Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

IF1 - Insurance, Legal and Regulatory > Chapter 2 - The Insurance Market > Flashcards

Chapter 2 - The Insurance Market Flashcards

1
Q

A - Market Structure

  1. Who are the main five participants in the insurance market?
A

Buyers (policyholders/insureds)

Insurers (sellers)

Intermediaries (those who bring buyers and sellers together, such as brokers)

Aggregators (most visible such as price comparison websites)

Reinsurers (a further means of spreading risk)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

A - Market Structure

  1. Who do buyers interact with?
A

Intermediaries & Insurers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

A - Market Structure

  1. Who do Intermediaries interact with?
A

Buyers, Insurers and Reinsurers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

A - Market Structure

  1. Who do Insurers interact with?
A

Buyers, Intermediaries, Reinsurers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

A - Market Structure

  1. Who do Reinsurers interact with?
A

Intermediaries and Insurers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

A - Market Structure

  1. Give examples of Intermediaries and state if they’re authorised or exempt.
A

Appointed representatives (exempt)

“Other” professionals (exempt)

Lloyds brokers (authorised)

Brokers (authorised)

Agents (authorised)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

A - Market Structure

  1. Give examples of Insurers
A

Direct insurers

Mutual indemnity associations

Captive insurance companies

Lloyds

Composite and specialist insurers

The State

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

A - Market Structure

  1. Give examples of Reinsurers.
A

Reinsurance companies

Lloyds

The State (terrorism and flood)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

B - Buyers

  1. Name the five main types of buyers
A

Private individuals

Companies

Partnerships

Public Bodies

Charities, Associations and Clubs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

B - Buyers

B1 Private Individuals

  1. Give examples of insurance people buy in their private capacity
A

Household buildings and contents insurance

Motor insurance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

B - Buyers

B2 - Companies

  1. What types of companies need insurance?
A

Multinational corporations
Sole traders

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

B - Buyers

B3 Partnerships

  1. Do Partnerships have a separate legal existence?
A

No, each partner is jointly and severally liable.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

B - Buyers

B3 Partnerships

  1. Give examples of partnerships
A

Medical practices
Veterinary practices
Legal professions

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

B - Buyers

B3 Partnerships

  1. How are the insurance needs of partnerships typically catered for?
A

By specialist schemes, particularly in the area of professional negligence.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

B - Buyers

B4 Public Bodies

  1. Public Bodies are major buyers of insurance. Give examples of public bodies.
A

Authorities
Schools

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

B - Buyers

B4 Public Bodies

  1. How do Public Bodies insure themselves?
A

Some may be large enough to set up their own insurance fund through which they insurance some risks, while turning to the market for others.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

B - Buyers

B4 Public Bodies

  1. Are some Public Bodies exempt from requiring insurance?
A

Yes, for example the police and motor insurance.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

B - Buyers

B5 Charities, Associations and Clubs

  1. What type of insurance do charities, associations and clubs typically take out? Give examples.
A

Liability risks and damage to owned property e.g football clubs, stamp collecting societies.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

B - Buyers

B5 Charities, Associations and Clubs

  1. How are charities, associations and clubs different in legal terms to companies and individuals?
A

There are “unincorporated associations” and have special requirements because, theoretically, each member is liable for the associations actions.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

C - Insurers

  1. Companies wanting to transact insurance in the UK must be authorised to do so by which authorities?
A

Prudential Regulation Authority (PRA)
Financial Conduct Authority (FCA)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

C - Insurers

  1. Financially speaking, what are insurance companies required to maintain?
A

Defined levels of solvency margins (difference between assets and liabilities)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

C - Insurers

  1. How might insurers be distinguished from one another?
A

In terms of ownership and function.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

C - Insurers

C1 Types of Insurer as defined by Ownership

  1. Name the 5 categories of ownership.
A

Proprietary companies
Mutual companies
Captive companies
Protected cell companies
Lloyds

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

C - Insurers

C1A Proprietary Companies

  1. What is a Proprietary company?
A

Limited liability companies where shareholders, in buying shares, contribute to the share capital of the firm, and therefore own the company profits.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

C - Insurers

C1A Proprietary Companies

  1. How is each shareholders liability for the company debts valued?
A

The shareholders liability for the company’s debts is limited to the nominal value of the shares they own.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

C - Insurers

C1B Mutual Companies

  1. Who owns a mutual company?
A

The policyholders

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

C - Insurers

C1B Mutual Companies

  1. Why would a policyholder use a mutual company?
A

The policyholders share in the profits of the company is reflected by way of lower premiums.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

C - Insurers

C1B Mutual Companies

  1. How are the losses of a mutual company limited for each policyholder
A

Limited by guarantee, with a policyholders maximum liability limited to their premium.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

C - Insurers

C1C Mutual Indemnity Associations

  1. What is a Mutual Indemnity Association?
A

A self-managed pool of insurers that are owned by the policyholders.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

C - Insurers

C1C Mutual Indemnity Associations

  1. Which industry are Mutual Indemnity Associations primarily used in?
A

Marine insurance, where Protection and Indemnity associations (known as P&I clubs) insure certain aspects of marine hull liability.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

C - Insurers

C1D Captive Insurers

  1. What is a Captive Insurance Company?
A

A Captive is an insurance company established by its parent company to provide insurance coverage primarily, if not solely, to the parent.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

C - Insurers

C1D Captive Insurers

  1. Why are Captives used?
A

For tax efficiency

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

C - Insurers

C1D Captive Insurers

  1. What are the non-fiscal reasons Captives might be used?
A

Get the full benefit of the group’s risk control techniques by paying premiums based on its own experience.

Avoid paying extra premium designed to meet a direct insurer’s overheads.

Obtaining a lower overall premium level by placing certain risks in the reinsurance market with its flexible products and lower overheads.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

C - Insurers

C1D Captive Insurers - Protected Cell Companies (PCCs)

  1. What is the purpose of PCCs?
A

To ring-fence assets of the participating cells and allow them to operate as distinct insurance entities.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

C - Insurers

C1D Captive Insurers - Protected Cell Companies (PCCs)

  1. PCCs operate in 2 parts. What are they?
A

A Core
An unlimited number of cells

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

C - Insurers

C1D Captive Insurers - Protected Cell Companies (PCCs)

  1. Legally speaking, what is a PCC?
A

A single legal entity with a single board of directors.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

C - Insurers

C1D Captive Insurers - Protected Cell Companies (PCCs)

  1. How does a prospective cell owner join a PCC?
A

Each prospective cell owner must enter into a cell management agreement with the PCC Board and will be bound by the PCC Mem & Arts.

Entry to the PCC is subject to approval by the PCC Board who will require details of the proposed business plan and will agree the parameters within which the cell is to operate.

