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M81 Insurance broking practice > Chapter 2 > Flashcards

Chapter 2 Flashcards

1
Q

A non investment insurance contract =

A

A contract or policy of insurance.

Includes;

1) General insurance
2) Pure protection = Term life, critical illness and income protection

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2
Q

An interemdairy is someone who

A

For remunerationm takes up or pursues insurance mediation.

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3
Q

Insurance mediation =

A

Activities of introducing, proposing or carrying out work preparatory to the conclusion to the contract of insurance.

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4
Q

Firms are to be regulated by the FCA if they carry out the following regulated activities…

A

Arranging/Advising/Dealing/Assisting

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5
Q

Introducers =

A

Those who display promotional material products but do not provide any opinion on the product

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6
Q

Conclusion of contract =

A

Moment when the customer accepts the insurers quotation

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7
Q

Durable medium =

A

Format that allows for storage of info.

Must be accessible for future reference and allow information to be reproduced without changes.

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8
Q

Group policy =

A

A person enters into a contract as a legal holder on their own behalf or for others who are, or will become policy holders.

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9
Q

Insurance brokers act 1977

A

Imposed supervision

Defined a broker

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10
Q

FCA’s strategic objective =

A

Ensure relevant markets function well

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11
Q

FCA’S Operational objectives

A

1) Consumer protection
2) Integrity
3) Competition

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12
Q

FCA has a risk based approach which means…

A

That they will focus on any insurance operations that pose a threat to the successful achievement to their objectives.

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13
Q

FCA overseas the…

A

FOS and the FSCS

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14
Q

What is the FCA’s three pillar approach?

A

1) Customers interests are considered in their firms systematic framework
2) Conducting event driven framework for emerging issues
3) Reviewing issues as they happen

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15
Q

What can products and promotions be regaridng the FCA?

A

Banned.

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16
Q

The PRA uses a judgement based approach and aims to be…

A

1) Forward looking. Not just in insurance but for different financial markets who will have a different approach.

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17
Q

What are the two main sourcebooks that are relevant to surrounding rules about training and competence?

A

Senior management arrangements and controls sourcebook

Training and competence rulebook

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18
Q

What does the senior management arrangements systems and control sourcebook set out

A

High level rules for authorised firms in relation to firms acting on their behalf

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19
Q

Firms should under the senior management arrangements systems and control sourcebook ..

A

1) Employ personnel with the skills, knowledge and expertise necessary for the discharge of the responsibilities allocated to them
2) Take into account, scale, nature and complexity of its business and the nature and range of financial services and activities undertaken in that course of business

20
Q

What three main areas does the training and competence sourcebook cover?

A

1) Assessing competence
2) Maintaining competence
3) Record keeping.

21
Q

Supervision is critical and employers must make assessment of competence and its maintenance at every stage of an employers development. This includes monitoring…

A

1) Technical knowledge and its application
2) Skills and expertise
3) Changes in the market
4) Products legislation and regulation

22
Q

The FCA expects fair treatment of customers throughout the product life cycle including…

A

pre contract / Post sale / during life / After the life.

23
Q

Where is the guidance relating to handling of complaints held?

A

In the FCA handbook: Dispute resolution complaints sourcebook

24
Q

An eligible complainant is…

A

1) A consumer
2) A micro enterprise = less than 10 employees and a turnover or balance sheet less than 50 mil
3) A Charity with a turnover less than 6.5 mil
4) A trustee with a net asset value of less than 5 mil
5) A consumer by to let
6) A small business with an annual turnover less than 6.5 mill, less than 50 employees or a balance sheet less than 5 mil
7) A guarantor

25
Q

What must firms do to fulfill its regulatory reporting responsibilities

A

Keep a register or log of eligible complaints. Every complaint must be acknowledged promptly.

26
Q

FOS =

A

An independent body that all insurers must be members of

27
Q

When can an eligible complainer refer to the FOS

A

Once all complaints procedures within an insurer have been exhausted.

28
Q

FSCS is a…

A

One stop compensation shop

29
Q

What does the FSCS cover?

A

Claims against insurers where the insurer is unable to pay them as they are out of business or insolvent.

30
Q

What is the FSCS funded by?

A

A levy

31
Q

Who is covered for 100% and who is covered for 90% under the FSCS?

A

100% Compulsory insurance

90% general insurance

32
Q

What does the FSCS have the ability to declare?

A

They can declare a firm in default =

A firm that is unable/likely to be unable to satisfy claims made against it

33
Q

Under the FSCS the insured is still…

A

Liable for any excess or deductible.

34
Q

The FSCS only covers

A

Only provides cover to commercial customers under statutory policies such as compulsory insurance (motor / employers liability)

35
Q

Insurance distributive directive replaced the..

A

Fromer insurance mediation directive.

36
Q

What did the IDD aim to do?

A

Make trade easier across borders and strengthen policy holder protection.

37
Q

Who do the IDD focus on?

A

1) Sellers of insurance
2) Admin and performance of insurance contracts
3) Ancillary insurance intermediaries.

38
Q

What are the key provisions under IDD?

A

1) Professionalism = Demonstrate knowledge and ability to perform activities. 15 hours CPD needed
2) Commission disclosure = Pre contractual disclosure and nature of remuneration.
3) Harminisaiton = Minimum standard
4) New product gov. requirements = in line with FCA product gov. requirements

39
Q

What does the Insurance Product information document (IPID) help to do?

A

Key requirement and it Helps customers understand what is included in their cover

40
Q

What are the two general principles under the IDD?

A

1) Distributors act honestly, fairly and professionally in accordance with the best interest of customers
2) All information provided by the distributor must be clear fair and not misleading.

41
Q

Insurance regulation in the US is…

A

Governed on a state by state basis. This was confirmed in the Mccarran-ferguson act 1945

42
Q

The national association of insurance commissioner…

A

1) Self regulating body

2) Occasionally address wordings and draft legislation / wordings for individual states to consider.

43
Q

What did the dodd vs frank act 2010 do?

A

1) Reformed some legislation

2) Established the federal insurance office who looks at how to modernise and improve insurance regulation in the US

44
Q

In the US an agent =

A

Representative of an insurance co.

45
Q

In the US Uk brokers/insurers are subject to..

A

Regulation by the attorney general.

46
Q

In the US, brokers are expected to be….

A

Transparent with their earnings, states deal with this differently.

M81 Insurance broking practice (8 decks)

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