CII IF1 Chapter 1 Flashcards
What does insurance act as in regards to risk?
Risk Transfer Mechanism
If someone is keen to carry risk themselves they are known as what?
Risk seeking
Which one of these terms describes someone who is keen to remove risk where possible? Risk-Unhappy / Risk-Seeking / Risk Adverse
Risk Adverse
What are the three controls when managing risk
Detective controls, corrective controls and preventative controls
What is the ABI
Association of British Insurers
What body helps control the amount of motor fraudulent claims
Motor Insurance Anti-Fraud and Theft Register (MIAFTR)
What are the 3 steps in the risk management process?
Risk Identification, Risk Analysis, Risk Control
What is a peril?
Something that gives rise to a loss (fire, theft, storm)
What is a hazard?
Something that influences the peril. (smoking within a property, ice on roads)
What are the 2 categories of hazard. Give an example of both.
Physical - Security (or lack of), property construction (flat, thatch), Type of car, age of policyholder
Moral - Careless driving, Non-disclosure
A risk must be what 3 things to be insurable? And what do each mean?
Financial - must be measurable in financial terms. The compensation has a monetary value against it. (Value of a car, Cost of repairs)
Pure - Where there is a possibility of loss but no gain.
Particular - Localised or personal risks such as a fire, flood, car crash. In comparison to fundamental risks which are outside any controls and are far spreading and are less physical. Example: War, Recession, political
What does it mean for a risk to be Fortuitous?
An Accidental or unexpected event
Which 2 ways is CO-Insurance used within the insurance market
Risk sharing between insurers - The insurers split the responsibility of pay out. (Flood re).
Risk sharing with the insured.
Homogeneous exposures are…?
Similar risks which help determine a pattern
The pool of insurance premiums must be large enough to meet the losses in any one year plus the what?
cost of operating and an element of profit.
A business has property insurance of £2m. If it chooses to cover the first £250,000 from its own resources, this amount is known as the insured’s what?
Retention
Insurers typically accumulate money due to the delay between premiums being collected and when claims are made. What is this known as?
Premium Reserve
Risk can best be defined in terms of:
uncertainty and unpredictability.
Why is insurance most likely to be purchased?
It provides peace of mind
What does it mean to buy insurance direct?
Means the consumer goes straight to the insurance company to purchase their insurance.
What is an intermediary and how do they work with direct insurers?
Intermediaries are companies like Pen and Iprism who have most of the insurance risk delegated to them to manage. They can transact business on behalf of the insurer via the phone or online facilities.
What is Bancassurance?
Insurance policies offered through your bank. They can either be tied to 1 insurer or have access to multiple insurers
What is Peer-to-Peer insurance.
Where a small group of people come together to insure their combination of things. This could be sports clubs, friends or tenants from a flat. It is usually a cost saving as there is no administration fees and people are less likely to claim.
What is Takaful insurance
Takaful insurance works on the basis of insuring items based on Islamic Law.