A PCC files a single annual return, but regulatory approval is required for each business plan.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
38
Q

C - Insurers

C1D Captive Insurers - Protected Cell Companies (PCCs)

  1. What are the benefits are using a PCC?
A

Minimum establishment and administration cost.

Establishment in territories with favourable tax rates will apply to any trading profits.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
39
Q

C - Insurers

C2 Types of Insurer as defined by Function

  1. What function do composite companies serve, and how are they represented in the market?
A

They accept several types of business and represent the major part of the insurance market.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
40
Q

C - Insurers

C2 Types of Insurer as defined by Function

  1. What function do specialist insurers serve?
A

They tend to issue policies for only one class of business.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
41
Q

C - Insurers

C3 Takaful Insurance Companies

  1. What is Takaful insurance?
A

Insurance that applies the rulings of Sharia law and Islamic attitudes to risk and profit.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
42
Q

C - Insurers

C3 Takaful Insurance Companies

  1. Name the 3 fundamental principles of Islam that insurance policies are seen to be contrary to.
A

Gharar (uncertainty)
Maisir (gambling)
Riba (interest)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
43
Q

C - Insurers

C3 Takaful Insurance Companies

  1. Explain why Gharar (uncertainty) is contrary to Islamic beliefs.
A

Islamic law forbids sales where there is a risk to the buyer.

Some believe that traditional insurance policies do not remove uncertainty because how much and when, if at all, a policy will pay out remains uncertain.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
44
Q

C - Insurers

C3 Takaful Insurance Companies

  1. Explain why Maisir (gambling) is contrary to Islamic beliefs.
A

Traditional insurance policies are seen to be a form of gambling because some policyholders receive claims payments while others do not.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
45
Q

C - Insurers

C3 Takaful Insurance Companies

  1. Explain why Riba (interest) is contrary to Islamic beliefs.
A

Islamic rules forbid making money from money. Wealth can only be made through the trade of assets and investments.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
46
Q

C - Insurers

C3 Takaful Insurance Companies

  1. What principles to Takaful insurances embrace?
A

Mutuality and Cooperation
Shared Responsibility
Joint Indemnity
Common Interests and Solidarity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
47
Q

C - Insurers

C3 Takaful Insurance Companies

  1. Who must Takaful products be approved by to ensure they’re compliant?
A

Islamic scholars

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
48
Q

C - Insurers

C4 The State

  1. What does the UK government legislate to make compulsory?
A

Certain insurances

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
49
Q

C - Insurers

C4 The State

  1. How does the UK government act as an insurer?
A

Welfare benefits
Pension provision

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
50
Q

C - Insurers

C4 The State

  1. When does the UK government act as a guarantor to the insurance sector?
A

Terrorism risks
Flood risks

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
51
Q

D - Lloyd’s and the London Market

D1 Lloyd’s Structure and Features

  1. Is Lloyd’s an insurer?
A

No, it’s a marketplace.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
52
Q

D - Lloyd’s and the London Market

D1 Lloyd’s Structure and Features

  1. What is Lloyd’s?
A

It is a society of members.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
53
Q

D - Lloyd’s and the London Market

D1 Lloyd’s Structure and Features

  1. What does the corporation of Lloyd’s provide?
A

The infrastructure for the market.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
54
Q

D - Lloyd’s and the London Market

D1 Lloyd’s Structure and Features

  1. Under the Lloyd’s Act 1982, what is the Council of Lloyd’s responsible for?
A

The management and supervision of the market.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
55
Q

D - Lloyd’s and the London Market

D1 Lloyd’s Structure and Features

  1. Who regulates Lloyd’s?
A

The PRA
The FCA

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
56
Q

D - Lloyd’s and the London Market

D1A Syndicates

  1. What is a syndicate?
A

A group of private individuals or corporate investors who carry the risks (provide financial backing).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
57
Q

D - Lloyd’s and the London Market

D1A Syndicates

  1. What are corporate and individual investors known as?
A

Underwriting members or Names.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
58
Q

D - Lloyd’s and the London Market

D1B Managing Agents

  1. What is the role of managing agents?
A

Syndicates outsource the day-to-day running of their insurance business to managing agents.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
59
Q

D - Lloyd’s and the London Market

D1B Managing Agents

  1. What are the responsibilities of the managing agents?
A

Employing the underwriters and claim adjusters.

Liaise with Lloyds and the regulators.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
60
Q

D - Lloyd’s and the London Market

D1C Capital and Members/Names

  1. What is capital?
A

The investment put into the market by investors, known as members or names.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
61
Q

D - Lloyd’s and the London Market

D1C Capital and Members/Names

  1. What must prospective members be able to prove in order to invest in the market?
A

Show they have adequate means to pay any potential claims made against them.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
62
Q

D - Lloyd’s and the London Market

D1D Members’ Agents

  1. What advice do members’ agents provide?
A

They advise potential corporate and individual members/names on the advantages and disadvantages of investing in the Lloyd’s market.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
63
Q

D - Lloyd’s and the London Market

D1D Members’ Agents

  1. What do members agents advise on specifically?
A

Syndicate selection and performance
Reserve requirements
Compliance issues

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
64
Q

D - Lloyd’s and the London Market

D1D Members’ Agents

  1. What additional role do member agents serve to members and managing agents?
A

Act as a communication channel between the member and the managing agents running the syndicates the member has invested in.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
65
Q

D - Lloyd’s and the London Market

D1D Members’ Agents

  1. What do member agents receive from managing agents?
A

Regular reports on syndicate performance.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
66
Q

D - Lloyd’s and the London Market

D2 Transacting Insurance at Lloyd’s

  1. What requirements must a broking firm meet to become a Lloyd’s broker?
A

Must be fully regulated by their own regulator

Must satisfy requirements set out by Lloyd’s about:

Capability
Understanding of the market
Ability to transact business using the central market systems.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
67
Q

D - Lloyd’s and the London Market

D2B Placing a Risk

  1. What is the document that the broker puts a summary of the risk to be placed, and the suggested terms and conditions, called?
A

Market Reform Contract (MRC)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
68
Q

D - Lloyd’s and the London Market

D2B Placing a Risk

  1. How is the standardisation and clarity of MRCs ensured?
A

Clear market rules.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
69
Q

D - Lloyd’s and the London Market

D2B Placing a Risk

  1. If a broker is involved, what is the first step of placing a risk?
A

The broker obtains a quote from an underwriter.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
70
Q

D - Lloyd’s and the London Market

D2B Placing a Risk

  1. What will the underwriter indicate on their quote?
A

The percentage share they’ll accept and the terms that apply.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
71
Q

D - Lloyd’s and the London Market

D2B Placing a Risk

  1. What is meant by saying the broker “fills the slip”
A

The brokers approaches other underwriters and obtains signatures for the shares they are each willing to accept.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
72
Q

