Chapter 3 Contract and agency Flashcards
What are the essentials of a valid contract
Offer and acceptance
Consideration
What is usually the consideration in insurance
The premium
Does a conditional acceptance form a valid contract
No it is not an acceptance it is a counter offer
If I post an acceptance when is it deemed that I have accepted an offer
When acceptance is posted
How soon must insurers warn insureds about renewal under ICOBS?
In good time
What were the three new renewal rules introduced by the FCA in April 2017
Previous year’s premium to be disclosed
Text to encourage consumers to shop around
Additional prescribed notice for insurers who have renewed four consecutive times
What is usually the cooling off period for consumer contracts
14 days
What is usually the cooling off period for PPI contracts
30 days
What is a cooling off period
Period in which consumers can cancel a policy
Do cooling off periods apply to all consumer insurance contracts
No, they do not apply to short term travel policies
Identify three other ways an insurance contract can be terminated.
Fulfilment
Voidable
Fraudulent acts
Following the Insurance Act 2015 what is insurers’ remedy if the policyholder breaches a warranty
Coverage is suspended whilst it is being breached,
If a policyholder submits a fraudulent claim what are insurers’ remedies?
Insurer not liable to pay clam
Can recover amounts already paid on claim
Can choose to terminate contract from date of fraudulent act
If an insurer decides to terminate coverage following a fraudulent claim what can they do?
Can refuse liability for all matters after fraudulent act
Do not have to return premiums
In a Group contract if an individual insured submits a fraudulent claim can the insurer terminate cover for the other indicivduals insured
No
Who is a broker usually an agent of?
The policyholder/insured
Identify three ways agency can be created
By consent/agreement (TOBA)
By necessity
By ratification
What is the difference between express and implied authority?
Express authority is expressly given usually specified in a terms of business agreement (TOBA)
Implied authority is assumed given the nature of the relationship
As an agent what duties does a broker owe to the insured
Advice on coverage
Advice on claim
In what circumstances may a broker act as an agent of an insurer
Authorised by insurer to receive and handle proposal forms
Surveys property on insurer’s behalf
Collects premiums on insurers behalf
Authorised to pay claims by insurer
Identify five duties owed by an agent to its principal
Obedience
Care and skill
Personal performance
Good faith
Accountability
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Identify two duties owed by the principal to the agent
Remuneration
Indemnity agaist losses incurred on the principal’s behalf
If it appears to a third party that an agent has the authority of their principal (apparent authority) will the principal be bound by any agreement the agent makes on their behalf with the third party
Yes
Identify three ways an agency agreement can be terminated
By mutual agreement
Terminated by principal or agent
Performance
By death, bankruptcy, insanity
Identify four functions of a TOBA
Be clear and succinct
Reflect the business relationship
Define and allocate responsibilities and rights
Ensure compliance with regulatory duties and rules
Identify seven items that will be part of a broker insurer TOBA
Status Commission Material information Premiums and credit Claim money Broker/client relationship Direct administration Claims Termination Regulatory requirements Accounting procedures Assignment Arbitration Variation of terms Signature Authority Indemnity
What is a TOBA?
Terms Of Business Agreement
Who else may a broker have a TOBA with other than insurers?
Their client
Sub brokers
