Random Mix Flashcards
What type of insurance provides cover for businesses against the risk of their debtors being unable to meet their obligations?
Credit insurance
Risks where there is historical data relating to the exposure to a large number of similar risks are known as:
Objective Risks
Marine freight insurance covers…
Liability for damage to goods carried.
A collective policy is issued when a risk is:
co-insured
A money policy provides cover for:
all risks
A large haulage company decides to buy third party only motor cover for their fleet of vehicles and makes provision for any damage to their own vehicles to be repaired through their own vehicle maintenance workshops. This is an example of:
self-insurance
Imran has arranged a travel policy for his summer holiday in Spain, which includes cover for baggage and personal effects. He also has a household policy which includes ‘all risks’ cover for personal possessions whilst anywhere in Europe. This is an example of:
dual insurance
Which of the following is a type of pecuniary insurance?
Political Risk
For companies quoted on the stock market it is a legal requirement:
to identify all significant risks to which the business is exposed
From a regulatory perspective, a protective cell company is required to have an approved business plan for:
each cell
Arranging reinsurance on a single known risk is known as:
facultative re-insurance
What is the role of a members’ agent at Lloyd’s?
Advising their clients on the advantages and disadvantages of investing in the Lloyd’s market
Who must be capable of offering advice on the basis of a fair analysis of the market?
An independent intermediary
A Societas Europaeas is subject to taxes and charges:
in all EU states where their administrative centres are situated.
Jim runs a internet mail order company selling electrical goods. With each order he despatches he inserts a brochure for extended warranty cover on behalf of the Swift Repair Insurance Company, giving details of how to contact them for a quotation. Under regulatory rules Jim is acting as an:
introducer appointed representative
Companies that manage one or more Lloyd’s syndicates on behalf of the members are known as
managing agents
The Legislative Reform (Lloyd’s) Order 2008 introduced which of the following changes?
It removed the restriction that only allowed a Lloyd’s broker to place business at Lloyd’s.
When a reinsurer seeks to transfer some of a risk to another reinsurer, the risk placed in this way is called a:
retrocession
Protection and indemnity clubs are associated with what type of insurance?
Marine liability
In which main area do mutual indemnity associations operate today?
Marine insurance
Which of the following developments in the insurance market is an example of consolidation in the insurance sector?
The growth of broker networks.
Which of the following developments in the insurance market is an example of consolidation in the insurance sector?
The growth of broker networks.
Under the law of agency, what is an ‘undisclosed principal’?
Someone for whom an agent acts whilst seeming to act on their own behalf.
When a policy is due for renewal, which of the following is an insurer required to do to comply with Financial Conduct Authority (FCA) rules?
Provide information in good time so that customers can make an informed decision.
Agency by consent:
may be either express or implied
An agent has a terms of business agreement with a principal. What type of authority does this create?
express authority
The cancellation condition in a general insurance policy requires insurers to give a return premium to the insured if the insurer cancels the policy mid term. On what basis does it say the return premium should be calculated?
A pro rata return premium should be given
Legally when does a valid contract first come into existence?
When an offer is accepted unconditionally
In what circumstance is an independent intermediary considered to be the agent of the insured?
When giving advice on cover, the placing of insurance or how to make a claim.
In what circumstance is an independent intermediary considered to be the agent of the insured?
When giving advice on cover, the placing of insurance or how to make a claim.
Margaret has bought herself a new top of the range sports car. The first insurer she contacts for a quotation offers to cover her at a premium of £475, subject to her having an immobiliser fitted to the vehicle. Margaret confirms that she wants to go ahead with cover on this basis. This is an example of:
Unconditional Acceptance
What is the consideration given by insurers when an insurance contract is formed?
An agreement to pay claims in accordance with the terms of the policy.
When a policy is due for renewal, which of the following is an insurer required to do to comply with Financial Conduct Authority (FCA) rules?
Provide information in good time so that customers can make an informed decision
Legally when does a valid contract first come into existence?
When an offer is accepted unconditionally
Under guidelines issued by the Association of British Insurers (ABI), which of the following should be included in the ‘Premiums and credit’ section of an insurer’s Terms of Business Agreement?
