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Cert CII IF3 > Chapter 2 > Flashcards

Chapter 2 Flashcards

1
Q

What are general questions on a proposal form?

A

Common to most general insurance eg proposer name, occupation, period of insurance

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2
Q

What are specific questions on a proposal form?

A

Risk specific and help UW determine whether to accept the risk eg description of subject matter, sum insured

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3
Q

What is a key duty of the insurer under Consumer Rights Act 2015?

A

Terms and info quote is based on are clear
Terms and conditions = subjectivities

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4
Q

When is an insurer bound by a quote?

A

Unless insurer withdraws the quote, if proposer accepts in specified time period

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5
Q

When is an insurer not bound by a quote?

A

Circumstances of the quote change or period has expired and proposer not accepted

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6
Q

What is premium?

A

Amount paid to insurer in consideration for covering the risk

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7
Q

Why does the law of large numbers help?

A

Pricing is easier as similar exposures can be more accurate

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8
Q

What is a premium rate?

A

Reflects hazards associated with the insured

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9
Q

What is a premium base?

A

Measure of exposure eg sum insured

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10
Q

How is premium usually calculated?

A

Applying a premium rate to a premium base

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11
Q

What is rate per cent?

A

Price in pounds for each hundred pounds of exposure

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12
Q

What is rate per mille?

A

Price in pounds for each thousand pound of exposure

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13
Q

What are adjustable premiums?

A

Exposure measure unknown as start period and only an estimate is provided, premium adjusted after end year declaration
Initial premium = deposit premium

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14
Q

What are flat premiums?

A

Charge a flat premium rate rather than apply a rate to a premium base, consult a rate table taking hazards into account

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15
Q

What is a covernote?

A

Issued as evidence cover is in place while policy docs are being produced
Temporary and superseded by docs / cert
RTA 1988 - illegal backdate motor covernote

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16
Q

What insurance has compulsory certificates?

A

Motor and EL

17
Q

What is IPT?

A

Tax levied on most general insurance for risks located in England, Wales, Scotland and NI

18
Q

Who pays IPT?

A

Payable by policyholders but insurers are responsible for collecting and accounting to HMRC

19
Q

What is the standard rate of IPT?

A

12%

20
Q

What is the higher rate of IPT?

A

20%

21
Q

What insurance is the higher rate of IPT applicable to?

A

Travel, engineering inspection service fees, electrical appliances and insurance sold alongside the purchase of vehicles

22
Q

What insurance is exempt from IPT?

A

Reinsurance, life assurance, some marine and risks located outside the UK

Cert CII IF3 (11 decks)

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