Weak Areas Flashcards
What does it mean if you are risk averse?
buy insurance
What does it mean if you are risk seeking?
self- insurance
Is a speculative risk insurable?
No
What is a speculative risk?
gain/break even. e.g gambling
what is a pure risk?
opposite to speculative - no possibility of gain- either no loss or total loss
what is a particular risk?
specific/small - opposite to fundamental
what is a fortuitous risk?
accidental
what is coinsurance?
one policy 2 insurers
what is dual insurance?
2 or more policies - contribution
what is a proprietary insurance company?
owned by Shareholders
what is a mutual company?
owned by Policyholders
what is a mutual indemnity company?
Marine
what is a captive company?
1 insured- large cooperation self insurance
What is a ‘Name’ in Lloyds Market?
unlimited liability
what is a managing agent?
companies that manage the syndicates and appoints underwriters
What is a corporate name in Lloyds?
companies that back syndicated financially - limited liability
what is a member agent?
gives advice to potential investors
what does an underwriter do in Lloyds?
accepts risks for syndicates
What is a principal?
individual/policyholder/consumer
what is an agent?
broker
who are brokers authorised by in order to sell insurance?
FCA
who is an appointed representative authorised by if they are exempt?
principal/client
what is an actuary?
they build the premium/quote behind the aggregator website
ceding is when…
an insurer gets insurance from reinsurer?
retroceding is when…
a reinsurer gets insurance from another reinsurer
invitation to treat
NEVER AN OPTION
what is agency by ratification?
when broker acts above their authority and breaks the agreement by the client approves
when is insurable interest required for life insurance policies?
inception
Who does CIDRA apply to?
consumers/personal individuals
when is insurable interest required for marine policies?
time of loss
what do consumers have to do to comply with CIDRA?
duty to not make a misrepresentation and to answer all questions fully & accurately
who does Insurance Act apply to?
commercial/business
what is replacement / new for old likely to be used for?
machinery
what do commercial customers have to do?
make a fair presentation of the risk and signpost anything important
what is reinstatement used for?
buildings
average/underinsurance equation
SI/Correct Value * loss
contribution equation ( independent liability method)
SI / Value of risk * loss
contribution equation (max liability method)
SI Proportion / total SI * loss
PRA
- Capital adequacy & governance
- Judgement based - forward looking
-Judges proximity to failure & have a Proactive Intervention Framework
SMCR
- Certificate = key roles in firms
- Senior Managers = statement of responsibilities, responsibility map, fit and proper testing
What is the ideal % of capital adequacy and what is the minimum %
99.5%
minimum 85%
FCA
- function of market, day to day
- consumer protection
risk based approach
Under Solvency II, there are 2 reports annually. One is public
Solvency & Financial Condition Report - public
Regulatory Supervisory Report- private
What Law investigates/prosecutes financial crime?
National Crime Agency
What Law defines Money Laundering?
Proceeds of Crime Act
How long must an insurance company keep complaints for?
3 years
What is the main purpose of IPT?
to raise revenue for the gov
How long does an insurance company have to respond with a final response?
8 weeks
For coninsurance situations, if one insurer becomes insolvent- how much of the claim does the other have to pay?
only their signed percentage
What type of company is owned by a non-insurance parent company?
Captive
when broker/agent is collecting money from client for insurer, they are obliged to…
keep the money seperate from their own
who has a duty of fair presentation within a contract?
both the insured and the insurer
why would an insurer offer the market value of their car and not a brand new car?
because this is the extent of their financial interest
what type of requirement is fair treatment of customers?
regulatory requirement
if an approved person does something wrong, who will be punished?
broker as well as the approved person
what is a fidelity guarantee policy?
covers the risk of fraud/dishonesty of an employee
does IPT apply to all insurance premiums?
only some GI policies
what type of body is the CII?
Professional
what is a tied agent?
represents only 1 insurer
can a client avoid a contract under a TOBA?
no he is bound by it
under a TOBA, an insurer and intermediary wouldn’t be to fault if the failure i caused by force majeure…
major things outside of anyone’s control which stops a cointract from completing
what measure of indemnity is used for total loss of building?
cost of reconstruction at the time of loss
what is a statutory requirement?
BY LAW
when must insurable interest first exist for motor insurance?
at the time the policy goes on risk
who initially collects IPT on behalf of the gov?
the insuRER
protection and indemnity clubs underwrite which LOB?
Marine
what regulation allows FCA to issue penalties and prosecution?
The Financial Services Act 2012
what are the 3 pillars for Solvency II
financial requirements
governance / supervision
reporting/disclosure
what are the main elements of CII’s high standard of service?
accuracy
transparency
suitability
Who owns a captive company?
A parent company
What form of consideration is a principal likely to give an agent?
Commission on premium received
What is the GABRIEL system that is submitted to FCA
Framework with provides the FCA with supervision of an insurers activities
If there’s a term in the contract unknown my policyholder, what law does this breach?
CONSUMER RIGHTS ACT
What does a the contracts act allow a third party to do
Enforce the policy against the insurer
Under which act was the assets recovery agency established?
Proceeds of crimes act
Highest travel premium for travel
North America
When a broker is advising a client on insurance who are they acting as the agent of
The principal
Who does a money laundering reporting officer report to
National crime agency
What is the principle purpose of the proceeds of crime act
To empower authorities to confiscate funds where it is believed they have been obtained unlawfully
