I10 2 Understand the role and responsibilities of the insurance broker in the provision of insurance Flashcards
How does an insurance broker who has a claims advocacy role assist and advise the client?
A. It handles all aspects of the claim.
B. It assists the client when problems arise which cannot be resolved directly with the insurer.
C. When requested to by the insurer to expedite the claim process.
D. When specialist or complex risks are involved
B. It assists the client when problems arise which cannot be resolved directly with the insurer.
What should be a major consideration for an insurance broker when designing a global insurance programme for a multinational client?
A. Achieving the lowest possible insurance premium.
B. Avoiding gaps in insurance coverage.
C. Ensuring that the client discloses all material information.
D. Obtaining identical insurance coverage for each territory.
B. Avoiding gaps in insurance coverage.
What action should an insurance broker immediately take upon realisation that it will be unable to fully meet a client’s demands and needs?
A. Inform the client of policy restrictions in coverage.
B. Insert any policy restrictions into the insurance policy.
C. Send the client a revised demands and needs statement.
D. Terminate the insurance placement.
A. Inform the client of policy restrictions in coverage.
A coverholder under a delegated authority agreement will be an employee of
A. an insurance broker.
B. an insurer.
C. the policyholder.
D. the reinsurer
A. an insurance broker.
If a proposer requests that an excess does NOT apply to his new insurance policy, the insurance broker should explain the
A. consequent limitations on cover.
B. effect on premium levels.
C. imposition of warranties.
D. restrictions on the policy term.
B. effect on premium levels.
Which document does a Lloyd’s insurance broker use to place business with Lloyd’s underwriters?
A. A bordereau.
B. A certificate of insurance.
C. A Market Reform Contract.
D. A Terms of Business Agreement.
C. A Market Reform Contract.
What characteristics does a Lloyd’s insurance broker look for in an insurer when selecting a leading underwriter to provide a quotation on a risk in the subscription market?
A. The ability to always underwrite the largest proportion of the insurance risk.
B. The ability to provide the lowest premium quotation which is then supported by following
insurers subject to different terms and conditions.
C. The capacity to underwrite 100% of the risk which is then automatically reinsured to following
insurers.
D. Specialised knowledge of the class of business to provide a quotation which will be supported
by following insurers.
D. Specialised knowledge of the class of business to provide a quotation which will be supported
by following insurers.
A proposal form is being completed in respect of a professional indemnity risk. What is the broker’s usual role in this process?
A. To advise the client on what material circumstances to disclose on the form.
B. To complete the form and ask the client to verify its accuracy before signing it.
C. To complete those questions where the client is unsure of the meaning.
D. To verify the accuracy of the information provided by the client before asking the client to
sign it.
A. To advise the client on what material circumstances to disclose on the form.
Why might an insurance broker recommend a packaged insurance policy to a client?
A. To cover a number of risks under one policy.
B. Long-term insurance coverage is guaranteed.
C. A lower excess is always available.
D. To provide an individually-designed insurance policy
A. To cover a number of risks under one policy.
An insurance broker has regularly placed a certain type of risk with a leading insurer, but market trading conditions have changed. How should the broker approach the renewal?
A. Maintain continuity with this insurer.
B. Negotiate improvements in terms and conditions with this insurer.
C. Review breadth of cover across the market sector.
D. Review capacity across the market sector leaders
C. Review breadth of cover across the market sector.
What factor must an insurance broker take into account when deciding which insurers to approach for a quotation?
A. The amount of commission paid by the insurer.
B. The financial security of the insurer.
C. Whether a delegated authority agreement is in place with the insurer.
D. Whether the insurer offers monthly instalments for payment of the premium.
B. The financial security of the insurer.
A recognised advantage to a client of using an insurance broker’s risk survey service is that it can
A. guarantee access to insurance at a competitive premium.
B. identify risks of which the client may otherwise be unaware.
C. provide certainty of a cost-effective management solution.
D. simplify the process of obtaining cover for otherwise uninsurable risks
B. identify risks of which the client may otherwise be unaware.
An insurance broker is reviewing an insurance programme for a client at a time of increasing competition for restricted capacity in the market. What should the broker recommend in order to maintain existing premium levels?
