70
Q

2 main reinsurance centres are

A

Lloyd’s
the International Underwriting Association of London (IUA)

71
Q

The largest representative organisation for international wholesale insurance and reinsurance cos in the world

A

International Underwriting Association of London (IUA)

72
Q

Whos responsible fpr representing its members cos ,the provision of information services and research

A

The international underwriting association of London (IUA)

73
Q

Public function of LUc (London underwriting Centre)

A

To produce clause wordings for the London market notably for marine insurance

74
Q

Task of underwriters

A

Is to manage the pool as effectively and profitably as possible

75
Q

Chartered loss adjusters are members of

A

CILA * Chartered Institute of loss adjusters

76
Q

Who are independent professionally qualified persons

A

LOSS ADJSUTERS

77
Q

Who are loss accessors

A

They are expert in dealing with insurance claims for the insured / policy holder, preparing and negotiating claims on their behalf

78
Q

Who carries variety of function on behalf of insurers which are relevant to risk assessment

A

Surveyors

79
Q

What is best known in crime scene investigation

A

Forensic analysis

80
Q

Professionally qualified persons who apply probability and statistical theory to problems of insurance investment ,financial and risk management and demography

A

Actuaries

81
Q

Technique used by actuaries are

A

Probability of loss and teh prediction of claim nos and future values

82
Q

The cos actuarial function has a key role to play in meeting

A

Solvency II

83
Q

Main role is to ensure that their firm abides by the rules and regulations set down by the regulator

A

Compliance officer

84
Q

Many risk managers are members of

A

Trade associations
IRM ( institute of Risk Management)
Association of Insurance and Risk Managers in Industry and Commerce

85
Q

Who is the largest of the insurance market association

A

ABI ( Association of British Insurers ) formed in 1985

86
Q

Also confers with the Govt.on matters of interest to its members

A

ABI ( Association of British Insurers )

87
Q

The AbI falls under 2 councils

A

The general insurance Council
The life insurance council

88
Q

It’s a co limited by guarantee which has a chief executive and is governed by an elected board mainly compromised of senior market figures

A

IUA ( International Underwriting Association of London )

89
Q

Much of the business of member cos is centred upon the LUC in the city of London

A

IUA (International Underwriting Association of London

90
Q

Major non statutory trade association for insurance intermediaries

A

BIBA ( British Insurance Brokers Association)

91
Q

Members Agent

A

Is effectively form of specialist adviser.They specifically advise potential individual members on the adv and disadv of investing in the Lloyd’s markets, syndicate selection and performance, reserve requirement and compliance issue .

92
Q

Many brokers operating in the London market are known as

A

Lloyd’s brokers

93
Q

Most risk are placed using a

A

MRC ( Market Reform Contract ) still known as slip

94
Q

Document can be used as the evidence of the final contract rather than a formal policy being issued

A

MRC ( Market reform Contract /also knwn as slip

95
Q

Leader

A

A broker who will obtain a quotation from an underwriter recognised as a leader in a particular class of business

96
Q

Subscription underwriting

A

Each underwriter that the broker approaches will accept a percentage share .this sharing of the risk between a number of insurers is knwn ad subscription underwriting

97
Q

Who manages central risk data capture and money movement systems for the entire London market

A

Xchanging

98
Q

Which insurance will b placed by a single underwriter

A

MOTOR

99
Q

Involved putting all the business from the 1993 year and prior into a specialist reinsurer known as equitas

A

Reconstruction and renewal

100
Q

Individuals provides financial backing for Lloyd’s syndicates

A

NAMES

101
Q

One of the main ingredients of a valid contract ( of insurance or otherwise)

A

Meeting of minds

102
Q

Within how many days contractual document should be shared to the client

A

30 calender days for commercial or seven working days for consumers

103
Q

If a broker is involved then its whos responsibility foe making sure that contract certainty is achieved

A

Both the broker and the underwriters

104
Q

An insurance intermediaries is an

A

Agent

105
Q

Whos is an agent

A

An agent is one who is authorises by one party , termed the principal to bring that principal into a contractual relationship with another , termed the Third Party

106
Q

Authorised person

A

Is an individual or firm authorised by FCA to engage in regulated activities

107
Q

Umbrella organisation have been created that are known as

A

Broker networks

108
Q

Who is the largest of the insurance market association

A

ABI ( Association of British Insurers )

109
Q

Who confers with the govt on the matters of interest to its members

A

ABI ( Association of British Insurers )

110
Q

ABI works under 2 Council

A

The general insurance Council
Life Insurance Council

111
Q

Who is the major non statutory trade association for insurance intermediaries

A

BIBA ( British insurance Brokers Association )