D - Lloyd’s and the London Market

D2B Placing a Risk

  1. What takes place once the Market Reform Contract/slip is fully placed by the broker?
A

The risk must then be submitted electronically to Xchanging Ins-sure Services (XIS).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
73
Q

D - Lloyd’s and the London Market

D2B Placing a Risk

  1. In terms of remuneration, what do the underwriters usually agree with the broker?
A

That the broker can deduct a certain percentage of the premium as brokerage.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
74
Q

D - Lloyd’s and the London Market

D2B Placing a Risk

  1. What do the brokers do once they have deducted their brokerage from the premium?
A

Transfer the net amount to the underwriters.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
75
Q

D - Lloyd’s and the London Market

D2B Placing a Risk

  1. Where does XIS record the risk and premium details?
A

On the central database.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
76
Q

D - Lloyd’s and the London Market

D2B Placing a Risk

  1. What does XIS facilitate with regard to premiums?
A

Payment of the premium to both Lloyds and the London Market underwriters for the broker.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
77
Q

D - Lloyd’s and the London Market

D2B Placing a Risk

  1. If a formal document is required by insurers for sending to a client, who can they get this from?
A

XIS.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
78
Q

D - Lloyd’s and the London Market

D2B Placing a Risk

  1. Once the data is recorded and the premium paid, what do the brokers and underwriters receive?
A

Electronic messages from XIS with data about the risk.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
79
Q

D - Lloyd’s and the London Market

D3 The London Market

  1. Does Lloyd’s represent the whole market?
A

No, it represents part of a much wider London Insurance market.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
80
Q

D - Lloyd’s and the London Market

D3 The London Market

  1. Who are the main providers in the London Market?
A

Insurance and Reinsurance companies
Lloyds Syndicates
Lloyds Services Companies, who effectively act as branch offices of the syndicates
Protection & Indemnity Clubs (P&I)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
81
Q

D - Lloyd’s and the London Market

D3 The London Market

  1. What is the key difference between the London Market and Lloyd’s?
A

The market is general, where the Lloyd’s market has been a focus for placing very unusual risks.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
82
Q

D - Lloyd’s and the London Market

D3 The London Market

  1. What was the gross written premium income for the Lloyd’s Market in 2022?
A

£46.7 Billion.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
83
Q

D - Lloyd’s and the London Market

D4 Contract Certainty

  1. What is Contract Certainty? Who is it adopted by?
A

Procedures adopted to ensure all parties are fully aware of the coverage and terms of the policy.

Lloyd’s and the London Market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
84
Q

D - Lloyd’s and the London Market

D4 Contract Certainty

  1. What does Contract Certainty achieve?
A

The complete and final agreement of all terms between the insured and insurer by the time they enter the contract, with documentation provided promptly thereafter.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
85
Q

D - Lloyd’s and the London Market

D4 Contract Certainty

  1. What are the 3 elements of contract certainty?
A

Details - Certainty of the details of the agreed contract

Documents - Provision of contractual documentation to the client

Share - Certainty as to the final share of the risk that each insurer has agreed to take

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
86
Q

D - Lloyd’s and the London Market

D4 Contract Certainty

  1. Who is responsible for ensuring contract certainty?
A

The underwriters.
The broker, if they were involved in placement.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
87
Q

E - Intermediaries

  1. What is an Intermediary?
A

An Agent.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
88
Q

E - Intermediaries

  1. What is an Agent’s relationship with the Principal?
A

The agent is authorised by the principal to bring the principal into a contractual relationship with a third party.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
89
Q

E - Intermediaries

  1. What sorts of mediation activities do agents perform?
A

Give advice

Promotion and sales functions

Complaints handling

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
90
Q

E - Intermediaries

  1. Which statuses must the intermediary adopt to be exempt from FCA rules?
A

Appointed Representative (AR)

Introducer Appointed Representative (IAR)

Be a member of a designated professional body

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
91
Q

E - Intermediaries

  1. What does it mean when an intermediary is exempted?
A

An authorised person/firm takes on the responsibility for the activities of the ARs/IARs.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
92
Q

E - Intermediaries

  1. What new category of intermediary was introduced in 2018 by the Insurance Distribution Directive (IDD)?
A

Ancillary Insurance Intermediary (AII)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
93
Q

E - Intermediaries

  1. What is an Ancillary Insurance Intermediary? Give an example.
A

Someone whose principle professional activity is not insurance distribution e.g. travel operator who sells travel insurance.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
94
Q

E - Intermediaries

E1 Authorised Persons

  1. Who/What is an Authorised Person?
A

An individual or firm authorised by the FCA to engage in regulated activities.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
95
Q

E - Intermediaries

E1 Authorised Persons

  1. What must an Intemediary wishing to offer insurance do to become an Authorised Person?
A

Apply for direct authorisation by the FCA.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
96
Q

E - Intermediaries

E1 Authorised Persons

  1. What happens to an Intermediary once they are authorised?
A

They are bound to abide by all FCA rules.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
97
Q

E - Intermediaries

E1 Authorised Persons

  1. What do FCA rules demand from authorised persons?
A

Financial accounting
Training and competence
Reporting requirements

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
98
Q

E - Intermediaries

E1 Authorised Persons

  1. What has been the result of strict FCA rules?
A

A great deal of consolidation in the marketplace through sales and aquisitions.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
99
Q

E - Intermediaries

E1 Authorised Persons

  1. How do Umbrella organisations work?
A

Known as broker networks, the umbrella organisation becomes the authorised person and each “member” of the network becomes an appointed representative.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
100
Q

E Intermediaries

E2 Appointed Representatives

  1. What is an Appointed Representative?
A

An individual or company that is appointed by an authorised person (the principal) under the terms of a contract

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
101
Q

E Intermediaries

E2 Appointed Representatives

  1. What is the name of the contract which sets out the terms of business between the intermediary and principal?
A

Appointed Representative Agreement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
102
Q

E Intermediaries

E2 Appointed Representatives

  1. What does the Appointed Representative Agreement determine?
A

The Appointed Representatives role and responsibilities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
103
Q

E Intermediaries

E2 Appointed Representatives

  1. What is the key feature of an Appointed Representative relationship?
A

The Principal takes responsibility for the Appointed Representatives activities in carrying out the business of the Principal.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
104
Q

E Intermediaries

E2 Appointed Representatives

  1. Can an Appointed Representative act for more than one Principal?
A

Yes, provided there is a suitable contract in place with each one.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
105
Q

E Intermediaries

E2 Appointed Representatives

  1. What must the Principals enter into if their Appointed Representative acts for more than one Principal?
A

A written Multiple Principal Agreement with every other Principal an AR may have.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
106
Q

E Intermediaries

E2 Appointed Representatives

  1. Give examples of Appointed Representatives.
A

Organisations with a non-insurance main occupation e.g. motor garages, freight forwarders, and associations who sell relevant insurance products to their members

Full time insurance agents that have decided to become “tied” to one or more insurer, rather than become authorised directly themselves.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
107
Q

E Intermediaries

E2 Appointed Representatives

  1. What are some of the problems that have arisen from the use of Appointed Representatives?
A

Principals not performing adequate due diligence at the outset of the appointment

Inadequate oversight and control once the AR begins performing regulated activities on behalf of principals

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
108
Q

E Intermediaries

E2 Appointed Representatives

  1. New FCA rules came into force in December 2022 that state, with regard to Appointed Representatives Principle firms are required to now….what?
A

Apply enhanced oversight of the Appointed Representatives (AR).

