Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

M81 Insurance broking practice > Chapter 1 > Flashcards

Chapter 1 Flashcards

1
Q

If the agent falls short of their duties…

A

the firm and the agent are liable = vicariously.

Confirmed in Merrit vs Babb

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

The retail broker acts on behalf of the…

A

Insured

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Wholesale broker is acting on behalf of…

A

The Producing/retail broker

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Reinsurance broker acts on behalf of…

A

The ceding insurer = client

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

When does the broker act on behalf of the insured and the insurer?

A

1) Motor cover notes
2) Delegated authority
3) Delegated claims authority
4) Proposal forms

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

When the broker has binding or delegated authority the broker is deemed to be…?

A

1) Acting as the agent for the insurer

But must take care when acting for the insured at the same time

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What did HIH casualty and general insurance and general insurance VS JLT Risk solutions look at?

A

When a broker is acting on both the insured and reinsured.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What did the judge hold at HIH casualty and general insurance and general insurance VS JLT Risk solutions?

A

1) Where a broker is acting for two principles, it does not absolve the broker owing a duty to each.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What legal duties does the law of agency impose on insurance brokers?

A

1) The broker must follow the lawful instructions of their principal
2) Agents must obey instructions and seek clarification if instructions are unclear.

This can be expressly written into a TOBA

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Brokers must perform their duties and tasks (under the law of agency)…

A

Themselves and not delegate.

Unless they express permission from their principal - these are usually administrative tasks.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

The agent has a duty to exercise…

A

Reasonable skill and care. Has a continuing duty of care.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

If a broker does not exercise reasonable skill and care…

A

Principal may hold them legally responsible.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

The agent/principal relationship is a….one?

A

Fiduciary one = one of trust

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What must brokers do because of the fiduciary relationship?

A

1) Account for all monies

2) Keep adequate records

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

If a broker gets any secret profits or commissions…

A

Can be recovered by the principal.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Any fees will be taken…

A

In lieu of brokerage/commission - Unless permission given by the client to receive additional income.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

A secret payment becomes a bribe when….

A

Paid to the agent without principals knowledge. This can be a criminal offence.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Brokers must not what regarding confidential client information?

A

Make use of confidential client information that they acquired in their capacity as an agent for the benefit of their selves or that of a third party.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Agents are required to act in the be….

A

The best interests of the client and should seek to avoid conflicts of interest.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What is key and a focus of the FCA

A

Transparency.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

How could close links with a particular insurer lead to a conflict of interest.

A

Broker owned by an insurer

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

How could personal conflicts lead to a conflict of interest.

A

Shares owned by a broker. Have to be significant.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

How could insurance and reinsurance lead to a conflict of interest.

A

Large broking firms that conduct both insurance and reinsurance.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

How could binding authority or claims handling authorities lead to a conflict of interest.

A

Inherent risk where the broker is working for the insured and insurer

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

How could a lloyds broker lead to a conflict of interest?

A

Where brokers perform services for lloyds underwriters. such as claims handling.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

How can potential conflicts also arise?

A

Payments of contingent commissions or overriders = Payments made to the broker in form of additional commission/profit shares.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

What are other inducements?

A

1) Premium finance - Brokers may own or participate in a premium finance provider
2) Soft loans and cash gifts = product providers may make large gifts to intermediaries in return for the providers being placed on a brokers panel.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Circumstances where the broker is acting with two or more clients with similar interests….

A

1) Clients are involved in the same claim and the broker is acting for more than one party.
2) Clients are competing for limited capacity in the market.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

Principals duties include…

A

1) Provide remuneration (commission/brokerage)

2) indemnity for expenses

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

Brokerage is earned…

A

on inception of the contract

31
Q

It has been held that a broker can keep their commission if the contract has been

A

subsequently cancelled.

32
Q

The agent cannot claim expenses…

A

In respect of any unauthorised actions or losses caused by their own negligence.

33
Q

Under the law of agency, any breach of duty gives rise to…

A

1) The right to terminate

2) receive damages

34
Q

A breach occurs by the principal if they fail to…

A

remunerate or indemnify the agent.

35
Q

A agent can, in light of a breach by the principal..

A

Exercise a lien over any goods held by the agent belonging to the principal.

36
Q

Where a agent is in breach of their obligation the principal can…

A

1) Terminate the agency

2) Sue for breach of contract.

37
Q

A broker owes a …. to a third party. What case confirmed this?

A

A duty of care even if there is no contractual link.

This was confirmed in a case about negligent misstatement called Hedley Byrne vs and heller and partners.

38
Q

What did Youell vs bland welch and co hold?

A

An insurance broker owes a duty of care in negligence towards his client whether bound by a contract or not.

39
Q

A brokers role is more than just a….

A

Post box

40
Q

What did GNER vs JLT Corporate risks discuss?

A

1) The duty for a broker to be proactive

2) Confirmed a continuing duty after placement of cover to ensure clients requirements carried out.

41
Q

What do brokers owe underwriters?

A

1) A duty of care.
2) They must present all information at their disposal so that underwriters can make a fair and reasonable assessment of the risk.

42
Q

What did Fisk V brian Thornhill and son conclude?