A. Improvements to risk management.
B. Payment of the premium in instalments.
C. A reduction in sums insured.
D. The removal of warranties and exclusions.
A. Improvements to risk management.
An insurance broker underwrites risks on a full delegated authority basis. What duties does the
broker perform?
A. Accept the business and calculate the premium only.
B. Accept the business and issue the documentation only.
C. Calculate the premium and issue the documentation only.
D. Accept the business, calculate the premium and issue the documentation.
D. Accept the business, calculate the premium and issue the documentation.
Which party under a delegated authority agreement will normally be responsible for underwriting risks?
A. The coverholder.
B. The insurer.
C. The reinsurer.
D. The retail broker.
A. The coverholder.
What can a broker incorporate into an insurance programme for a client who wishes to maintain rates and terms for a set period?
A. Higher excesses.
B. A long-term agreement.
C. A packaged policy with a single insurer.
D. A risk management review.
B. A long-term agreement.
What must an insurance broker include within a policyholder’s suitability statement?
A. A financial report on the insurer that is being recommended to the policyholder.
B. As many quotations as possible so that the policyholder can make an independent review of
all possible insurance options.
C. The reasons why it is recommending an insurance policy and how the insurance coverage
meets the policyholder’s demands and needs.
D. Specific questions to establish the policyholder’s demands and needs.
C. The reasons why it is recommending an insurance policy and how the insurance coverage
meets the policyholder’s demands and needs.
In order to comply with the Financial Conduct Authority’s Contract Certainty Code of Practice, within how many days should an insurance broker issue full documentation to clients?
A. 7 days for consumers and 14 days for commercial customers.
B. 7 days for consumers and 30 days for commercial customers.
C. 7 days for both consumers and commercial customers.
D. 30 days for both consumers and commercial customers
B. 7 days for consumers and 30 days for commercial customers.
When incorrect documents are received from an insurer, in what circumstances, if any, can the insurance broker send them to the client to enable it to meet contract certainty timelines?
A. In all circumstances.
B. In no circumstances.
C. Only if the broker has manually amended the documents and kept a copy on file.
D. Only if the broker has obtained the insurer’s agreement to make any potential corrections.
D. Only if the broker has obtained the insurer’s agreement to make any potential corrections.
An insurance broker is appointing a loss adjuster to deal with a claim and will subsequently ask the insurer to make an offer in settlement. The broker is providing what level of claims service, if any?
A. No service.
B. Claims advocacy.
C. Delegated authority claims handling.
D. Full claims service.
D. Full claims service.
When providing claims management support, to which party does the broker’s main responsibility lie?
A. The adjuster.
B. The insured.
C. The insurer.
D. The regulator.
B. The insured.
An insurance broker is approached for a quotation by the owner of an engineering business. The broker obtains a number of quotations, helps the proposer to formulate a business continuity plan and then places the risk. The new insurer arranges a survey. Which of these elements is an added value service?
A. Assisting with the business continuity plan.
B. Obtaining the quotations.
C. Placing the risk.
D. Surveying the risk.
A. Assisting with the business continuity plan.
Under a delegated underwriting authority agreement, when would a coverholder normally declare bound risks by completing a bordereau and submitting it to the insurer?
A. Immediately the risk is bound.
B. Weekly.
C. Monthly.
D. Annually
C. Monthly.
If a proposer requests that an excess does NOT apply to his new insurance policy, the insurance broker should explain the
A. consequent limitations on cover.
B. effect on premium levels.
C. imposition of warranties.
D. restrictions on the policy term
B. effect on premium levels.
Which document will an insurance broker normally use to establish the demands and needs of a potential client who requires professional indemnity insurance?
