Chapter 4 Flashcards
Good Faith Laws
- CIDRA 2012
- Insurance Act 2015
Insurance Product Information Document (IPID)
Provides a consistent, non-personalised product summary for easy comparison of insurance products
No Claims Discount Evidence
Previous insurer’s renewal notice or other documentation, or verification through industry databases
Cover Note
Provides temporary evidence of insurance coverage until permanent documents are issued
Motor Vehicles (Third Party Risks) Regulations 1972 Certificates
Form A: Specified Vehicle Certificate
Form B: Blanket Certificate for Fleets or Motor Trade
Form C: Certificate incorporated into Cover Notes
Cartwright v. McCormack Case 1963
A cover note’s duration includes the entire day of expiry, ending at midnight
How long after a policy expires should information be kept?
7 years after expiry
Requirements for design of insurance certificates
- to be printed on a black or white background
- exclude advertising matter, except for the insurer’s badge/logo
- be issued in paper, plastic card or electronic form
What circumstances must an insurer issue a replacement certificate?
- the certificate is lost or destroyed
- the certificate is defaced
Windscreen Insurance Disks
WIDs must be issued for vehicles registered in the Channel Islands, along with certificates of insurance
Premium for Mid-Term policy adjustments
Calculated pro-rata, based on the number of days remaining in the policy term
Cooling-off period
14 days
Mid-Term Cancellation Rates
1 month - 20% due
2 months - 30% due
3 months - 40% due
4 months - 50% due
5 months - 60% due
6 months - 70% due
7 months - 80% due
8 months - 90% due
Over 9 months - Full Premium
Suspension of Cover
- minimum of 4 consecutive weeks
- vehicle must be SORN
- pro-rata refund, adjusted for residual risks like fire and theft
Misrepresentation and Non-Disclosure Actions
- cancel policy and keep all premiums
- adjust policy on different terms
Law Commission Review 2006
Focused on customer duty of disclosure, breach of warranty and misrepresentation
Aimed to address the unfair balance against proposers under the current law
Material Facts
Defined as disclosing anything influencing a “prudent insurer”
Types of Misrepresentation under CIDRA
- Innocent
- Careless
- Deliberate / Reckless
Breach of Duty of Fair Presentation
- deliberate / reckless breach
- non-deliberate breach
Insurance Act 2015 and Warranties
Breach of warranties now suspend, not terminate, the insurer’s liability
Coverage resumes once the breach is remedied
Enterprise Act 2016
Insurers must pay claims within a reasonable time, or risk paying damages for financial loss caused by delays
Two Exceptions to Traditional Renewal Invitation
- short period insurances
- long term agreements
Renewal Retention Rate
Retaining customers reduces acquisition costs and ensures stability
Long-term PH’s are less likely to shop around or generate fraud claims
FCA Requirement on Renewal Invitations
Insurers must invite renewal in good time or provide adequate notice if renewal will not be invited
Dual Pricing or Price Walking
Offered lower premiums to new customers, penalising loyal customers and was banned by the FCA in 2022
Information for a Renewal Notice
- insurer details
- policyholder information
- policy number
- renewal date
- insured vehicle details
- renewal premium
- NCD entitlement
Commercial Renewals
- retroactive premium adjustments
- fleet exposure reviews
- negotiations between stakeholders
Agent of the Proposer for advising on Insurance Needs
An independent intermediary is regarded as the agent of the proposer, but this may vary during proposal completion and providing information to the insurer
Tied Agent
A tied agent, representing one insurer, is usually regarded as the agent of the insurer
When is an Intermediary deemed to act as an agent of the Insurer?
When empowered to grant cover on the insurer’s behalf, such as issuing temporary cover notes
Stockton v. Mason 1978
Established that a broker with implied authority to issue interim cover on behalf of the insurer could create a valid interim insurance contract
Delivery of Certificates of Insurance
Physically delivery is required, but posting is sufficient as postal authorities are regarded as agent of the receiver
Starkey v. Hall 1936
A finance company holding policy documents could not deliver them as they were not authorised agents of the policyholder
Electronically Issued Documents
- enable fast delivery, reduced costs and allow policyholders to access and modify policies online
- the RTA allowed EDI from 30 April 2010 to run parallel with posting the policies
