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IF1 Get ready > Chapter 9 - Compulsory insurance and statutory regulations > Flashcards

Chapter 9 - Compulsory insurance and statutory regulations Flashcards

1
Q

Identify six types of insurance that are compulsory in the U.K.

A 
Employers liability
Motor third party
Solicitors professional indemnity
Horse Riding Public Liability
Dangerous Animals/Dogs Public Liability
Insurance brokers professional indemnity
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2
Q

Which Act applies to contracts and notices between consumer and seller. Terms are only binding on consumer if they are “fair”

A

Consumer Rights Act (2015)

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3
Q

Which Act gives an injured party the right to claim directly against the liability insurer of the party who injured them. If the party is insolvent.

A

Third Parties (Rights Against Insurers) Act 2010

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4
Q

Which Act implemented EU Gender directive. Insurers can not charge a higher premium based on gender.

A

Equality Act 2010

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5
Q

Which Act allows parties to a contract to override privity of contract and allow a third party to enforce the contract if it expressly provides benefit to that third party.

A

Contracts (Rights Of Third Parties) Act 1999

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6
Q

Which Act states that insurer may be liable to pay interest on claims if they have not paid claims within a reasonable time?

A

Enterprise Act 2016

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7
Q

Identify three insurance policy terms that may be under Consumer Rights act grey list and be deemed unfair.

A

Term that hinders consumer’s right to take legal action
Term that allows a seller to change terms unilaterally
Term that applies disproportionately high cancellation charges

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8
Q

What is the current rate of Insurance Premium Tax on policies other than Travel insurance?

A

12%

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9
Q

What is the current rate of Insurance Premium Tax on Travel insurance?

A

20%

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10
Q

Which regulator is the prime regulator for insurers

A

Prudential Regulation Authority

PRA

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11
Q

Which regulator regulates insurance intermediaries

A

Financial Conduct Authority

PRA

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12
Q

What are the PRA’s objectives

A

promote safety and soundness of UK financial system

contribute to ensuring the insurance policyholders PRA’s

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13
Q

Who is the lead regulator of the Lloyd’s of London

A

PRA

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14
Q

Who regulates managing agents

A

PRA and FCA

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15
Q

Who regulates Lloyd’s brokers and members agents

A

FCA

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16
Q

What is the FCA’s strategic objective?

A

To protect and enhance confidence in

the U.K. financial system.

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17
Q

What are the FCA’s three operational objectives

A

Consumer protection
Integrity
Competition

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18
Q

Which regulated fim risk category is most risky so firms get more intense supervision

A

Category 1

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19
Q

Which regulated firm risk category is least risky an includes most insurance brokers

A

Category 4

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20
Q

What are the three types of work in the FCA Supervision model?

A

Proactive
Reactive
Thematic

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21
Q

What is the reporting system called under which the FCA gathers information on small firms?

A

GABRIEL

22
Q

How often do low risk small firms have a “touch point” with the FCA

A

Every 4 years

23
Q

Identify three areas where the FCA focus on:

A

Product governance
End-to-sales processes
Prevention of financial crime

24
Q

Which Act encourages “whistle blowing” by reducing employers ability to punish whistle blowers?

A

Public Interest Disclosure Act 1998 (PDA)

25
Q

What are Threshold Conditions?

A

The conditions a firm needs to meet to be authorised by PRA/FCA

26
Q

Regulated firms must have a responsibilities map under what regime?

A

Senior Managers and Certification Regime

27
Q

What are the regulators’ rules which apply to senior managers called?

A

Rules of conduct

28
Q

Identify four discplinary powers of the regulator

A

Public censure
Financial penalties
Prosecution for criminal offences
Civil and less formal remedies eg injunctions

29
Q

The difference between an insurers’ assets and liabilities is known as?

A

Solvency margin

30
Q

What are the three pillars in Solvency II

A

Pillar 1 Capital requirements
Pillar II Risk management
Pillar III Disclosure

31
Q

Identify two ways an insurer can calculate their MCR and SCR

A

Standard formula

Internal model

32
Q

To what level of confidence must captal be held in respect of the SCR

A

99.5%

33
Q

To what level of confidence must captal be held in respect of the MCR

A

85%

34
Q

What is the SCR?

A

Solvency Capital Requirement

35
Q

What is the MCR?

A

Minimum Capital Requirement

36
Q

What will be higher MCR or SCR?

A

SCR

37
Q

What does ORSA stand for under what pillar of Solvency II is it required?

A

Own Risk and Solvency Assessment PIllar 2

38
Q

Identify two reports insurers are required to provide under Solvency II Pillar 3 Disclosure which is public and which private?

A

Solvency Financial Condition Report (SCR) Public

Regulatory Supervisory Report (RSR) Private

39
Q

Identify seven ways the PRA can intervene if an insurance company’s capital is inadequate for the risks they face.

A 
Restrict premium income
Require more frequent accounts
Require more information
Prevent insurer accepting new business
Require company to restore capital
Impose requiremenst on investment policy
Withdraw authorisation
40
Q

Identify seven items in an insurance broker’s Retail Mediation Activities Return

A

Accounting information
Regulatory capital
PI insurance
Threshold conditions
Training and competence
Conduct of business data
Product sales data
FCA fees data
Complaints (Eligible complaints to be reported twice yearly)
~~~

41
Q

What is ICOBS

A

PRA/FCA rule book governing the sale of general insurance

42
Q

What is the cooling off period under a consumer policy

A

14 days

43
Q

What is the cooling off period for payment protection insurance?

A

30 days

44
Q

What is the mandatory CPD requirement under the Insurance Distribution Directive?

A

15 hours

45
Q

What are the three stages of money laundering?

A

Placement
Layering
Integration

46
Q

The process by which money obtained illegally is converted to legitimate funds is called?

A

Money Laundering

47
Q

Under the Proceeds of Crime Act (2002) who must insurers nominate to make disclosures to the Serious Organised Crime agency?

A

Money laundering reporting officer

48
Q

Identify four offences under the Bribery Act 2010

A

Pay bribe
Receive bribe
Bribe foreign official
Failure of commercial organisation to have adequate procedures to prevent bribery

49
Q

The process of establishing a new client’s identity is known as?

A

Client verification

50
Q

What are there cross cutting rule sunder the new Consumer Duty?

A

Act in good faith towards retail customers
Avoid forseeable harm to retail customers
And enable and support retail customers to pursue their financial objectives

51
Q

Under the new Consumer Duty what are the 4 areas where FCA expect to see good outcomes?

A

Products and services
Price and value
Consumer understanding
Consumer support

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