Ensure ARs have adequate systems, controls and resources.

Assess and monitor the risk ARs pose to consumers and the market.

Review their ARs activities, business and senior management annually.

Be clear on the circumstances where they should terminate an AR relationship.

Notify the FCA of future AR appointments 30 calendar days before it takes effect.

Provide complaints and revenue information for each AR to the FCA on an annual basis.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
109
Q

E Intermediaries

E3 Introducer Appointed Representatives

  1. How is the scope of an Introducer Appointed Representatives appointment limited?
A

Limited to effecting introductions and distributing financial promotions e.g. proposals and brochures

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
110
Q

E Intermediaries

E3 Introducer Appointed Representatives

  1. How are the Principals responsibilities for an Introducer Appointed Representative different than with an Appointed Representative?
A

A less demanding regime applies e.g. training and competence rules do not apply.

111
Q

E Intermediaries

E3 Introducer Appointed Representative

  1. To whom does an Introducer Appointed Representative appointment suit?
A

Those who wish to act as a marketing channel for an insurer.

112
Q

E Intermediaries

E4 Lloyd’s Brokers

  1. Does the FCA make any formal distinction between the term “broker” and “independent intermediary”?
A

No.

113
Q

E Intermediaries

E4 Lloyd’s Brokers

  1. Can the term “Lloyd’s Broker” be used freely in the market?
A

Yes, although it is the Council of Lloyd’s that registers insurance broking firms to act as Lloyd’s brokers.

114
Q

E Intermediaries

E4 Lloyd’s Brokers

  1. Name the order that granted access to Lloyd’s to a wider range of Intermediaries?
A

Legislative Reform (Lloyds) Order 2008

115
Q

E Intermediaries

E4 Lloyd’s Brokers

  1. When an Intermediary uses a Lloyd’s broker what terms are used to describe the two parties?
A

Lloyds Broker - Wholesale Broker

Intermediary - Producing Broker or Sub-Broker

116
Q

E Intermediaries

E5 Services provided by Intermediaries

  1. Who do Independent Intermediaries act on behalf of?
A

They act on behalf of the client, not the insurer.

117
Q

E Intermediaries

E5 Services provided by Intermediaries

  1. What expertise do Independent Intermediaries provide?
A

Recommending the most appropriate insurer to place the risk with.

118
Q

E Intermediaries

E5 Services provided by Intermediaries

  1. What must Independent Intermediaries advise on when giving a recommendation?
A

Whether the product recommended is a personal recommendation based on fair and personal analysis of the market.

119
Q

E Intermediaries

E5 Services provided by Intermediaries

  1. What do FCA rules oblige Intermediaries to provide if they have not fully explored the market?
A

A list of products available.

120
Q

E Intermediaries

E5 Services provided by Intermediaries

  1. How are Intermediaries traditionally remunerated?
A

A percentage of the premium.

121
Q

E Intermediaries

E5 Services provided by Intermediaries

  1. List some of the typical services provided by Intermediaries to their clients.
A

Deciding the best market to place the risk.

Negotiating terms and conditions initially and for mid-term changes.

Provide advice to the client regarding the detail of the policy wording.

Negotiate renewal.

Advise clients on the validity of claims.

122
Q

E Intermediaries

E5 Services provided by Intermediaries

  1. What additional services might Intermediaries also provide to their clients?
A

Risk Management advice

Assisting with the presentation of claims

Assisting with recovering any uninsured losses

123
Q

E Intermediaries

E5 Services provided by Intermediaries

  1. What are the typical services provided by intermediaries on behalf of the insurers?
A

Collecting the premium

Settling claims on behalf of the insurer

Issuing cover notes to give evidence of cover

124
Q

E Intermediaries

E5 Services provided by Intermediaries

  1. What rule applies if an Intermediary operates as an Appointed Representative for an Insurer?
A

They may only give advice in relation to that insurer’s products.

125
Q

E Intermediaries

E6 Consolidation of the Insurance Broking Sector

E6A Broker Networks

  1. What is a Broker Network?
A

An organisation that is authorised by the FCA that offers Appointed Representative status to those who join.

126
Q

E Intermediaries

E6 Consolidation of the Insurance Broking Sector

E6A Broker Networks

  1. What are the benefits of joining a broker network?
A

Firms who join retain ownership of their own broker firm

But gain access to centralized services such as accounting, training and development and compliance.

127
Q

E Intermediaries

E6 Consolidation of the Insurance Broking Sector

E6A Broker Networks

  1. What benefits does a Broker Network receive?
A

Greater purchasing power in negotiations from insurers

Cost savings from joint operations

128
Q

E Intermediaries

E6 Consolidation of the Insurance Broking Sector

E6B Consolidators

  1. What are Consolidators?
A

Companies that grow through formal aquisition of others in the market.

129
Q

E Intermediaries

E6 Consolidation of the Insurance Broking Sector

E6B Consolidators

  1. Why are Insurers keen to offer preferential rates to Consolidators?
A

Size and potential for growth.

130
Q

E Intermediaries

E6 Consolidation of the Insurance Broking Sector

E6B Consolidators

  1. The Legislative Reform (Lloyds) Order 2008 has removed the “Divestment Rule”. What did the rule state?
A

Broking and Underwriting activities must be completely separated.

131
Q

F Insurance Marketing and Distribution

  1. Name the 4 Ps of the marketing mix
A

Product
Price
Promotion
Place

132
Q

F Insurance Marketing and Distribution

  1. What do Promotion and Place relate to? And why is it important in insurance?
A

Distribution

Because choice of distribution channel affects pricing.

133
Q

F Insurance Marketing and Distribution

  1. What are the two types of distribution channel? Give examples.
A

Direct - employees of the insurer sell the product
Indirect - intermediaries paid by the insurer promote the product

134
Q

F Insurance Marketing and Distribution

  1. Who operates as direct marketing channels?
A

Direct insurers

Company sales staff

135
Q

F Insurance Marketing and Distribution

F1 Direct Marketing Channels

  1. Who operates as indirect marketing channels?
A

Agents

Brokers

Consultants or advisers

Price comparison websites/aggregators

136
Q

F Insurance Marketing and Distribution

F1 Direct Marketing Channels

  1. Give examples of direct marketing methods.
A

Targeted mailing
Telephone calls
Social media messaging

137
Q

F Insurance Marketing and Distribution

F1A Benefits and Drawbacks

  1. What are the benefits of direct marketing?
A

When marketed directly, without involving paid sales staff, there will be reduced costs. These savings can be passed to the customer.

Customers can buy insurance quicker and more easily

Insurers can control the customer experience and make improvements to service quickly without having to involve third parties

138
Q

F Insurance Marketing and Distribution

F1A Benefits and Drawbacks

  1. What are the drawbacks of direct marketing?
A

Only one product is available

Advertising and promotion costs can be significant

No independent advise is available regarding suitability

139
Q

F Insurance Marketing and Distribution

F2 Indirect Marketing Channels

  1. What are benefits of indirect marketing?
A

There is an incentive to sell for intermediaries as they earn commission.

Intermediaries provide advice on suitability and attractiveness of the product

140
Q

F Insurance Marketing and Distribution

F2 Indirect Marketing Channels

  1. What type of products are indirect marketing relationships suited to?
A

Complex commercial insurances

141
Q

F Insurance Marketing and Distribution

F2A Schemes and Delegated Authority

  1. Who do insurers delegate authority to?
A

Intermediaries, to act on their behalf

142
Q

F Insurance Marketing and Distribution

F2A Schemes and Delegated Authority

  1. Can Intermediaries be authorised to issue cover?
A

Yes, provided it falls within the defined criteria of a delegated authority arrangement

143
Q

F Insurance Marketing and Distribution

F2A Schemes and Delegated Authority

  1. What is a binder?
A

A delegated authority scheme

with a great deal of flexibility within defined limits.

144
Q

F Insurance Marketing and Distribution

F2A Schemes and Delegated Authority

  1. What is the attraction of Binder schemes for insurers?
A

Flow of business from the tailored wording

Agreed ratings for ease of business

145
Q

F Insurance Marketing and Distribution

F2A Schemes and Delegated Authority

  1. What is the attraction of Binder schemes for Intermediaries?
A

Ability to grant immediate cover

Ease of operation

Sometimes profit sharing provision, if results of the scheme are good

146
Q

F Insurance Marketing and Distribution

F2A Schemes and Delegated Authority

  1. What is a Managing General Agent?
A

A specialist intermediary who has delegated authority to act for one or more insurers.

147
Q

F Insurance Marketing and Distribution

F2A Schemes and Delegated Authority

  1. What functions do Managing General Agents perform?
A

As an intermediary, MGAs perform functions ordinarily handled only by insurers

E.g. Marketing
Binding cover
Underwriting and pricing cover
Appointing agents and loss adjusters
Handling claims

148
Q

F Insurance Marketing and Distribution

F2A Schemes and Delegated Authority

  1. How do Managing General Agents benefit insurers?
A

By providing specialist expertise in niche areas

By distributing and servicing insurance products

149
Q

F Insurance Marketing and Distribution

F3 Bancassurance

  1. What is Bancassurance?
A

The arrangement between a bank and an insurance company whereby insurance products are sold to the bank’s customers

150
Q

F Insurance Marketing and Distribution

F3 Bancassurance

  1. What are the advantages of Bancassurance?
A

Access to each parties “scale efficiencies”

Lower risk to the business

Access to previously unavailable resources

Improving Value Chain Efficiency

Opportunities for joint product development

Access to one another’s brands and reputations

151
Q

F Insurance Marketing and Distribution

F4 Price Comparison Website

  1. What is the main criticism of price comparison websites?
A

The imperative to save time and effort in submitting personal details by limiting the number of questions may affect the accuracy of quotations.

152
Q

G Reinsurance

  1. What is Reinsuance?
A

The transfer of risk from insurers to reinsurers.

153
Q

G Reinsurance

  1. Name the three ways reinsurance may be done.
A

On an individual risk basis

On an event basis

On a portfolio of risks

154
Q

G Reinsurance

G1 Purpose of Reinsurance

  1. Give examples of why reinsurance is used.
A

To cover several losses to different risks that are all connected in some way e.g. Storm damage

To cover very large losses e.g. terrorist attack

155
Q

G Reinsurance

G1 Purpose of Reinsurance

  1. When are insurers able to reinsure a risk they hold?
A

When they stand to lose financially as a result of any claim payment.

156
Q

G Reinsurance

G1 Purpose of Reinsurance

  1. Do insurers reinsure the whole risk?
A

No, they only reinsure part of the risk.

157
Q

G Reinsurance

G1 Purpose of Reinsurance

  1. What does reinsuring part of the risk allow insurers to do?
A

Share losses on a risk-by-risk basis.

158
Q

G Reinsurance

G1 Purpose of Reinsurance

  1. What is one of the big differences between Reinsurance and Co-Insurance?
A

When an insurer reinsurers, the insured need not know this has happened.

159
Q

G Reinsurance

G1 Purpose of Reinsurance

  1. Is there a contractual relationship between the insured and the reinsurer?
A

No.

160
Q

G Reinsurance

G1 Purpose of Reinsurance

  1. What happens when a claim occurs on a reinsured policy?
A

The insured will look to the insurer to meet the loss in full.

Any subsequent recovery of reinsurance monies is entirely a matter for the insurer to pursue with the reinsurer.

161
Q

G Reinsurance

G1 Purpose of Reinsurance

  1. Name the 4 purposes of reinsurance
A

To smooth peaks and troughs in trading results

To protect the portfolio

To provide improved customer service

To provide support to insurers entering new areas of business

162
Q

G Reinsurance

G1A Smoothing Peaks and Troughs

  1. How does reinsurance ensure stability in insurance companies?
A

By spreading the cost of very large losses over a period of time

163
Q

G Reinsurance

G1A Smoothing Peaks and Troughs

  1. How does reinsurance provide stability in relation to adverse trends?
A

Reinsurers will require increases in premium, but will not try to recoup a very large payment in one go, instead spreading the cost over a number of years.

164
Q

G Reinsurance

G1B Protecting the Portfolio

  1. What is facultative reinsurance?
A

Reinsurance on a single known risk

165
Q

G Reinsurance

G1B Protecting the Portfolio

  1. Why is facultative reinsurance used?
A

To protect the pool from effects of very large losses arising from a single cause e.g. weather related claims

166
Q

G Reinsurance

G1B Protecting the Portfolio

  1. What are Treaties?
A

Facilities arranged to enable insurers to place a range of risks that fall within agreed criteria.