A. A proposal form.
B. A statement of fact.
C. A suitability statement.
D. A Terms of Business Agreement.
A. A proposal form.
A Lloyd’s broker will prepare a Market Reform Contract to
A. detail the monthly risks under a delegated authority agreement.
B. identify a client’s demands and needs.
C. notify an insurer of a claim.
D. provide underwriting information to an insurer.
D. provide underwriting information to an insurer.
A Lloyd’s broker will prepare a Market Reform Contract to
A. detail the monthly risks under a delegated authority agreement.
B. identify a client’s demands and needs.
C. notify an insurer of a claim.
D. provide underwriting information to an insurer.
D. provide underwriting information to an insurer.
Whom must a Lloyd’s broker initially notify under an insurance policy placed with a Lloyd’s underwriter when a catastrophe claim is reported by a client?
A. The Council of Lloyd’s.
B. The leading underwriter only.
C. Xchanging Claims Services.
D. All underwriters who have insured the risk
B. The leading underwriter only.
A retail insurance broker has a fully-owned managing general agency (MGA). When considering
delegated authority agreements, how does this arrangement affect the broker’s relationship with
the delegating insurers?
A. The MGA must be used in separately defined market areas to those of the owning broker.
B. The MGA must have lower authority limits than the owning broker.
C. The MGA provides the owning broker with increased capacity on separately negotiated terms.
D. All delegated authority business must be placed with the MGA.
C. The MGA provides the owning broker with increased capacity on separately negotiated terms.
The Insurance Act 2015 emphasises what role for brokers with regard to material circumstances?
A. To ensure all material circumstances are supplied to enable accurate presentation of the risk.
B. To explain to the proposer that any misrepresentation will be treated as deliberate or reckless.
C. To explain to the proposer that failure to disclose a material circumstance is an offence under
the Act.
D. To verify the accuracy of all information supplied by the proposer.
A. To ensure all material circumstances are supplied to enable accurate presentation of the risk.
What is one of the benefits to the client where an insurance broker provides a detailed underwriting submission to an insurer?
A. A faster quotation will always be obtained.
B. Fewer exclusions and warranties.
C. Increased probability of more favourable terms.
D. Wider cover will always be offered.
C. Increased probability of more favourable terms.
What should an insurance broker check before approaching a UK insurer to underwrite a risk?
A. That the insurer is a member of the Association of British Insurers.
B. That the insurer is regulated to underwrite the required class of insurance.
C. The amount of the insurer’s claim reserves.
D. The insurer’s underwriting profit
B. That the insurer is regulated to underwrite the required class of insurance.
Where a broker operates a no service claims-handling arrangement, what action must be taken
when a claim is notified by a client?
A. Advise the client that the broker can only become involved if there are problems with the claim.
B. Advise the client that they have a duty to notify the insurer and the broker has no involvement.
C. Advise the insurer that a claim is being made but also tell the client to deal directly with the
insurer.
D. Advise the insurer that the broker will forward the initial paperwork but that the insurer must
then respond directly to the client.
C. Advise the insurer that a claim is being made but also tell the client to deal directly with the
insurer.
Whom should an insurance broker inform if he suspects that a claim may be fraudulent?
A. The claimant.
B. The insurer.
C. The police.
D. The regulator.
B. The insurer.
An insurance broker suggests to a client that risk control measures are introduced to limit the extent of any physical damage if a loss occurs. This is known as
A. risk avoidance.
B. risk elimination.
C. risk minimisation.
D. risk prevention
C. risk minimisation.
An insurance broker’s risk survey has identified the potential for small, high-frequency claims. The
same risk also results in occasional significantly higher claim values. What is likely to be the most appropriate recommendation from the broker based on this information?