A

1) That there was a breach of duty to the insured for not obtaining a satisfactory completed proposal form.
2) Providing warranties on behalf of the insured without authority.
3) Failing to warn insured of new insurers and new policy conditions

43
Q

What was held in Tudor Jones and marsh vs Crowley colosso ltd

A

That not checking an exclusion clause in accordance with the clients instructions should be apportioned between producing and placing brokers.

44
Q

What was the three part stage in Hedley vs Brynes to determine negligent misstatement?

A

1) special relationship between parties (not a contract) where it is responsible for the client to rely on the advice
2) The giver of advice can reasonably foresee that the advice is likely to be acted upon
3) The advice is acted upon

45
Q

Under the consumer insurance (disclosure and representations) act 2012 what must consumers do?

A

1) Reasonable care not to make a misrepresentation
2) Duty to volunteer information
3) Answer all of the insurers questions fully and accurately.

46
Q

material information comes down to…

A

The brokers experiance and needs to be disclosed to insurers

47
Q

The clients loss experiance is info that…

A

Should be disclosed to insurers and includes claims that were made and any uninsured losses.

48
Q

Uninsured losses include…

A

1) Self insured losses

2) Unintentionally uninsured losses

49
Q

Under the insurance act 2015…

A

Commercial customers have a duty to make a fair presentation of the risk =

1) information that the insured knows or ought to know
2) Info that puts a prudent info on notice that it needs to make further enquiries to those material circumstances.

50
Q

A material circumstance =

A

A circumstance or representation that would influence the judgement of a prudent insurer in determining whether to take the risk and if so on what terms.

51
Q

All disclosures under the IA 2015 MUST BE

A

Substantially correct and made in good faith.

52
Q

How did the enterprise act amended the insurance act

A

Added an implied term to every contract of insurance that insurers must pay any sums due in a reasonable time or insurer can pursue claim for late payment damages

53
Q

What does the dotorine of privity of contract state?

A

That only parties to a contract can sue or be sued.

Therefore a contract cannot confer a benefit on any third party or impose a duty on any third party.

54
Q

What does the contracts rights act 1999 provide?

A

An exception to the doctrine of a privity of contract.

55
Q

What does the contracts rights act 1999 allow a third party to do?

A

Allows a third party to enforce a contractual term if the contract provides that they may do so

Or the contract purports to confer a benefit on a third party.

Insurers don’t like this so tend to exclude it.

56
Q

What does the Third parties act 2010 set out to do?

A

To protect insurance proceeds from the effects of insolvency.

Permits a third party to bring a claim directly against an insurer.

57
Q

Data controllers…

A

say why and how personal data is proccessed

58
Q

Data processors

A

act on the controllers behalf

59
Q

Personal data =

A

Data that can be contributed to a particular individual

60
Q

Sensitive personal data =

A

Special categories of personal categories.

61
Q

Personal data should be;

A

1) Processed fairly and in a transparent manner
2) Collected for specified, explicit and legitimate purposes
3) adequate, relevant and limited to what is necessary in relation to the purposes for which the personal data is processed
4) accurate and kept up to date
5) Kept for no longer than is neccessary
6) Processed in a manor which ensures appropiate security.

62
Q

The right to be

A

Informed

right to access

rectification

Erasure

Restrict processing

data portability

reject

rights in relation to automated decision making and profiling.

63
Q

In the event of a breach…

A

A company has 72 hours to report the breach to the information commissioners office or ICO who has the power to issue fines up to 17 million or 4% of a global companies turnover.

64
Q

Money acquired by a illegal means =

A

Dirty money

65
Q

The proccess of cleaning the money is called…

A

Money laundering

66
Q

What are the three stages of money laundering?

A

Placement = Money into the financial system which could be done by turning the money into seperate financial assets

Layering = As many transactions are made as possible to create misdirection as to the whereabouts of the money

integration = clean money

67
Q

Proceeds of crime act states that a criminal can cause an offence if they

A

1) Conceal disguise or convert criminal property
2) acquire use or possess criminal property
3) Enter into or become concerned with an arrangement which they know or suspect may facilitate a money to acquire use or retain criminal property
4) Know, suspect or have reasonable grounds to suspect that a person or transaction in the course of business involves money laundering but fails to report it as soon as practicable
5) Tip off suspected money launders

68
Q

Fraud is a problem, therefore brokers must..

A

take measures to:

1) Prevent
2) detect
3) combat fraud and

reduce financial crime

69
Q

under the Fraud act 2006 someone is guilty of fraud if they

A

1) Make a false misrepresentation
2) Failing to disclose to another information which there is duty to disclose
3) Dishonestly abusing position.

70
Q

What are the four major offenses under the bribary act 2010

A

Bribing someone else

being bribed

Bribing a foreign public official

Failing to prevent bribary = corperate offence and passive offence

71
Q

Directors have the duty to

A

ensure there is clear training and systems and controls to prevent bribary.

72
Q

Financial sanctions can be imposed on…

A

1) Individuals
2) Entities
3) Governments

73
Q

Financial sanction orders…

A

Prohibit insurance brokers from carrying out transactions from a specific person or organisation.

M81 Insurance broking practice (8 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions