Chapter 1 Flashcards
How many employees constitutes a small buisness?
Up to 49
What % of buisness’s in the uk are small?
99%
What are the three main types of small buisness?
Limited Companies, Partnerships, Sole Traders
Who owns a limited company?
The shareholders
What separates out competing insurers?
Price and Value
Who is responsible for the conduct of business regulation across the UK’s financial services industry and the prudential regulation of small firms, e.g. brokers and IFAs?
The FCA
Who is responsible for macro-prudential regulation and watching for emerging risks to the UK’s financial system?
FPC
Who is responsible for the micro-prudential regulation of systemically important firms, e.g. bank and insurers?
PRA
What does ICOBS stand for?
Insurance: Conducts of Business Source Book
Does the ICOBS rules apply to alterations, renewals or new buisness?
All of them
What is the difference between a consumer and a commercial customer?
consumers - a policyholder or potential policyholder acting outside their trade, business or profession; and
commercial customers – a policyholder or potential policyholder who is not a consumer.
What does IDD stand for and when was it introduced?
Insurance Distribution Directive in 2018
What does the IDD aim for?
To make it easier for firms to trade across borders and to strengthen policyholder protection by creating a level playing field.
What requirements does the IDD set out for insurance professionals?
To complete at least 15 hours of professional training or development a year.
What does the FCA define a venerable customer as?
‘someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care’
What are 4 key vunerablilitys?
Heath, Lifestyle, Resilience, Capability
Supervision is conducted through a risk framework based on three pillars, what are they?
Proactive supervision for the biggest firms
Event-Driven, reactive supervision of actual or emerging risks and
Thematic work that focuses on risks and issues affecting multiple firms or a sector as a whole
What does Thematic Work mean?
The definition of thematic is something with recurring ideas or a theme.
Thematic work is therefore a something repeated in a work environment consistantly.
Who does the FCA focus its highest level of supervision on?
Fixed Portfolio Firms with a large number of retail customers.
What differentiates a combined policy and a packaged policy?
Combined policy’s cater for risks where a number of different types of insurance is required. Each type is underwritten separately and grouped together with a single document and policy.
Packaged policy’s are underwritten as a whole for common trades based on historic information, it has pre determined rates and offers a single contract with the “full” package.
What three types of cover are on a typical packaged policy as standard?
Business Contents/Material Damage
Business Interruption
EL, PL Products Liability
Are schemes packages policies or combined policies’?
Niche Packaged Policies
What does a dual regulated firm mean?
Regulated by both the FCA and PRA
What rules do firms selling and administeding packaged commercial insurances need to abibe by and have systems and procedures in place to ensure they continue to abide by these rules?
The rules in the PRA Rulebook and FCA Handbook.
The regulations specific to the conduct of general insurances are contained in the Insurance: Conduct of Business Sourcebook (ICOBS), form part of the FCA Handbook
They must have processes in place.
What is a fixed portfolio firm?
Small number of large firms with a big market presence and customer footprint. They require the highest level of FCA supervision.
What is a Flexible Portfolio Firm?
The majority of regulated firms. Smaller is size than Fixed Portfolio Firms and have less FCA supervision.
What does each category of vulnerability mean? Health, Life Event, Resilience, Capability
Heath - illness or disability
Life Events - an event such as retirement or bereavement
Resilience - find it hard to cope low emotional resilience, low savings, in debt
Capability - unintelligent, poor written skills, low education, learning difficulties