167
Q

G Reinsurance

G1B Protecting the Portfolio

  1. Give examples of Treaties.
A

Reinsurance to protect the portfolio (class of business) as a whole

Reinsurance that pays out if the overall loss ratio exceeds a certain figure

168
Q

G Reinsurance

G1C Improving Customer Service

  1. How does reinsurance improve customer service?
A

The extra capacity created by treaty arrangements enables insurers to accept much more than their own net capacity

169
Q

G Reinsurance

G1C Improving Customer Service

  1. Who does the extra capacity created by reinsurance benefit most?
A

Independent Intermediaries placing extremely large risks.

170
Q

G Reinsurance

G1D Entering New Business Areas

  1. When insurers decide to underwrite a new class of business, who must they register their intention to do so with?
A

The Prudential Regulatory Authority (PRA)

171
Q

G Reinsurance

G1D Entering New Business Areas

  1. How does reinsurance help insurers to enter new business areas?
A

Special arrangements exist that provide extra capacity while the insurer is gaining experience.

172
Q

G Reinsurance

G2 Types of Reinsurer

  1. What does the typical reinsurer look like?
A

Limited Liability Company
Substantial amounts of paid up capital

173
Q

G Reinsurance

G2 Types of Reinsurer

  1. What are the main types of reinsurers?
A

Insurance companies
Lloyds syndicates
Specialist reinsurance companies

174
Q

G Reinsurance

G2 Types of Reinsurer

  1. What is it called when reinsurance is reinsured? What is the risk called?
A

Retroceding
The risk placed is called Retrocession

175
Q

G Reinsurance

G2 Types of Reinsurer

  1. What is another name for a reinsurer?
A

Cedant or ceding office.

176
Q

G Reinsurance

G2 Types of Reinsurer

  1. What are the two main reinsurance centers?
A

Lloyds
The International Underwriting Association of London (IUA)

177
Q

G Reinsurance

G2 Types of Reinsurer

  1. What is the International Underwriting Association of London (IUA) responsible for?
A

Representing its member companies
Providing information and research
It is not itself an insurer

178
Q

G Reinsurance

G2 Types of Reinsurer

  1. What purpose does the London Underwriting Centre (LUC) serve?
A

Produce clause wordings for the London Market, notably for Marine Insurance.

179
Q

H Insurance Professionals

H1 Underwriters

  1. What is the task of an underwriter?
A

To manage the pool as effectively and profitably as possible

180
Q

H Insurance Professionals

H1 Underwriters

  1. What are the main functions of an underwriter?
A

Assess the risks brought to the pool

Decide whether risks are accepted

Determine the terms and conditions and scope of cover offered

Calculate a suitable premium to cover expected claims, provide a reserve, meet all expenses and provide a profit

181
Q

H Insurance Professionals

H1 Underwriters

  1. Who can be an underwriter?
A

Employee of an insurance company

Employee of an insurance broker

Lloyd’s underwriter

An insurance company

182
Q

H Insurance Professionals

H2 Claims Personnel

  1. What is the role of Claims Personnel?
A

Deal quickly and fairly with all claims submitted

Distinguish between real and fraudulent claims

Determine the realistic cost of a claim prior to payment

Determine whether loss adjustors need to be involved

Settle claims with minimum wastage

183
Q

H Insurance Professionals

H3 Loss Ajustors

  1. What is a Loss Adjustor?
A

An expert in processing claims who acts for the insurer

184
Q

H Insurance Professionals

H3 Loss Ajustors

  1. When are loss adjustors used?
A

For larger claims or more complex policy wordings

185
Q

H Insurance Professionals

H3 Loss Ajustors

  1. What are the duties of a loss adjustor?
A

Investigate the circumstances surrounding a claim

Determine to what extent the policy covers the loss

Facilitate any emergency measures

Negotiate amounts claimed

Negotiate with any specialist suppliers

Make a recommendation for settlement to the insurer

186
Q

H Insurance Professionals

H3 Loss Assessor

  1. What is a Loss Assessor?
A

An expert in dealing with insurance claims who acts for the insured and negotiates claims

187
Q

H Insurance Professionals

H5 Surveyors and those providing forensic services

  1. What do Surveyors use forensic analysis to do?
A

Determine the proximate cause of a loss

188
Q

I Market Organisations

I1 Association of British Insurers (ABI)

  1. What is the Association of British Insurers?
A

The largest of the insurance market associations.

189
Q

I Market Organisations

I1 Association of British Insurers (ABI)

  1. What functions does the Association of British Insurers (ABI) serve?
A

Gather market statistics
Frame codes of practice
Public relations
Conferring with government

190
Q

I Market Organisations

I1 Association of British Insurers (ABI)

  1. What are the objectives of the Association of British Insurers (ABI)?
A

Get the right people to inform public policy

Be the public voice of the sector

Encourage customer understanding of products and services

Support a competitive insurance industry

191
Q

I Market Organisations

I1 Association of British Insurers (ABI)

  1. Name the two councils in the ABI.
A

General insurance council

Life insurance council

192
Q

I Market Organisations

I2 British Insurance Brokers Association (BIBA)

  1. What is BIBA?
A

The major non-statutory trade association for insurance intermediaries

193
Q

I Market Organisations

I2 British Insurance Brokers Association (BIBA)

  1. What are the key roles of BIBA?
A

Promote members views on legislation

Encourage training

Encourage links between members

Liaise with outside bodies

194
Q

I Market Organisations

I3 Lloyd’s Market Association (LMA)

  1. What does the Lloyds’s Market Association (LMA) do?
A

Provides representation, information and technical services to underwriting businesses in the Lloyd’s market

195
Q

I Market Organisations

I3 Lloyd’s Market Association (LMA)

  1. What are the Lloyd’s Market Association’s (LMA) strategic objectives?
A

Increase the flow of profitable businesses to the market

Maintain capital flexibility

Reduce costs

196
Q

I Market Organisations

I4 London and International Insurance Brokers Association (LIIBA)

  1. What is the London and International Insurance Brokers Association (LIIBA)?
A

Independent trade body that represents the interests of insurance and reinsurance brokers

197
Q

I Market Organisations

I3 London and International Insurance Brokers’ Association (LIIBA)

  1. What are the London and International Insurance Brokers’ Association (LIIBA) key priorities?
A

Represent members interests to government

Modernize London market processes

Support members with regard to legislative and technical changes

198
Q

I Market Organisations

I5 London Market Regional Committee (LMRC)

  1. What is the London Market Regional Committee (LMRC) a part of?
A

BIBA

199
Q

I Market Organisations

I5 London Market Regional Committee (LMRC)

  1. What is the role of London Market Regional Committee (LMRC)?
A

Lobbying on behalf of London market brokers

200
Q

I Market Organisations

I6 International Underwriting Association of London (IUA)

  1. What is the International Underwriting Association of London (IUA)?
A

The worlds largest representation organisation for international and wholesale insurance companies