112
Q

Who seeks to maintain and improve highest standards of business behaviour and to protect the interest of its members for the benefit of the general public

A

BiBA ( British insurance Brokers Association )

113
Q

Which is the world’s largest representative organisation for international and wholesale insurance and reinsurance cos

A

IUA (International Underwriting Association of london)

114
Q

IUA (International Underwriting Association of London) is a merger of

A

ILU ( institute of London Underwriters) representating marine companies and the London insurance and reinsurance market association, (LIRMA) representing non marine and reinsurance interests

115
Q

An independent trade body,Representing the interest of insurance and reinsurance brokers operating in the London and international markets

A

LlIBA ( London and International Insurance Brokers Association)

116
Q

Which type of buyer is the largest multinational corporation with a multi million pound worldwide premium spend to the self employed sole trader working from home

A

Companies

117
Q

What is company’s solvency margin

A

Is the difference between its assets and its liabilities

118
Q

What is marketing means as per chartered institute of marketing

A

Means the management process which identifies, anticipates and supplies customer requirements efficiently and profitably

119
Q

Marketing mix

A

In insurance terms, marketing process involves making decision on product, price ,promotion and place ( the later two involving distribution)

120
Q

Specialist type of intermediary who also has delegated authority to act for one or more insurers

A

Managing General Agent (MGA)

121
Q

Bancassurance

A

The arrangement between a bank and an insurance Co whereby insurance products are sold to the banks customers ..traditionally through its Bank branches

122
Q

Who uses Web based extraction tools to collect and analyse information from different data sources

A

A price comparison website

123
Q

Term used for information retrieval for goods and services on internet

A

Aggregation

124
Q

Who acts as a partial regulator for those organisations offering insurance within that marketplace

A

Lloyd’s

125
Q

Group of pvt individuals also known as names or corporate members who actually carry the risks ( they provide the financial banking)

A

Syndicates

126
Q

Which agents are dual regulated

A

Lloyds managing agents

127
Q

Managing agent

A

Each syndicate outsources the day to day running of the insurance business to an organisation known as managing agent

128
Q

Effectively a form of specialist financial adviser

A

A members agent

129
Q

Most risk are not placed using a prosal form but using a

A

Market reform contract (MRC) still known as slip

130
Q

Which document can be used as the evidence of the final contract .rather than a formal policy being issued

A

MRC/ slip

131
Q

Subscription underwriting

A

Each underwriter that the broker approaches will accept a percentage share.This sharing of the risk between a number of insurers is known as subscription underwriting.

132
Q

Who manages central risk data capture and money movement systems for the entire London market ( so both Lloyd’s and cos)

A

Xchanging

133
Q

Who will manage the collection of the net premium from the broker and the distribution to the appropriate Lloyd’s and London Co market insurers

A

Xchanging

134
Q

Which individuals provide financial backing for Lloyd’s syndicates

A

Names

135
Q

An insurance intermediary is an

A

Agent

136
Q

AII ( ancillary insurance intermediary)

A

Is a person that distributes insurance on an ancillary purpose and whose principal activity is not insurance distribution

137
Q

Appointed representative (AR)

A

May br an individual or a company that is appointed by an authorised person (the principal) under the terms of a contract

138
Q

May b acting for an insurer or for an intermediary that is itself directly authorised by the PRA or FCA

A

Appointed representative (AR)

139
Q

Who may act for more than one principal

A

AR (appointed representative)

140
Q

The expression broker is widely used within the insurance market.A firm that uses this term in its title

A

Usually provides independent advice

141
Q

Which type of intermediary does not need to be authorised by FCA

A

An appointed representative

142
Q

Who has responsibility for ensuring that an insurance Co abides by the rules and regulations set down by the regulator

A

Compliance oversight function

143
Q

What best describes the main type of insurance risks dealt with in the London market

A

Complex or worldwide large risks

144
Q

An intermediary who provides advice but does not need to be directly authorised by the UK regulator is

A

Appointed representative

145
Q

A loss adjusters role is primary to

A

Process more complex claims from start to finish

146
Q

Within the Lloyd’s market ,what is the role of the marketing agent

A

They manage the underwriting of one or more syndicates

147
Q

Which regulators ensures that UK insurance Co has adequate solvency levels

A

PRA ( Prudential Regulation Authority )

148
Q

Between which 2 parties the contract of certainly exist in the London market

A

The insured and the insurer

IF 1 Insurance , Legal And Regulatory (13 decks)

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