Chapter 2 Flashcards
What is Capital and Working Capital
Capital is when money is raised by savings, issue of shares etc.
Working Capital is used for acquisition and running costs
In order for a company to be viable it must what?
Be able to match their liabilities with their assets
What is the MCR?
Minimum Capital Requirement - is the higher of two amounts
A base capital requirement and an amount that has to be calculated from the volume and type of business. This is the general insurance capital requirement (GICR).
What is the ICA
Individual capital assessment.
What’s the purpose of The Solvency 2 and Insurance (Amendment, etc.) (EU exit) Regulations 2019
Ensures that existing EU Law on Solvency II continues to work effectively now the UK has left the EU
Why is contract certainty required
UW’s will not know their exposure, claims reserving & pricing is less accurate, unable to alocate capital correctly.
Brokers, liability for error & omissions
Policyholder - wont be certain of their coverage
Contract certainty definition
Contract certainty is achieved by the complete and final agreement of all terms
between the insured and insurer by the time that they enter into the contract, with
contract documentation provided promptly thereafter.
Contract certainty Part A
Must ensure that all terms are clear and unambiguous by the time the offer is made or accepted. All terms must be clearly expressed, including any conditions or subjectivities
Contract certainty Part B
Documentation issued within;
7 days for consumer
30 days for all others
Contract certainty Part G
Insurer and Broker must resolve any issues around the achievement of the contract certainty principles as soon as practicable and without undue delay
Consumer rights act 2015 did what?
aimed to reform and simplify UK consumer law and make it easier for consumers to understand their rights and the remedies available to them if things go wrong.
Contract terms must be what?
Transparent (expressed in plain intelligible language)
Prominent (Brought to the consumers attention)
An underwriter must ensure that any data held is:
- Relevant
- Accurate
- Disclosed only to the those authorised to have it
Who does GDPR apply to?
Data Controllers and Processors
What is Sensitive Personal Data
- race;
- ethnic origin;
- politics;
- religion;
- trade union membership;
- genetics;
- biometrics (where used for ID purposes);
- health;
- sex life; or
- sexual orientation.
What is Lawful Processing?
- Consent
- Contract
3.Legal Obligation - Vital Interests
- Public Task
- Legitimate interests
UK GDPR Rights
Right to:
Be informed
Access
Rectification
Erasure
Restrict Processing
Portability
Object
relation to automated decision making and profiling
Article 75 of the MIB’s Memorandum and Articles of
Association - what is it
insurers are required to accept liability in circumstances where they would not be
liable under the RTA, including where:
- the insurance has been obtained by fraud, misrepresentation or non-disclosure of
material facts; - cover has been backdated; and
- the use of the vehicle is not covered by the policy
Consumer Insurance (Disclosure and Representations) Act 2012 (CIDRA)
Consumer’s duty to take reasonable care not to make a misrepresentation. The implication for underwriters is that they must ask specific questions about those material facts if they are to rely on non-disclosure as a reason to repudiate a claim and/or avoid a policy.
Honest and Reasonable - must pay the claim
Careless - Insurer can apply terms of what they would have done if accurate answer given - refund premium if cancelling contract
Reckless/Deliberate - policy is void & decline all claims & keep premium
Warranties - do they cancel a policy if breached
No - they only suspend a policy until the breach is remedied.
Equality Act protects what characteristics?
- age;
- disability;
- gender reassignment;
- pregnancy and maternity;
- marriage and civil partnership;
- sex or sexual orientation;
- race, religion or belief.
Hard Market
At the top of the cycle, the so-called ‘hard market’, prudent insurers will build up reserves from profit in the certain knowledge that their markets will decline at some point. Careful preparation will fund losses at the bottom of the cycle, thereby ensuring survival.