The broker’s obligation to release all statutory documentation
For life assurance contracts insurable interest must exist:
at inception, but it does not need to exist at the time of a loss
Which of the following is a requirement of the Life Assurance Act 1774 for a life insurance policy to be valid?
The name of the person effecting the policy must be shown in the policy.
Which of the following statutes makes tenants responsible for the upkeep of the buildings they occupy?
The Settled Land Act 1925
Which of the following is an example of a statute restricting liability and therefore insurable interest?
The Hotel Proprietors’ Act 1956
What is the general rule regarding the existence of insurable interest in relation to general insurance contracts?
It must exist both at inception of the policy and at the time of any claim.
What is a bailee?
Someone who holds property on a temporary basis on behalf of the legal owner.
The insurable interest of a shareholder in a limited company is limited to:
the value of the shares that they own
Which important principle concerning insurable interest under a general non marine contract of insurance is illustrated by the case of Lucena v Craufurd (1806)?
The expectation of acquiring insurable interest at some time in the future is not enough to create insurable interest.
ABC insurance company arrange reinsurance on the buildings of a large shopping centre they insure. What is the subject matter of the reinsurance contract?
ABC’s financial interest in the original insurance
The case of Castellain v Preston (1883) laid down an important principle with regard to which of the following features of insurable interest?
The subject-matter of the contract
At common law a person’s insurable interest in their potential legal liabilities includes:
the claimant’s damages and legal costs
The roof of Howard’s house is poorly maintained. A loose tile falls and hits Derek on the head when he calls to read the gas meter. The injury caused to Derek as a result of Howard’s negligence is an example of insurable interest arising under:
common law
A tenant is most likely to have an insurable interest in the property they rent:
under contract **
ABC insurance company arrange reinsurance on the buildings of a large shopping centre they insure. What is the subject matter of the reinsurance contract?
ABC’s financial interest in the original insurance
Bert is seeking a package insurance policy for his convenience store. Henry has just bought a car and requires motor insurance. Both approach the Composite Insurance Company for a quotation. Financial Conduct Authority guidance states that the Composite Insurance Company should explain the duty to disclose all circumstances material to a policy to:
Bert only
After inception of her life policy Marilyn is diagnosed with diabetes. When, if at all, MUST Marilyn disclose this information to her life insurer?
There is no requirement to disclose
Which of the following is an example of physical hazard in relation to motor insurance?
Age of the driver
Under common law, the duty of disclosure starts:
when negotiations begin
ABC insurers send their surveyor out to carry out a fire survey of a warehousing risk. The surveyor fails to notice that amongst the items stored in the premises are some flammable paints. Which of the following statements is true about the insurer’s rights if this information subsequently comes to light when a claim is made?
The insurer cannot claim non disclosure in order to void the policy
Although there has been a deliberate breach of the duty of disclosure a motor insurer pays a third party personal injury claim as required by the Road Traffic Act 1988. From whom, if anyone, do insurers have a right of recovery of their outlay?
the insured
Duty of disclosure
The duty of disclosure does not apply between inception and renewal negotiations unless it affects the policy cover.
Insurers’ approach to handling situations involving non disclosure have been modified to reflect the approach of the:
FOS
Legally when does a valid contract first come into existence?
When an offer is accepted unconditionally
Where a loss was caused by an uninsured peril which was preceded by an excepted peril, to what extent would the claim be payable by the insurer?
None of the claim would be payable
How, if at all, does the wording of the Lloyd’s standard fire policy differ from the ABI standard fire policy?
It provides marginally more cover for explosion damage
Miranda accidentally sets fire to a frying pan whilst cooking dinner one evening. She calls the fire brigade who manage to put out the fire before it can spread. Apart from the fire damage to the kitchen there is also smoke and water damage to the adjoining lounge. What is the proximate cause of the damage to the lounge?
Fire
The application of the doctrine of proximate cause is MOST likely to be needed when:
a loss results from a series of events
When a claim is reported where there has been a sequence of events, insurers will need to establish the proximate cause of any damage. What will this tell them?
