Unsure

Question 1

What is ‘cross-selling’?

Answer 1

Selling additional insurance to an existing client.

Question 2

What is ‘Up-selling’?

Answer 2

Selling the client more of the same product under an existing policy.

i.e. extending cover under an existing policy.

Question 3

What is the principal aim of the IDD?

Answer 3

Consumer protection.

Question 4

Minimum number of years an insurance broker must keep training records?

Answer 4

5 years.

Question 5

What document provides the FCA evidence of a firms compliance with its regulations?

Answer 5

RMAR - Retail Mediation Activities Return

Question 6

Explain the principle of ‘Tort’?

Answer 6

Brokers are legally responsible to their principal to exercise reasonable care.

Brokers must:
- not withhold any material info.
- present to the underwriter all info at their disposal.

Question 7

Why is it important that an insurance broker with a high client retention level also focuses on attracting new clients?

Answer 7

The client base will naturally erode.

Question 8

What is the main disadvantage of ‘loss leader’ business?

Answer 8

Significantly reduced profits in the early stages.

(For a new business proposal to be competitive, fees have to be cut, so the business may not be competitive during the first year).

But, it may generate new income in the future.

Question 9

What is a simple complaint? What is a complex complaint?

Answer 9

Simple = can be solved within 3 days, by the person receiving the complaint, and to the client’s satisfaction.

Complex = cannot be resolved by the person receiving it and unlikely to be within 3 days.

Question 10

How long must records be kept of a complaint?

Answer 10

3 years from the date of the complaint.

Question 11

The back office function within a firm of insurance brokers will NOT include…

Answer 11

… placement of risks.

Question 12

Insurance brokers are least likely to be involved in placing which type of insurance?

Answer 12

Extended warranty.

Question 13

Who is normally the client of a wholesale insurance broker?

Answer 13

The retail broker.

Question 14

What is a Bordereau? How often is it submitted to an insurer?

Answer 14

It’s a report provided by the coverholder of the risks written and the claims reported.

Submitted monthly.

Question 15

Under a ‘no service’ claims agreement, what action must be taken by the broker when a claim is notified by the client?

Answer 15

Advise the insurer that there is a claim but also tell the client to deal directly with the insurer.

Question 16

Whom should an insurance broker inform if they suspect a claim to be fraudulent?

Answer 16

The insurer.

Question 17

The FCA’s rule relating to identifying client needs, product information, and claims handling are stated in what document?

Answer 17

Insurance: Code of Business Sourcebook (ICOBS).

Question 18

What money may be held in an insurance broker’s client asset account?

Answer 18

Return premiums from insurers prior to payment to clients.

Question 19

What is an ‘initial disclosure document’?

Answer 19

The FCA requires an insurance broker to disclose its status (i.e. address & authorisation status).

They can do this by using an ‘initial disclosure document (IDD)’, which is compulsory for consumer contracts and contains a list of details that must be said about the firm.

Question 20

When a Lloyd’s broker uses the subscription market to place a insurance policy, this is a process of?

Answer 20

Co-insurance.

Question 21

What are the cancellation rules for consumers?

Answer 21

Most general insurance contracts issued to consumers are subject to 14 day cancellation rights.

If the policy is cancelled, the consumer is entitled to a refund within 30 days.