Chapter 2; Role of the broker in meeting client needs Flashcards
What are demands and needs?
Clarifying a client’s requirements
How do brokers establish a client’s demands and needs?
Asking questions and completing a proposal form
Who requires a copy of the proposal form?
The regulator, the client. All parties must agree on it
Outline the process of providing insurance products
- Establish client’s wants
- Complete data capture
- Confirm client’s demands and needs
- Source appropriate product
- Recommend product to the client and include a suitability statement
- Formally arrange cover
What does a suitability statement record?
- Customer’s needs and demands
- How recommendation addresses these demands and needs
- the reasons for the recommendation
What is the primary role of the broker in providing insurance products?
Identification and arrangement of suitable insurance products and services
What is PPL?
Platform Placing Limited: widely used platform within the London market enabling brokers and insurers to quote, negotiate, bind and endorse business digitally.
What are consumers required to do under CIDRA?
Take reasonable care not to make a misrepresentation
What is one key material fact that should be disclosed to underwriters?
Loss experience
Does the client only have to supply insurance claims?
No. Insured losses and Uninsured losses
What is a consequence of CIDRA?
- Personal lines proposal forms may increase in length
- Greater temptation for consumers to look at brokers to complete their proposal forms
What is required under the Insurance Act?
Duty for commercial clients to make a fair presentation.
What happens if all parties to an insurance contract agree that the provisions of the Insurance Act 2015 will not apply?
Previous law on disclosures applies - Utmost good faith
How does IA affect breach on warranties?
- No longer terminates contract instead insurers liability is terminated until breach is remedied
- Insurers not entitled to avoid breach if it does not relate to the loss.
Does the IA 2015 provide insurers clear statutory remedies when a policyholder submits a fraudulent claim?
Yes
What ways can a broker compile underwriter information?
- Proposal forms
- PPL and electronic placement systems
- Insurers Questionnaires
- Brokers questionnaires
- Survey reports
- Statements of Fact
Which method of compiling underwriter information provide an ideal opportunity to remind their client about their duty of disclosure?
Proposal forms
Which method of compiling underwriter information makes selling and buying insurance easier?
Statement of fact
What is the disadvantage of statement of fact?
Assumptions made by insurer and insured come to light when a claim is made
Which method of compiling underwriter information ensures all correct information is requested and questions that are not relevant can be avoided?
Insurer’s questionnaire
What is the disadvantage of an Insurers’ questionnaire?
Tailored to fit risk and hence take time to structure and can be onerous
Which method of compiling underwriter information will capture the most physical risk information
Survey reports
What are the disadvantages of Survey reports?
- Insurer may only quote based on their own findings
- Expensive and brokers may not have this in house
What is the brokers best approach to capture data/
Joint survey
What is a joint survey?
Insurer sends their own expert the meet the client but the broker/risk surveyor is also present to represent the client.
What does a MRC ensure the risk presentation is aligned with?
Contract certainty
Can you data dump under the IA 2015?
No
What positive factors do brokers take into account when selecting an insurer?
- Credit facilities
- Additional income (keep premiums low)
- Ese of payment
- Provision of support and sale literature
- Reputation and experience
What is a fair analysis?
Large number of insurance contracts have been considered and broker is able to make a recommendation
Define the process of fair presentation
- Data capture
- Identify potential insurers
- Refine potential insurers based on Demands and Needs
- Refine further with specialist knowledge
- Provide broking submission and negotiate terms
- Recommend insurer
What are the key issues in programme design?
- Risk retention (What level0
- Combined packages (can savings be made)
- Programme Term (LTA’s)
- Limits
- Specialist Cover
- Insurers
What are the characteristics of a soft market?
High capacity due to capital markets investing in insurance
Insurers take on more risk
Increase in claims
What are the characteristics of a hard market?
Less capacity due to less investment
Increased competition
Increased premiums and restricted cover
Increased profitability
What is the most competitive class of business in the UK?
Motor insurance
What are the methods of dealing with claims?
- No service
- Claims advocacy (advise but not directly involved)
- Full claims service
- Delegated authority (Broker acts as insurer by authorising the claim on their behalf)
What is opportunistic fraud?
Exaggerating a genuine claim to increase value of pay out. Claim may be fabricated
What is organised fraud?
Criminal gang takes out insurance with specific intention of committing fraud
