Chapter 1 Flashcards
How many motor insurers offer Motorcycle insurance?
A small number of insurers
How many vehicles do there usually have to be for a fleet policy to be considered?
5 vehicles
Fleet policies are usually based on what to get premiums?
Claims history but also types of vehicles, cover required, ect
What is a home fleet policy
Where the number of cars outweighs the number of drivers
New entrants to the market cause what?
A softening of the market which as a result causes lower premiums
If insurers exit the market and capacity reduces what happens?
This causes the market to harden and rates usually increase
Both private car insurance and motorcycle insurance tend to be what driven?
Process driven due to the demand
What is the difference between a commercial vehicle policy and a fleet policy?
Fleet policies are rated as a collective based mainly on claims history. Commercial vehicle policies are rated on 1 vehicle at a time.
Give an example of a direct sell company
Direct Line, NFU Mutual, Tesco
What factor is no longer taken into account for insurance premiums?
Gender
What happened in November 2008 in the lloyds market?
The restriction that only a lloyds broker could place business at lloyds was removed
What does ICOBS stand for?
Insurance: Conduct of Business Sourcebook
who are the 2 main regulators of the insurance industry
PRA Prudential regulation authority
FCA Financial conduct authority
Who’s handbook do the ICOBS make part of
FCA
What do the ICOBS do?
They outline standards intermediaries must comply to
How is the market split in terms of insurers?
Direct sellers and brokers and lloyds brokers
What did The Law Commission review focus on?
-Customers’ duty of disclosure
-Misrepresentation
-Breach of Warranty
What does a direct sell intermediary do?
They act in every way that the insurer would without carrying the actual policy risk
What is the Consumer Insurnace (Disclosure and Representations) Act 2012?
It attempts to address deficiencies in
consumer insurance contract law in major areas, including
misrepresentation and non-disclosure by the insured before
the contract is made, remedies for breach, warranties and
similar terms
What is the role of the MIB (Motor insurers’ Bureau)?
It acts as an insurer’s last resort. It is there to only be called upon to pay in the event there is no insurer for the responsible driver or the driver can not be traced.
Who pays the liabilities of the MIB?
It’s members.
Is it compulsory for an insurer to be a member of the MIB?
Yes, every insurer who transacts motor risks must be a member
For a property damage claim to be considered. Who needs to be informed and how quickly?
The police and 5 days
What used to be the excess for property damage claims under the uninsured drivers agreement?
£300 before 2007
What are the 2 key points about the green card section of the MIB?
- Deals with accidents that occur overseas.
- It does not pay compensation.
What is the UKIC and what does it do?
The UK Information Centre is responsible for maintaining a register of vehicles normally based in the UK. They use the Motor Insurance Database to identify insured vehicles by registration number.
What was the MID project set up for?
To help reduce the number of uninsured vehicles in the UK
What new offence did Section 22 of the Road Safety Act 2006 introduce?
A new offence of being the registered keeper of a vehicle which
does not meet statutory insurance requirements.
Who runs the Police Helpline?
The MIB
Where a direct sell intermediary carries out underwriting and claims, what action will the insurer normally take to avoid the broker taking on unacceptable risks?
Offer a profit-sharing arrangement.
Who is legally responsible for providing the insurance details of a commercial vehicle to the Motor Insurance Database?
The policyholder.
Which commercial motor risks are most likely to transact insurance directly with insurers?
Local authorities.
Which body oversees the Money and Pensions Service?
The FCA
Why might a British national contact the UK Information Centre if they have a motor accident with a motorist from the EU, in a country operating the Green Card system?
To identify the insurer of the foreign vehicle involved.
What does the Untraced Drivers’ Agreement cover?
The Agreement
covers ‘hit and run’ cases where the negligent driver remains
unidentified and applies to compensation for personal injury
or death and,property damage.
What does the MIB Police Helpline do?
The Police helpline means police can now seize any vehicle they believe to be uninsured.
What are the 2 main functions of the DVLA?
- to regulate the issuing of licences to drivers; and
- to regulate the issuing of licences for vehicles and
registration of vehicles.
How can the DVLA database be used?
- When the driving license is missing or an incorrect
document may have been produced. - To trace the registered keepers of vehicles involved in road
traffic accidents whom the insurer may want to pursue for
claims. - To find out the exact specification of a vehicle.
Why do some insurers request your driving license number?
Insurers will be able to get information from
the DVLA on the type of licence a customer holds, how long
they have held it and whether there are any driving
convictions.
What does the FCA regulate?
The conduct of business
What is the FPC
Financial Policy Committee
What are the 3 operational objectives of the FCA?
CCI
Consumer protection
Integrity
Competition
Under the ICOBS how is a consumer defined?
a consumer is a natural person who is acting for purposes which are outside his trade of profession.
Under the ICOBS how is a commercial customer defined?
a commercial customer is anyone who is not a consumer.
How many parts are the ICOBS split into?
8 parts
What does ICOBS 1 cover?
Application. It explains who the rules apply to, how they apply and the extent of them.
What does ICOBS 5 cover?
identifying clients needs and advertising. Explains a firms responsibility to ensure suitable advice to any customer who is entitled to rely on their judgement. Also provides advice on demands and needs.
What section of the ICOBS rules covers the right to cancel within 30 days for pure protection contracts and payment protection contracts and 14 days for any other contract of insurance?
section 7 cancellation
Which section of the ICOBS covers general matters and what does it detail?
section 2. It relates to client categorisation these include:
Communications to clients. Stating all communication must be clear and fair and not misleading.
Management of conflicts of interest.
Record keeping.
Exclusion of liability.
Section 3 covers what for the ICOBS?
distance communications. This section mirrors the distance marketing directive.
Claims handling is covered in what section of the ICOBS and what does it detail?
Section 8. Clarifies how policyholders should be able to access reasonable guidance to help make a claim and provide updates on its progress. It also outlines how insurers cannot decline a claim for unreasonable grounds such as misrepresentation where not intentional. It does however, also provide reasons for an Insurer to decline to pay a claim
What ICOBS section covers the following points:
1. A firm must provide the customer the following information before a contract is confirmed.
1a. It’s name and address
1b. The fact it is included within the FCA register
1c. Whether is has a direct or indirect holding representing more than 10% of the insurance voting rights.
1d. Whether the company is owed by a parent company owning more than 10%.
ICOBS 4: Information about the fir, it’s services and remuneration.
How many outcomes did the fair treatment of customers initiative have?
6 outcomes
Give 2 of the key provisions of the Insurance Distribution Directive.
Professionalism
Commission Disclosure
New Product Governance Requirements