201
Q

I Market Organisations

I6 International Underwriting Association of London (IUA)

  1. Is the International Underwriting Association of London (IUA) a limited company with a Chief executive and elected board?
A

Yes

202
Q

I Market Organisations

I6 International Underwriting Association of London (IUA)

  1. What are the objectives of the International Underwriting Association of London (IUA)?
A

Transform business through modernization

Deliver knowledge and expertise for underwriting and claims handling

Represent members on matters of public policy and regulation

203
Q

I Market Organisations

I7 Managing General Agents’ Association (MGAA)

  1. What purpose does the Managing General Agents’ Association (MGAA) serve?
A

Provides the industry with a better understanding of what an MGA is

204
Q

I Market Organisations

I8 Chartered Insurance Institute (CII)

  1. What activities does the Chartered Insurance Institute (CII) take part in?
A

Offering qualifications
Promoting professional growth
Careers information
Code of Conduct

205
Q

I Market Organisations

I9 Chartered Institute of Loss Adjusters (CILA)

  1. What is the Chartered Institute of Loss Adjusters? What do they provide? And who do they represent?
A

Leading authority on claims related issues

Code of conduct

Individuals rather than firms

206
Q

I Market Organisations

I10 Institute and Faculty of Actuaries (IFOA)

  1. What is the Institute and Faculty of Actuaries (IFOA)?
A

Only chartered body dedicated to Actuaries

207
Q

I Market Organisations

I9 Institute of Risk Management?

  1. What is the institute of risk management?
A

Only chartered body dedicated to risk management.

208
Q

I Market Organisations

I12 Association of Insurance and Risk Managers in Industry and Commerce (AIRMIC)

  1. What does AIRMIC do?
A

Promotes the interests of insurance buyers

209
Q

I Market Organisations

I13 Insurtech UK (IUK)

  1. What does IUK do?
A

Promotes technical innovation in the insurance sector

210
Q

I Market Organisations

I10 Motor Insurers’ Bureau (MIB)

  1. What is the purpose of MIB?
A

Enter into agreements with the government to compensate the victims of accidents cause by uninsured motorists

211
Q

I Market Organisations

I10 Motor Insurers’ Bureau (MIB)

  1. How is the MIB financed?
A

By a levy on authorised motor insurers

212
Q

I Market Organisations

I10 Motor Insurers’ Bureau (MIB)

  1. Name the two arms of the MIB.
A

Untraced Drivers

Uninsured Drivers

213
Q

J Classes of Insurance

  1. What do Personal Lines do?
A

Protect a policyholder from loss or damage to personal property or damages for which the policyholder may be held personally liable.

214
Q

J Classes of Insurance

  1. What do Commercial Lines do?
A

Protects a business from loss of its business property or damages for which the company may be held liable

215
Q

J Classes of Insurance

  1. What is Insurance Premium Tax levied on?
A

General insurance premiums

216
Q

J Classes of Insurance

  1. What are the two main rates of IPT?
A

Standard rate 12%

Higher rate 20% for travel insurance

217
Q

J Classes of Insurance

  1. What types of insurance of exempt from IPT?
A

Most long-term insurances
Reinsurance’s
Marine
Aircraft
Goods-in-transit (international)
Risks located outside the U.K.

218
Q

J Classes of Insurance

  1. Who collects IPT?
A

The insurer

Who then pays it to HMRC

219
Q

J Classes of Insurance

J1 Motor Insurance

  1. What is the name for cover that pays for losses to the policyholders property?
A

Property cover

220
Q

J Classes of Insurance

J1 Motor Insurance

  1. What is the name for cover that pays for damages for which the policyholder is liable?
A

Causality cover

221
Q

J Classes of Insurance

J1 Motor Insurance

What are larger commercial motor risks referred to as?

A

Fleet-rated risks

222
Q

J Classes of Insurance

J2 Home Insurance

  1. What does home insurance provide cover for?
A

Buildings and contents against a range or perils including fire and theft

Valuables and personal effects are also included

223
Q

J Classes of Insurance

J2 Home Insurance

  1. Can home insurance cover accidental damage?
A

Yes, optional extensions are available

224
Q

J Classes of Insurance

J3 Travel Insurance

  1. What does travel insurance cover?
A

Injury
Death
Medical expenses
Loss of luggage, possessions, money
Cancellations

225
Q

J Classes of Insurance

J4 Pet Insurance

  1. What does Pet Insurance cover?
A

Vet costs if a pet is ill, injured or has an accident

226
Q

J Classes of Insurance

J4 Pet Insurance

  1. What optional extensions are available with pet insurance?
A

Purchase price if a pet dies due to accident

Third party injury caused by the pet

227
Q

J Classes of Insurance

J5 Health Insurance

  1. What are the 5 main types of health insurance?
A

Personal Accident
Sickness
Private Medical Insurance
Short-Term Income Protection
Critical Illness

228
Q

J Classes of Insurance

J5 Health Insurance

  1. What does personal accident cover? How is it paid?
A

Accidental death and disablement

Compensation is paid in a lump sum

229
Q

J Classes of Insurance

J5 Health Insurance

  1. How are temporary disabilities paid?
A

Paid by a weekly benefit for a specified period.

230
Q

J Classes of Insurance

J5 Health Insurance

  1. What does Sickness insurance cover?
A

An inability to engage in the individuals usual occupation due to sickness or disease

231
Q

J Classes of Insurance

J5 Health Insurance

  1. How is sickness insurance paid?
A

Compensation is paid in weekly installments for a specified period.

232
Q

J Classes of Insurance

J5 Health Insurance

  1. What does private medical insurance cover?
A

Individuals who seek medical treatment outside the NHS

233
Q

J Classes of Insurance

J5 Health Insurance

  1. What is the purpose of private medical insurance?
A

To provide cover for costs of acute care received, rather than long term or chronic conditions

234
Q

J Classes of Insurance

J5 Health Insurance

  1. What is short-term income protection designed to do?
A

Pay an agreed amount during a short period an individual can’t work because of accident, sickness or redundancy

235
Q

J Classes of Insurance

J5 Health Insurance

  1. How is short-term income protection paid?
A

The policyholder must wait a set number of days before receiving a monthly payment

236
Q

J Classes of Insurance

J5 Health Insurance

  1. What does critical illness insurance cover?
A

Cover in the event of a diagnosis of a defined range of disabilities or long-term serious illnesses

e.g. loss of limb, heart attack, stroke

237
Q

J Classes of Insurance

J5 Health Insurance

  1. What does payment protection insurance cover?
A

Covers monthly loan and credit card payments

238
Q

J Classes of Insurance

J5 Health Insurance

  1. How is Payment Protection Insurance paid?
A

Typically made directly to the insured’s creditors, rather than to the insured

239
Q

J Classes of Insurance

J5 Health Insurance

  1. Can Payment Protection Insurance be sold as a single premium contract?
A

No, it must be sold with other insurance.

