Chapter 9: Underwriting Procedures and Premium Payment Flashcards
What is contract certainty?
The complete and final agreement of all terms between the insurer and the insured by the time they enter into a contract, with contract docs supplied shortly after.
Who produces a standard TOBA wording?
BIBA.
What is a service-level agreement?
A client charter explaining the standards to which the intermediary will operate. E.g. response times for enquiries, etc.
What is a client agreement / initial disclosure document / terms of business and statutory disclosure?
A document containing the information about the intermediary required by the FCA.
What is included on the client agreement?
- Name and address of the intermediary
- Firm included in Financial Services Register and found at FCA
- Ownership - i.e. if it owns / is owned by more than 10% of/by an insurer
- Who to complain to
- Whether it gives advice based on a fair analysis of the market
- Under a contractual arrangement to an insurer?
- If not under such agreement, does it give a limited analysis of the market?
What governs telephone sales?
The Distance Marketing Directive.
What information does the Distance Marketing Directive require?
- Name and address
- Characteristics of the service the firm will provide
- The law applicable to t
What is a demands and needs?
A form filled out by the proposer and provided to the intermediary to help them figure out the kinds of insurances the client wants.
How can intermediaries ensure suitability?
By gathering information from the client and if required by gathering information from elsewhere, including details of their current insurance.
What issue was raised by the PPI misselling?
That an insured should only be offered insurance if they are able to claim a benefit. With PPI, people were buying it even though their employment status meant they were unable to claim from the outset.
What is a statement of demands and needs?
A document given to the client detailing their demands and needs, including any personal recommendations made by the intermediary.
Is it required to disclose commission?
No. Though if fees are to be charges in lieu of commission, these must be stated.
How much CPD per year does the Insurance Distribution Directive require?
15 hours per year.
What is an ancillary insurance intermediary?
Those who don’t sell insurance as their main business but who still do, so are subject to the regulations.
Is the insurer legally bound to honour the quotation if accepted within the specified time?
Yes, even if there is an error on the quote.
What is a key features document?
One which outlines the key areas of coverage of a policy.
Where is a key features document mandatory?
- All pure protection policies
- Payment indemnity contracts
What does the Insurance Act allow an insurer to do if a claim arises but there has been a misrepresentation?
Can reduce the claim payment.
What happens if an insurer opts out of the proportionate reduction of a claim remedy option in the Insurance Act?
May pay the claim in full, but charge a higher premium as they would have done.
This option might be stated in the key features document.
What are the cancellation periods?
- 14 days for general insurance
- 30 days for protection contracts
What happens if the policy is cancelled during the cooling off period?
The insurer will return the premium less an administration fee.
What happens if the policy is cancelled after the cooling off period?
The insurer will return the premium, less an administration fee and a pro-rata for the period the policy was in force.
What if there was a claim before the policy was cancelled?
There will be no refund of premium.
How long does the intermediary have to get the docs to the client?
‘Promptly’, generally within 30 days.
What is a statement of fact?
A document containing the information the insurer has about the client, asking the client to confirm that the information it has is correct.
What are telematics?
Black boxes.
What’s the benefit of technology gathering large amounts of data?
Insurers can predict risks to a fine degree.
What is premium rate?
Intended to reflect the hazards associated with a particular insured.
What is premium base?
The measure of the exposure.
What is rate per mille?
A price paid per thousand pounds insured.
What is rate per cent?
A price paid per hundred pounds insured.
How is EL rated?
Wageroll.
How is PL rated?
Turnover.
How is PI rated?
Fees earned.
What’s a minimum and deposit premium?
Where the lower end of the premium is fixed meaning that a year end adjustment will be nil or a higher premium will apply.
Where might a flat premium be charged?
- Motor insurance
- If there is no obvious exposure measure (e.g. a large manufacturing risk for PL, as there is no standout exposure).
Is the policy the contract itself?
No, rather it is evidence of the contract. The contract exists regardless of a policy document existing.
How soon must a policy document be issued?
- 7 days for consumers
- 30 days for general
What is a cover note?
A document issued where the insurer is waiting for risk information to issue full documents.
States that cover is in force.
What are the rates of IPT?
- 12% generally
- 20% for travel, consumer motor and domestic/electrical appliances
Is IPT levied on fees?
No.
Is IPT payable on reinsurance?
No.
Neither on certain marine policies and engineering inspection policies (latter being subject to VAT).
