Chapter 5 - Material Information Flashcards
What is the first stage in providing a quotation to a proposer for a commercial packaged policy?
To gather all relevant information
What significantly changed the process of gathering information for a quotation?
The IA 2015 (Insurance Act)
Prior to the Insurance Act 2015 - what act governed the gathering of information for an insurance quotation?
Marine Insurance Act 1906
How does the Insurance Act 2015 define a material fact?
every circumstance which would affect the judgment of a prudent underwriter in fixing the premium or determining whether he will take the risk.
How to the courts test if a fact is material?
By looking at it from a prudent insurers point of view
What duty of disclosure applies to a proposer seeking to take out a commercial packaged policy?
To make a fair presentation of the risk
The proposer must do what when discussing at quote stage about his business?
They must make the manner of the presentation reasonably clear and accessible to a prudent insurer
Under the Insurance Act 2015, the material circumstances which the insured must disclose is:?
information known by its senior management and by the persons responsible within the business for arranging insurance; and
information that should reasonably have been revealed by a reasonable search of information within the insured’s own organisation but could also include information held by others (such as their brokers).
What information does not need to be disclosed by the insured?
Matters know to indicuiduals such as brokers
Knowlege help the insurer and readily avalible
matters know by enployee or agent which should have been passed on (such as claims)
Contracting out is subject to ‘transparency requirements’ - what do they state?
that the insurer must take enough steps to draw the insured’s attention to the less favourable terms in a clear fashion before the contact is agreed.
Insurers can review the insured’s entitlement to indemnity under a policy where there has been a breach of the duty of fair presentation with what caviat?
The insurer can prove it would not have entered the contract at all or would have done so only on different terms.
What are the two different breaches of disclosure?
Deliberate or reckless
Not deliberate nor reckless
What is a deliberate or reckless breach of disclosure?
Where the insured either knew or did not care that they were in breach
How can insurers treat a deliberate or reckless breach of disclosure?
They can treat the policy as if it never existed and may decline all claims.
They do not need to return any of the premiums paid.
What is a not deliberate nor reckless breach of disclosure?
An innocent or merely careless breach.
How can insurers treat a non deliberate nor reckless breach of disclosure?
Proportionate remedies apply:
If the insurer would not have accepted to cover the insured they can refuse to pay any claims but must return the premium. Avoid the policy essentially.
If the insurer would have offered cover but under different terms, then the policy must be treated as if it was entered under those different terms.
What is the job of an underwriter in relation to a hazard and peril?
To asses the relationship between the hazard and the peril.
What is a hazard?
Something which influences the operation of a peril.
The feature of a risk which makes a loss considerably like to happen or would cause the loss to be larger or smaller in size.
What is a peril?
The thing which gives rise to the loss such as a flood, storm, accidental damage ect
What is a physical hazard?
The physical characteristics of a risk such as the construction or measurements of a building.
What is a moral hazard?
The attitude or behavour of people such as how carless a driver is or if they are dishonest.
What is a general question at proposal stage?
A question about the proposer and their buisness
hat is a specific question at proposal stage?
A question about the risk to be insured.