240
Q

J Classes of Insurance

J6 Liability Insurance

  1. What does Liability insurance cover?
A

The legal liability to pay compensation and costs awarded against the insured in favour of another party.

241
Q

J Classes of Insurance

J6 Liability Insurance

  1. What does Employers Liability insurance cover?
A

Compensates the insured in respect of their legal liability to pay damages to any employee arising from bodily injury, disease, illness or death.

242
Q

J Classes of Insurance

J6 Liability Insurance

  1. Is Employers Liability Insurance compulsory?
A

Yes.

243
Q

J Classes of Insurance

J6 Liability Insurance

  1. What does Public Liability insurance cover?
A

Compensates the insured in respect of claims from third parties for accidental bodily injury or damage to property due to negligence

244
Q

J Classes of Insurance

J6 Liability Insurance

  1. What does Products Liability insurance cover?
A

Legal liability for third party bodily injury or property damage caused by products, goods or services sold or supplied.

245
Q

J Classes of Insurance

J6 Liability Insurance

  1. What does Directors and Officers Liability insurance cover?
A

Covers personal legal liability incurred by individual directors and officers for financial loss resulting from their negligence or failure to fulfill their statutory responsibilities

246
Q

J Classes of Insurance

J6 Liability Insurance

  1. What does Professional Indemnity insurance cover?
A

Protects a person acting in their professional capacity against claims that loss or injury resulted from their negligent actions or advice.

247
Q

J Classes of Insurance

J7 Commercial Property Insurance

  1. What do Perils and “All Risks” policies cover?
A

Material property such as building, contents and stock

248
Q

J Classes of Insurance

J7 Commercial Property Insurance

  1. How are Perils and “All Risks” policies issued?
A

Tend to be issued on the basis of building up cover by adding different perils or, as with risk policies, removing exclusions.

249
Q

J Classes of Insurance

J7 Commercial Property Insurance

  1. What does Engineering/Breakdown insurance cover?
A

Explosions, breakdown or accidental damage to plant & machinery

250
Q

J Classes of Insurance

J7 Commercial Property Insurance

  1. What legal requirement applies to Engineering/Breakdown insurance?
A

Many items need to be inspected regularly by a competent person.

251
Q

J Classes of Insurance

J7 Commercial Property Insurance

  1. What do Glass insurance cover? And on what basis?
A

Destruction or damage to all fixed glass

On an “All Risks” basis

252
Q

J Classes of Insurance

J7 Commercial Property Insurance

  1. What does Livestock insurance cover?
A

Covers livestock against death through accident or disease, and theft

253
Q

J Classes of Insurance

J7 Commercial Property Insurance

  1. What does Money insurance cover? And on what basis?
A

Covers all losses, destruction or damage to money.

“All Risks” basis

254
Q

J Classes of Insurance

J8 Pecuniary Insurance

  1. What does Pecuniary insurance cover?
A

Intangibles such as income, revenue or value.

255
Q

J Classes of Insurance

J8 Pecuniary Insurance

  1. What does Fidelity mean?
A

Faithful or loyal performance of a duty

256
Q

J Classes of Insurance

J8 Pecuniary Insurance

  1. What does a Fidelity Guarantee cover against?
A

Financial loss as a result of dishonesty or disloyalty of a company employee

257
Q

J Classes of Insurance

J8 Pecuniary Insurance

  1. What does Legal Expenses insurance cover?
A

The cost of seeking legal advice or pursuing/defending civil actions.

258
Q

J Classes of Insurance

J8 Pecuniary Insurance

  1. What does Credit insurance cover?
A

Covers a business against non-payment

259
Q

J Classes of Insurance

J8 Pecuniary Insurance

  1. What does Business Interruption insurance cover?
A

Losses caused by an interruption to normal business activities usually caused by material damage or disease

260
Q

J Classes of Insurance

J8 Pecuniary Insurance

  1. How is Business Interruption insurance paid?
A

Paid in respect of actual loss of earnings, adjusted for business trends

plus costs associated with business recovery

261
Q

J Classes of Insurance

J8 Pecuniary Insurance

  1. What does Political insurance cover?
A

The risk that revolution or political conditions result in a loss.

262
Q

J Classes of Insurance

J8 Pecuniary Insurance

  1. What does Guaranteed Asset Protection (GAP) cover?
A

Covers the difference between the amount still to be repaid on the finance that was taken out to buy the vehicle and the amount the insurance company pays if the car is stolen or totaled.

263
Q

J Classes of Insurance

J9 Marine and Aviation Insurance

  1. What are the 3 main risks with Marine insurance?
A

Physical damage to the ship or goods

Liabilities incurred to other parties

Loss of income

264
Q

J Classes of Insurance

J9 Marine and Aviation Insurance

  1. What does Marine Hull insurance cover?
A

Physical damage to the ship, its machinery and equipment

And some limited liability in case of contact with other vessels

265
Q

J Classes of Insurance

J9 Marine and Aviation Insurance

  1. What does Marine Cargo insurance cover?
A

Loss or damage to goods.

266
Q

J Classes of Insurance

J9 Marine and Aviation Insurance

  1. What does Marine Freight insurance cover?
A

The sums paid for transporting goods or for vessel hire.

267
Q

J Classes of Insurance

J9 Marine and Aviation Insurance

  1. What does Aviation insurance cover?
A

Loss of or damage to the aircraft

Legal liability to third parties and passengers

268
Q

J Classes of Insurance

J9 Marine and Aviation Insurance

  1. How is aviation cargo covered?
A

Under a marine policy.

269
Q

J Classes of Insurance

J9 Marine and Aviation Insurance

  1. Name another special type of aviation insurance.
A

Satellite insurance.

270
Q

J Classes of Insurance

J10 Cyber Insurance

  1. What does Cyber insurance cover?
A

Protects businesses from both first party and third party losses arising from cyber attacks.

271
Q

J Classes of Insurance

J10 Cyber Insurance

  1. What else is included in Cyber insurance?
A

Costs of investigation
Recovering lost data
Loss of income arising from an attack
Extortion payments demanded by attackers.

272
Q

J Classes of Insurance

J11 Combined or Packaged Policies

  1. What do Combined or Packaged policies do?
A

Bring together a range of types of cover or a range of risks/perils under one policy.

273
Q

J Classes of Insurance

J11 Combined or Packaged Policies

  1. Who are combined packages designed for?
A

Particular trade sectors e.g. shopkeepers, hoteliers, hairdressers

Usually relatively inflexible (don’t cater to other trades)

Carefully researched to cater for a particular trade, at favourable rates.

IF1 - Insurance, Legal and Regulatory (9 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions