Miscellaneous

Question 1

What is the cost for a Subject Access Request?

Answer 1

Free subject to an optional charge – max 1 month to comply

Question 2

What is the definition of Fair Analysis?

Answer 2

Adequate number of insurers, large enough for the broker to demonstrate their knowledge of the insurers in the relevant market

Question 3

What type of company would a reinsurer most likely look to spread the risk a clients portfolio?

Answer 3

Large companies

Question 4

What is the main purpose of the IDD?

Answer 4

Consumer Protection

Question 5

What did the IDD replace?

Answer 5

IMD - Insurance Mediation Directive

Question 6

What is the main definition of Law of Agency?

Answer 6

Perform all their principals lawful instructions and do this in a timely fashion

Question 7

Retention

Answer 7

cost of acquiring new clients can be high, training and competence programme, client service contributes directly to client retention

Question 8

Conflict of Interest

Answer 8

an agent can only have one principal at any one time – FCA requires all brokers to identify and manage conflicts of interest, and full disclosure and transparency is needed in order to manage and avoid conflicts. Should be set out in TOBA.

Question 9

Main info on Broker’s TOBA with a client?

Answer 9

FSCS, firm’s ownership, cooling off period, complaints procedure

Question 10

Four key elements in TOBA?

Answer 10

Regulatory information, broking firm’s TOBA, Details of the services provided, The broker’s remuneration

Question 11

Commission or brokerage is least likely to be quoted:

Answer 11

Within the insurance quote that is sent to the client.

Question 12

Commercial customers have a duty of fair presentation which means they must:

Answer 12

Disclose every material circumstance which they know or ought to know.

Question 13

A company specialises in motor insurance and is acting as a reinsurer for a company who deals mainly in property insurance. What is the most likely reason for this?

Answer 13

Motor insurance is a new liability line for the property insurance company.

Question 14

What should insurance brokers refer to for details of when commission payments can be withdrawn from the premiums paid by insureds?

Answer 14

The insurers’ terms of business agreements [TOBA].

Question 15

Who is responsible for reviewing and assessing the report that sets out the risks written and claims reported, also known as the bordereau?

Answer 15

The insurance company who provided the delegated authority.

Question 16

When would an insurance broker disclose the amount of commission they were paid by an insurer?

Answer 16

As standard business practice to a individual client and only if requested by a commercial client.

Question 17

Before a firm prepares a business plan to become an authorised insurance broker, it must decide:

Answer 17

The scope of authorisation and how the FCA’s Principles for Businesses apply to the firm.

Question 18

The process of risk management is LEAST likely to involve:

Answer 18

Acceptance.

Question 19

The advantages of choosing to reinsure a portfolio of risks are LEAST likely to include:

Answer 19

Faster claims settlement.

Question 20

Exaggerating an insurance claim is an example of:

Answer 20

Opportunistic fraud.

Question 21

FCA only requires brokers to disclose their commission earnings if asked by a

Answer 21

Commercial customer

Question 22

The material facts relating to an application for buildings and contents insurance are LEAST likely to include the:

Answer 22

Number of previous policies the proposer has held.

Question 23

Lloyd’s market is made up of syndicates:

Answer 23

Groups of private individuals or corporate members who carry financial risk

Question 24

A broker is granted approval by an insurer to operate a delegated authority on a property scheme. A customer requires cover for a property and requests that the cover notes the interest of ABC Bank. When the broker places cover within the delegated authority agreement, which option best describes the role of the broker?

Answer 24

The broker acts primarily as agent of the insurer.

Question 25

Although agents are bound by their principal’s instructions, insurance brokers are usually permitted to delegate tasks that:

Answer 25

are purely mechanical in their nature

Question 26

An insurance broker is able to bring a principal and a third party together in a contractual relationship. Which of the following is the principal?

Answer 26

The client.

Question 27

As part of an insurance company’s claims team, you are tasked with clarifying the correct name of a client who is insured under a delegated authority agreement. Your manager instructs you to speak with the cover holder. Who should you call?

Answer 27

The organisation or persons that are in receipt of the delegated authority facility.

Question 28

FCA – Has two main areas of regulatory responsibility in regards to broking:

Answer 28

• Authorisation: ‘prudential regulation’ / ensure firms are financially sound
• Conduct of business: ‘Conduct regulation’ Relationship authorised firm has with customers

Question 29

Fixed portfolio:

Answer 29

• Continue to be subject to a programme of firm or group-specific supervision
• Small population of firms which require highest level of supervisory attention –allocated a named individual supervisor.

Question 30

Flexible portfolio:

Answer 30

• Subject to event driven reactive supervision

- Majority of firms classified as flexible portfolio firms.

Question 31

Principles for business:

Answer 31

11 principles for business.

Question 32

Treating customers fairly:

Answer 32

Six FCA TCF outcomes