chapter 1

Question 1

1. State the four main groups in the insurance market.

Answer 1

insurance buyers, insurance providers , distribution channels & re insurers

Question 2

List the four main types of insurance buyers.

Answer 2

• private individuals
• commercial concerns
• public bodies
• associations and clubs.

Question 3

3. Explain the term ‘affinity group’.

Answer 3

Affinity groups are groups of people with a common interest or connection, who work together to
achieve a common goal, e.g. to obtain discounted premium rates or exclusive insurance schemes. Trade
unions are examples of affinity groups.

Question 4

State the difference between specialist and composite insurers.

Answer 4

Composite insurers accept several classes of insurance business but specialist insurers only accept a
specific class(es) of business.

Question 5

Outline the main incentive for creating a captive insurance company in Ireland.

Answer 5

The main incentive for creating a captive insurance company in Ireland is that it provides a more
favourable corporate tax system than most other countries.

Question 6

Outline the primary function of the State Claims Agency (SCA).

Answer 6

The State Claims Agency (SCA) manages personal injury claims (both injuries to employees and to
members of the public), property damage and clinical negligence claims brought against certain State
authorities

Question 7

Outline the key advantages, from an insurer’s perspective, of selling insurance directly to the customer

Answer 7

The key advantages, from an insurer’s perspective, of selling directly to the customer are:
* Reduced costs – no intermediary commission or fees
* Efficiency – ease and speed of selling insurance is improved as immediate cover can be granted
over the phone and internet.

Question 8

List the main reasons why customers purchase private health insurance

Answer 8

Customers purchase private health insurance for the following reasons:
* the high cost of medical treatment
* a perceived lack of access to public health services
* the perceived standard of public health services

Question 9

Identify the main types of reinsurer

Answer 9

The main types of reinsurer are:
* specialist reinsurers that do not sell insurance, only reinsurance
* Lloyd’s syndicates
* insurance companies that also act as reinsurers

Question 10

Outline the main role of Insurance Ireland.

Answer 10

The role of Insurance Ireland is to represent and advocate on behalf of its members to Government,
state agencies, regulatory bodies, public representatives, other national interest groups, the media and
the general public. Insurance Ireland also represents its members on a European and global level and
keeps them up-to-date on relevant policy and regulatory developments. It provides a forum for member
debate and policy formulation on such issues.

Question 11

Explain the purpose of the Declined Cases Agreement (DCA).

Answer 11

The purpose of the Declined Cases Agreement (DCA) is to assist those who are finding it difficult to
obtain insurance quotes for compulsory third party motor insurance.

Question 12

Explain the main function of MIBI

Answer 12

The main function of MIBI is to compensate victims of road traffic accidents caused by uninsured or
unidentified vehicles.

Question 13

Sarah is a selfemployed architect
operating as a sole
trader. She wants to
arrange a policy to
cover her business
activities. Is Sarah
categorised as a
private individual
or a commercial
concern?

Answer 13

Sarah is categorised as a commercial concern as she is providing a business service and the insurance
she is purchasing is for business purposes rather than private purposes. However, as you will learn later
in your studies, Sarah would be classed as a consumer by the Central Bank and consumer protection
legislation as her revenue would likely be under €3 million.

Question 14

What is unique
about the owner of
a captive insurance
company?

Answer 14

The owner of a captive insurer is always a non-insurance parent company and the captive insurer only
insures the risks of that particular parent company

Question 15

Price comparison
websites are proving
popular among
insurance customers
at the moment. Can
you think of any
disadvantages to
using them?

Answer 15

One disadvantage is the tendency to focus on price rather than cover, key product features and
wordings; another is the inability to easily obtain answers to questions that may arise in the purchasing
process.

Question 16

Name three types of
reinsurers.

Answer 16

Reinsurers can be:
* specialist reinsurers
* Lloyd’s syndicates
* insurance companies.

Question 17

Which type of
intermediary deals
mainly with private
health insurance?

Answer 17

Employee benefit consultants deal mainly with private health insurance.

Question 18

During the night,
John’s parked car
was struck by a
car. There were
no witnesses. The
impact sent John’s
car through the
front wall of his
house causing
€120,000 worth
of damage. How
much compensation
can John expect
to receive from the
MIBI?

Answer 18

John will not be able to claim from the MIBI as the damage to John’s property was caused by an
unidentified vehicle. However, if the vehicle is comprehensively insured and the house is also insured,
he can claim from his insurers without his no claims discount being affected.