A. Advise the client to self-insure in respect of this entire risk.
B. Exclude this risk from cover.
C. Make this risk subject to a warranty.
D. Set an excess to eliminate the smaller claims.
D. Set an excess to eliminate the smaller claims.
When a multi-national business places insurance, which party is normally responsible for designing its insurance programme?
A. The insurance broker.
B. The insurer.
C. The policyholder.
D. The reinsurance company
A. The insurance broker.
What should an insurance broker do when there is increased capacity in the insurance market?
A. Encourage clients to increase excess levels to maintain current premiums.
B. Encourage clients to invest in additional risk management.
C. Recommend clients remain with existing insurers despite increasing premiums.
D. Search the market for more competitive terms for clients
D. Search the market for more competitive terms for clients
Why may a client use an insurance broker’s rent-a-captive facility in preference to establishing its own captive insurance company?
A. Administrative costs are reduced because a number of facilities are collectively managed by the
broker.
B. It requires less insurance premium to fully fund the calculated risk.
C. There will be more funds available to settle claims.
D. To avoid conflicts of interest
A. Administrative costs are reduced because a number of facilities are collectively managed by the
broker.
How is an insurance broker normally remunerated for supplying additional risk management
services to a client?
A. As a first charge on any claim payment.
B. As a separate negotiated fee.
C. As part of the total insurance premium.
D. It is automatically included within the commission payment
B. As a separate negotiated fee.
A delegated authority agreement will normally be arranged between an insurance broker and
A. the Financial Conduct Authority.
B. an insurer.
C. a policyholder.
D. a reinsurer.
B. an insurer.
What is the maximum time period after inception during which an insurance broker should send an insurance policy to a consumer to comply with the Contract Certainty Code of Practice?
A. 5 days.
B. 7 days.
C. 10 days.
D. 14 days.
B. 7 days.
The final stage in the standard process of providing insurance products is to:
A. Complete an appropriate proposal form.
B. Source the appropriate product[s].
C. Confirm the client’s demands and needs.
D. Formally arrange cover and bring the insurer and the client to contract
D. Formally arrange cover and bring the insurer and the client to contract
The industry’s Contract Certainty Code of Practice requires the full policy wording to be delivered to customers within a certain time frame. Can you identify the correct time frame in which a commercial customer should receive full documentation?
A. 21 days.
B. 28 days.
C. 30 days.
D. 7 days.
C. 30 days.
Which of the following is a ‘limiting factor’ which will affect a broker’s choice of insurer?
A. Ease of payment.
B. Reputation and experience.
C. Financial security.
D. Credit facilities.
C. Financial security.
To which situation would the Consumer Insurance [Disclosure and Representations] Act 2012 apply?
A. Disclosure of a significant trading loss in the last financial year for a design company.
B. A roofing company requiring employers’ liability cover for employees working at height.
C. A shopkeeper looking to insure stock in the basement.
D. A homeowner looking to insure their new-build family home
D. A homeowner looking to insure their new-build family home
According to the Consumer Insurance [Disclosure and Representations] Act 2012, consumers should at all times:
A. Disclose every material circumstance that would influence the judgment of a prudent insurer.
B. Take reasonable care to answer insurers’ questions fully and accurately.
C. Follow the principal of utmost good faith in their dealings with insurers.
D. Make a fair presentation of the risk to the underwriter.
B. Take reasonable care to answer insurers’ questions fully and accurately.
What can a broker issue to help them to meet their duty to fully explain their recommendations and how these will deliver the client’s demands and needs?
A. An initial disclosure document.
B. A proposal form.
C. A suitability statement.
D. An acceptance letter.
C. A suitability statement.
The Consumer Insurance [Disclosure and Representations] Act 2012 is designed to offer better protection to:
A. Company directors.
B. Commercial organisations.
C. Business customers.
D. Consumers
D. Consumers
A statement of fact is usually used:
A. when a risk is reasonably straight forward.
B. As soon as a signed proposal form has been submitted.
C. With the broker’s initial quote request to the insurer.
D. When a risk requires a survey or inspection.
A. when a risk is reasonably straight forward.
Risks are presented to London Market underwriters on a standard form known as the:
A. London Market Form.
B. London Underwriting Contract.
C. Market Reform Contract.
D. Lloyd’s submission form
C. Market Reform Contract.
Which instance best summarises why a customer would want to use an insurance broker?
A. When a client needs to arrange cover sooner rather than later.
B. When a client is unclear about the product they need.
C. When a client is interested in a range of products offered by a tied agent.
D. When a client needs to spread insurance costs using instalments.
B. When a client is unclear about the product they need.
What action should an insurance broker immediately take upon realisation that it will be unable to fully meet a client’s demands and needs?
A. Inform the client of policy restrictions in coverage.
B. Insert any policy restrictions into the insurance policy.
C. Send the client a revised demands and needs statement.
D. Terminate the insurance placement.
A. Inform the client of policy restrictions in coverage.
Who normally instructs a wholesale insurance broker to place an insurance policy?
A. An appointed representative.
B. An insured.
C. An insurer.
D. A retail insurance broker
D. A retail insurance broker
A coverholder under a delegated authority agreement will normally be an employee of
A. an insurance broker.
B. an insurer.
C. the policyholder.
D. the reinsurer.
A. an insurance broker.
If a proposer requests that an excess does NOT apply to his new insurance policy, the insurance broker should explain the
A. consequent limitations on cover.
B. effect on premium levels.
C. imposition of warranties.
D. restrictions on the policy term.
B. effect on premium levels.
Which document would an insurance broker normally require a client to complete to establish the client’s demands and needs?
A. A delegated authority agreement.
B. An initial disclosure document.
C. A questionnaire.
D. A suitability statement.
C. A questionnaire.
Which document does a Lloyd’s insurance broker use to place business with Lloyd’s underwriters?
A. A bordereau.
B. A certificate of insurance.
C. A Market Reform Contract.
D. A Terms of Business Agreement.
C. A Market Reform Contract.
When a Lloyd’s insurance broker uses the subscription market to place an insurance policy, this is a process of
A. co-insurance.
B. co-ordination.
C. consolidation.
D. contribution
A. co-insurance.
What characteristics does a Lloyd’s insurance broker look for in an insurer when selecting a leading underwriter to provide a quotation on a risk in the subscription market?
A. The ability to always underwrite the largest proportion of the insurance risk.
B. The ability to provide the lowest premium quotation which is then supported by following insurers subject to different terms and conditions.
C. The capacity to underwrite 100% of the risk which is then automatically reinsured to following insurers.
D. Specialised knowledge of the class of business to provide a quotation which will be supported by following insurers.
D. Specialised knowledge of the class of business to provide a quotation which will be supported by following insurers.
The principal of a reinsurance broker is the
A. insurance broker.
B. insured.
C. insurer.
D. reinsurer
C. insurer.
Why does an insurer normally use a reinsurance broker to place its property catastrophe worldwide reinsurance exposure?
A. To provide an enhanced claims service.
B. To reduce its administration expenses.
C. To use the reinsurance broker’s expertise to reinsure the exposure
with one large reinsurer only.
D. To use the reinsurance broker’s expertise to reinsure the exposure with a number of financially strong reinsurers.
D. To use the reinsurance broker’s expertise to reinsure the exposure with a number of financially strong reinsurers.
An insurance broker receives a request for a quotation from a potential new client. Who normally determines which insurers the broker will approach?
A. The British Insurance Brokers’ Association.
B. The client.
C. The Financial Conduct Authority.
D. The insurance broker.
D. The insurance broker.
A proposal form is being completed in respect of a professional indemnity risk. What is the broker’s usual role in this process?
A. To advise the client on what material circumstances to disclose on the form.
B. To complete the form and ask the client to verify its accuracy before signing it.
C. To complete those questions where the client is unsure of the meaning.
D. To verify the accuracy of the information provided by the client before asking the client to sign it
A. To advise the client on what material circumstances to disclose on the form.
Why might an insurance broker recommend a packaged insurance policy to a client?
A. To cover a number of risks under one policy.
B. Long-term insurance coverage is guaranteed.
C. A lower excess is always available.
D. To provide an individually-designed insurance policy
A. To cover a number of risks under one policy.
An insurance broker has regularly placed a certain type of risk with a leading insurer, but market trading conditions have changed. How should the broker approach the renewal?
A. Maintain continuity with this insurer.
B. Negotiate improvements in terms and conditions with this insurer.
C. Review breadth of cover across the market sector.
D. Review capacity across the market sector leaders.
C. Review breadth of cover across the market sector.
What factor must an insurance broker take into account when deciding which insurers to approach for a quotation?
A. The amount of commission paid by the insurer.
B. The financial security of the insurer.
C. Whether a delegated authority agreement is in place with the insurer.
D. Whether the insurer offers monthly instalments for payment of the premium.
B. The financial security of the insurer.
An insurance broker obtains quotations from a number of insurers for a client. In what circumstances may the broker take into account the amount of commission that will be paid when deciding which insurer to recommend?
A. Where no fee is charged in addition to the commission earned.
B. Where the approval of the regulator has been obtained.
C. Where the client’s interests are not prejudiced.
D. Where the policy is placed via Lloyd’s.
C. Where the client’s interests are not prejudiced.
How does an insurance broker who has a claims advocacy role assist and advise the client?
A. It handles all aspects of the claim.
B. Only when problems arise which the client cannot resolve directly with the insurer.
C. Only if requested to by the insurer to expedite the claim process.
D. Only where specialist or complex risks are involved
B. Only when problems arise which the client cannot resolve directly with the insurer.
An insurance broker is appointing a loss adjuster to deal with a claim and will subsequently ask the insurer to make an offer in settlement. The broker is providing what level of claims service, if any?
A. No service.
B. Claims advocacy.
C. Delegated authority claims handling.
D. Full claims service.
D. Full claims service.
What should an insurance broker encourage a client to do when considering risk management?
A. Employ a loss adjuster to advise on risk reduction.
B. Ensure all risks are transferred to an insurance company.
C. Ensure that the proposed risk management measures are cost effective.
D. Fully eliminate the risk concerned in order to improve insurance terms in respect of other perils
C. Ensure that the proposed risk management measures are cost effective.
A recognised advantage to a client of using an insurance broker’s risk survey service is that it can
A. guarantee access to insurance at a competitive premium.
B. identify risks of which the client may otherwise be unaware.
C. provide certainty of a cost-effective management solution.
D. simplify the process of obtaining cover for otherwise uninsurable risks.
B. identify risks of which the client may otherwise be unaware.
An insurance broker is reviewing an insurance programme for a client at a time of increasing competition for restricted capacity in the market. What should the broker recommend in order to maintain existing premium levels?
A. Improvements to risk management.
B. Payment of the premium in instalments.
C. A reduction in sums insured.
D. The removal of warranties and exclusions
A. Improvements to risk management.
Which parties are likely to benefit from a specialist risk management service arranged by an insurance broker?
A. The client only.
B. The client and the insurer.
C. The insurance broker only.
D. The insurance broker and the insurer.
B. The client and the insurer.
A firm of insurance brokers which establishes a network will seek to attract members who are
A. clients.
B. insurers.
C. other insurance brokers.
D. reinsurers.
C. other insurance brokers.
An insurance broker underwrites risks on a full delegated authority basis. What duties does the broker perform?
A. Accept the business and calculate the premium only.
B. Accept the business and issue the documentation only.
C. Calculate the premium and issue the documentation only.
D. Accept the business, calculate the premium and issue the documentation
D. Accept the business, calculate the premium and issue the documentation
Which party under a delegated authority agreement will normally be responsible for underwriting
risks?
