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M80 > Chapter 3 > Flashcards

Chapter 3 Flashcards

1
Q

expense ratio

A

cost of aquiring + uw& service / net premiums

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2
Q

Pre-inception moral hazard

A

poor training
poor maintenance

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3
Q

Post-inception moral hazard

A

delays in premium payement
poor attitude to recommendations to risk improvement

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4
Q

Post loss moral hazard

A

delays in notifcation
lack of readiness to help insurer value loss
exaggerating claims

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5
Q

operative clause

A

details the type of event insured against -> cover derived from this clause is from uw policy

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6
Q

Exemptions / exclusion clause

A

General exclusion apply to whole policy

specific exclusion apply to certain parts of policy

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7
Q

Conditions clause

A

Expresses the OH rights and obligations which they have to contractually oblige by

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8
Q

The schedule

A

describes subject matter of insurance and sums insured / limits

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9
Q

Risk surveyors purposes

A
  1. describe, classify and assess the risk to give uw sound rationale
  2. how risk can be improved
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10
Q

Risk improvement categories

A

Requirements - necessary to carry out for risk to be acceptable
Reccomendations - optional

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11
Q

Distribution Channels

A

Intermediaries
Direct sales
Price comparison websites

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12
Q

Intermediaries

A

Commercial lines and personal mainly done through intermediary
Delegated authority
Insurer may put uw in broking house to make uw function and set uw guidelines -> uw can have pressure to accept out of appetite business

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13
Q

Personal lines and distribution

A

may be indpt brokers or tied to company, sometimes insurers agents through media and adverts

Can be done cheaply and easily through use of computers for instant quote and bind

Use variety of channels

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14
Q

Direct sales / price comparison website (aggregators)

A

Used to be phone calls now on internet

Limited to personal lines

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15
Q

commoditisation

A

Product becomes less differentiated so buyers care less about who they biy it from

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16
Q

Impact on pricing model by choice of distro

A

through expenses, commission, rates and retention of business

Premiums for direct and intermediary business may vary.

Direct side will have less referral and offer the greatest amount of premium flexibility. Allow to change model on short notice

Direct uw incurs higher acquisition costs of handling queries normally handled by broker

17
Q

DUA

A

Can be restricted to do specific things only

Binders:
greater flexibility for intermediary within limits. Policy wordings are often neogtiated to fit specific client AKA Schemes

18
Q

Coverholder

A

Binding agreement set out -> insurer = risk carrier

coverholder may handle claims and settle

19
Q

How CH benefits intermediaries

A

lower cost placing business
offer quick turnoarounds -> immediate cover
access to unique product
remove from open market where they compete directly
enhanced level of commission
gain profits

20
Q

MGA

A

Holds pen and does all activities of insurer, but does not provide funding for claims

21
Q

Auditts of CH

A

Adherence to terms of binding authority
financial scope of ch
compliance with legal and reg
other material development

22
Q

Problems with DUA

A

Selection of broker/partner
Conflict of interest -> authority clearly expressed, with seperation of duties
poor perfomance
ambiguous terms
regs aspect and RI

23
Q

Routes into expanding into other territories

A

Appointing local agents
Joint venture with another insurer
Acquiring local insurer
Foreign subsidiary -> local branchC

24
Q

Consideration for other territoties

A

Local legislation
State insuer needs to cover some risks
local taxes
exchange rates
specific documentation
specific cover

25
Q

Global risks

A

Financial
Political
Cultural

26
Q

Fraud

A

ABI, IFB in 2020 96k fraud claims = 1.1bn

27
Q

Classes of fraud - Fraud Act 2006

A

False representation
failing to disclose info
abuse of position

28
Q

Pre-meditated fraud

A

Getting out insurance then egineering an evevnt e.g oney laundering

29
Q

claims fraud detection

A

Expert staff
invetigative interviewing - behaviour
covert surveillence
photo and mapping
forensic claim

30
Q

Anti - fraud bodies

A

Insurance Fraud Investigators Group (IFIG) membership: Not for profit org
insurers
investigators
loss adjustors
lawyers

IFB insurance fraud bureau:

Insurance Fraud Enforcement Dept:
motor fraud
commercial / public liability fraud
emerging fraud risk

31
Q

Opportunistic fraud

A

All types of insurance

32
Q

Commercial liability fraud

A

Exaggerated personal injury claims to faking injuries

33
Q

Illegal intermediaries / ghost brokers

A

Taking advantage of people who don’t understand anythingP

34
Q

Pro enablers

A

Know that claim they’re submitting if fraud

35
Q

Anti-fraud databases

A

CUE (Claims, UW exchange): Detials held 6 yrs
- Motor
- Home
- Personal injury
- Travel (2017)

Motor (MIAFTR):
- multiple different policies for 1 car
- ficticous theft

IFR: set up by member of ABI:
- SHare info of fraud

M80 (5 decks)

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