Chapter 1 - C

Question 1

A direct insurer can locate their administrative and underwriting centres anywhere in the country or overseas and still interact with customers. What gives them the ability to do this?

Answer 1

• Modern communications technology and telesales techniques.

- Online and telephones.

Question 2

Direct line managed to remove what when evaluating the value chain?

Answer 2

Duplication and Zero value adding.

Question 3

Price comparison websites are also known in the industry as what?

Answer 3

Aggregators.

Question 4

What is a price comparison website?

Answer 4

Online distribution channel where insurers and brokers allow access to their pricing for different risks. A customer will complete one set of questions and then be provided with multiple quotations. The customer can then approach the most favourable quote provider directly to complete a purchase.

Question 5

Why are price comparison websites criticised?

Answer 5

There is concern that only limited information is gathered at quotation stage which can affect the accuracy or willingness of an insurer to quote. Price comparison sites rank quotes on price and not on terms of cover, so can be misleading and not a clear reflection on the products.

Question 6

Banks and building societies have entered the personal insurance market at force. Why is this?

Answer 6

They have a large customer base already and an extensive distribution network to develop new customers.

Question 7

Many banks have become intermediaries, but how do they usually brand their cover?

Answer 7

In their own name.

Question 8

Banks may offer cover for? (List 3)

Answer 8

• Creditors insurance (when agreeing a loan).
• Life, household buildings or contents cover (when granting a mortgage).
• Own schemes (such as motor, travel, safe custody and students living away from home).

Question 9

What distribution channel can also be referred to as ‘white labelling’?

Answer 9

Retailers who offer an insurance product branded with their name but is underwritten by an insurance company or with a Lloyd’s syndicate.

Question 10

There are three other distribution channels who offer travel insurance. Name them:

Answer 10

• Travel and tour operators.
• Travel agents.
• Airports.

Question 11

An intermediary is usually paid commission on a premium by the insurer. This can be described as?

Answer 11

Brokerage.

Question 12

Intermediaries whose main business is not the transaction of insurance are called?

Answer 12

Agents.

Question 13

Agents are usually appointed representatives and will be limited to offering policies from one insurer. These are called?

Answer 13

Captive agents.