A. The coverholder.
B. The insurer.
C. The reinsurer.
D. The retail broker.
A. The coverholder.
Which document is used to detail each party’s duties in the insurance placement process when a retail insurance broker and a wholesale insurance broker are both involved in placing an insurance policy?
A. A demands and needs statement.
B. An initial disclosure document.
C. An insurance policy.
D. A Terms of Business Agreement.
D. A Terms of Business Agreement.
What must an insurance broker include within a policyholder’s suitability statement?
A. A financial report on the insurer that is being recommended to the policyholder.
B. As many quotations as possible so that the policyholder can make an independent review of all
possible insurance options.
C. The reasons why it is recommending an insurance policy and how the insurance coverage meets the policyholder’s demands and needs.
D. Specific questions to establish the policyholder’s demands and needs.
C. The reasons why it is recommending an insurance policy and how the insurance coverage meets the policyholder’s demands and needs.
How does an insurance broker who has a claims advocacy role assist and advise the client?
A. It handles all aspects of the claim.
B. It assists the client when problems arise which cannot be resolved directly with the insurer.
C. When requested to by the insurer to expedite the claim process.
D. When specialist or complex risks are involved.
B. It assists the client when problems arise which cannot be resolved directly with the insurer.
When providing claims management support, to which party does the broker’s main responsibility
lie?
A. The adjuster.
B. The insured.
C. The insurer.
D.The regulator.
B. The insured.
What should be a major consideration for an insurance broker when designing a global insurance programme for a multinational client?
A. Achieving the lowest possible insurance premium.
B. Avoiding gaps in insurance coverage.
C. Ensuring that the client discloses all material information.
D. Obtaining identical insurance coverage for each territory.
B. Avoiding gaps in insurance coverage.
What action should an insurance broker immediately take upon realisation that it will be unable to fully meet a client’s demands and needs?
A. Inform the client of policy restrictions in coverage.
B. Insert any policy restrictions into the insurance policy.
C. Send the client a revised demands and needs statement.
D. Terminate the insurance placement.
A. Inform the client of policy restrictions in coverage.
A coverholder under a delegated authority agreement will be an employee of
A. an insurance broker.
B. an insurer.
C. the policyholder.
D. the reinsurer.
A. an insurance broker.
If a proposer requests that an excess does NOT apply to his new insurance policy, the insurance broker should explain the
A. consequent limitations on cover.
B. effect on premium levels.
C. imposition of warranties.
D. restrictions on the policy term.
B. effect on premium levels.
Which document does a Lloyd’s insurance broker use to place business with Lloyd’s underwriters?
A. A bordereau.
B. A certificate of insurance.
C. A Market Reform Contract.
D. A Terms of Business Agreement.
C. A Market Reform Contract.
What characteristics does a Lloyd’s insurance broker look for in an insurer when selecting a leading underwriter to provide a quotation on a risk in the subscription market?
A. The ability to always underwrite the largest proportion of the insurance risk.
B. The ability to provide the lowest premium quotation which is then supported by following insurers subject to different terms and conditions.
C. The capacity to underwrite 100% of the risk which is then automatically reinsured to following insurers.
D. Specialised knowledge of the class of business to provide a quotation which will be supported by following insurers
D. Specialised knowledge of the class of business to provide a quotation which will be supported by following insurers
A proposal form is being completed in respect of a professional indemnity risk. What is the broker’s usual role in this process?
A. To advise the client on what material circumstances to disclose on the form.
B. To complete the form and ask the client to verify its accuracy before signing it.
C. To complete those questions where the client is unsure of the meaning.
D. To verify the accuracy of the information provided by the client before asking the client to sign it.
A. To advise the client on what material circumstances to disclose on the form.
Why might an insurance broker recommend a packaged insurance policy to a client?