The peril that caused the damage *****
Deborah is insured with ABC insurers on a comprehensive basis. Cheryl is insured with XYZ insurers on a third party only basis. Their vehicles collide on a roundabout and it is clear that they are both partially to blame. There is damage to both vehicles in addition to which Deborah sustains a broken arm. Cheryl is not injured. A claim is made under both policies. Which insurer(s) will deal with the losses sustained by Deborah?
ABC insurers will initially pay for the damage to Deborah’s vehicle. XYZ insurers will be liable both for Deborah’s personal injury claim and to reimburse her insurers for the damage to her vehicle to the extent to which blame is apportioned.
What is the effect on the cover provided by a standard fire policy of the use of the words ‘directly or indirectly’ in the nuclear assemblies exclusion?
The cover provided excludes remote causes linked to nuclear risks
What is indemnity?
Indemnity is financial compensation sufficient to place the insured in the same financial position after a loss as they enjoyed immediately before the loss occurred.
A liability policy provides indemnity to the:
insured in respect of their legal liability to pay damages and claimant’s costs.
If a piece of equipment is insured on an indemnity basis, the measure of indemnity is the value of the property at the time and place:
when the loss occurs
Zuzana’s car, which is comprehensively insured, is involved in road traffic accident. She makes a claim under her motor policy for the damage to her own vehicle. Her insurer arranges for the car to be repaired at a recommended repairer. How will her insurer settle the claim?
Zuzana’s insurer will pay the garage directly for the cost of the repairs.
Where buildings are insured on a reinstatement basis, the sum insured MUST be at least what percentage of the actual rebuilding cost to avoid claim payments being reduced?
85%
The measure of indemnity under a marine policy which has been arranged on a valued basis is determined by the
value agreed between the insured and the insurer
What is a benefit of using the replacement option as a method of settling commercial glass insurance claims?
Further losses are minimised
Although there has been a deliberate breach of the duty of disclosure a motor insurer pays a third party personal injury claim as required by the Road Traffic Act 1988. From whom, if anyone, do insurers have a right of recovery of their outlay?
The insured
What policy will NEVER be subject to subrogation?
Personal Accident
When applying the principle of contribution, the two ways in which each insurer’s rateable proportion of a loss can be calculated are the:
sum insured method and independent liability method
The purpose of the ABI Memorandum of Understanding - Subrogated Motor Claims is to:
set out principles based on honesty and transparency
What policy would usually contain a more specific clause?
Household Insurance
Under the subrogation condition which is found in most insurance policies, at what stage in the claims process can an insurer pursue subrogation rights from a responsible third party?
As soon as its own insured’s claim is notified
Where a landlord/tenant relationship exists, this is MOST likely to give rise to subrogation in which of the following ways?
Under the terms of a contract
Under money laundering regulations, for what period of time must records of client verification be kept?
5 years
How is public liability insurance made compulsory as a result of the Dangerous Dogs Act?
Dangerous dogs must be licensed by the local authority, which must be satisfied as to the adequacy of insurance
In the event of a regulatory failure, the Financial Conduct Authority (FCA) are required to make a report to the
Treasury
What penalty can be imposed on directors who are personally responsible for failure to comply with the Money Laundering Regulations 2017?
Imprisonment up to 2 years
Under money laundering regulations, proof of identity should be obtained
before any transactions are complete
The Prudential Regulation Authority (PRA) requires qualitative reports to be submitted:
Annually
Changes to legislation as a result of the Test-Achats judgement affect which of the following types of policies?
Income protection
Under the guidelines issued by the Joint Money Laundering Steering Group what document is acceptable for client verifiation purposes?
A Firearms certificate
Which section of the Financial Conduct Authority’s (FCA’s) Handbook contains rules that MUST be met with regard to close links with other organisations?
Threshold Conditions
How many central principles does the CII’s Code of Ethics contain?
5
code of conducts applies to
apply to all individuals who choose to become members of a professional body
The Financial Conduct Authority (FCA) expects almost all complaints to have been substantively addressed through a firm’s final or written response within
8 weeks
An insurer or intermediary is bound by the decision of the Financial Ombudsman Service (FOS):
where the Ombudsman’s award does not exceed £350,000
The high level rules on Training and Competence, which apply to all authorised firms, are found in which section of the Financial Conduct Authority’s (FCA’s) handbook?
SYSC