A. To cover a number of risks under one policy.
B. Long-term insurance coverage is guaranteed.
C. A lower excess is always available.
D. To provide an individually-designed insurance policy.
A. To cover a number of risks under one policy.
An insurance broker has regularly placed a certain type of risk with a leading insurer, but market trading conditions have changed. How should the broker approach the renewal?
A. Maintain continuity with this insurer.
B. Negotiate improvements in terms and conditions with this insurer.
C. Review breadth of cover across the market sector.
D.Review capacity across the market sector leaders.
C. Review breadth of cover across the market sector.
What factor must an insurance broker take into account when deciding which insurers to approach for a quotation?
A. The amount of commission paid by the insurer.
B. The financial security of the insurer.
C. Whether a delegated authority agreement is in place with the insurer.
D. Whether the insurer offers monthly instalments for payment of the premium
B. The financial security of the insurer.
A recognised advantage to a client of using an insurance broker’s risk survey service is that it can
A. guarantee access to insurance at a competitive premium.
B. identify risks of which the client may otherwise be unaware.
C. provide certainty of a cost-effective management solution.
D. simplify the process of obtaining cover for otherwise uninsurable risks.
B. identify risks of which the client may otherwise be unaware.
An insurance broker is reviewing an insurance programme for a client at a time of increasing competition for restricted capacity in the market. What should the broker recommend in order to maintain existing premium levels?
A. Improvements to risk management.
B. Payment of the premium in instalments.
C. A reduction in sums insured.
D. The removal of warranties and exclusions.
A. Improvements to risk management.
An insurance broker underwrites risks on a full delegated authority basis. What duties does the broker perform?
A. Accept the business and calculate the premium only.
B. Accept the business and issue the documentation only.
C. Calculate the premium and issue the documentation only.
D. Accept the business, calculate the premium and issue the documentation.
D. Accept the business, calculate the premium and issue the documentation.
Which party under a delegated authority agreement will normally be responsible for underwriting risks?
A. The coverholder.
B. The insurer.
C. The reinsurer.
D. The retail broker.
A. The coverholder.
What can a broker incorporate into an insurance programme for a client who wishes to maintain rates and terms for a set period?
A. Higher excesses.
B. A long-term agreement.
C. A packaged policy with a single insurer.
D. A risk management review.
B. A long-term agreement.
What must an insurance broker include within a policyholder’s suitability statement?
A. A financial report on the insurer that is being recommended to the policyholder.
B. As many quotations as possible so that the policyholder can make an independent review of all possible insurance options.
C. The reasons why it is recommending an insurance policy and how the insurance coverage meets the policyholder’s demands and needs.
D. Specific questions to establish the policyholder’s demands and needs.
C. The reasons why it is recommending an insurance policy and how the insurance coverage meets the policyholder’s demands and needs.
In order to comply with the Financial Conduct Authority’s Contract Certainty Code of Practice, within how many days should an insurance broker issue full documentation to clients?
A. 7 days for consumers and 14 days for commercial customers.
B. 7 days for consumers and 30 days for commercial customers.
C. 7 days for both consumers and commercial customers.
D. 30 days for both consumers and commercial customers.
B. 7 days for consumers and 30 days for commercial customers.
When incorrect documents are received from an insurer, in what circumstances, if any, can the insurance broker send them to the client to enable it to meet contract certainty timelines?
A. In all circumstances.
B. In no circumstances.
C. Only if the broker has manually amended the documents and kept a copy on file.
D. Only if the broker has obtained the insurer’s agreement to make any potential corrections.
D. Only if the broker has obtained the insurer’s agreement to make any potential corrections.
An insurance broker is appointing a loss adjuster to deal with a claim and will subsequently ask the insurer to make an offer in settlement. The broker is providing what level of claims service, if any?
A. No service.
B. Claims advocacy.
C. Delegated authority claims handling.
D. Full claims service.
D. Full claims service.
