Chapter 2- Role of Broker (keywords) Flashcards Preview

I10 Broking exam > Chapter 2- Role of Broker (keywords) > Flashcards

Flashcards in Chapter 2- Role of Broker (keywords) Deck (18):
1

Law Of Agency

Brokers have a legal duty to act in the best interests of their clients. The FCA requires the broker to treat their customers fairly.

2

Core Broking Functions

Traditional Broking Services:
- The provision of products & services
- Negotiation and placement
- Selection of insurers
- Claims, negotiation, collection and payment
- the design and operation of insurance programmes

3

Demands and Needs

Identifying and clarifying a clients requirements

4

Proposal Form

Establishing a clients demands and needs is usually done through a set of questions, this is done through the proposal form. Most brokers follow an established format with different questionnaires for different insurance types

5

Suitability Statement

Recommending the product to the client ensuring that they have all the information about the product and include a statement of how that product meets the clients needs

6

Warranties

Once a suitability statement is mead then the broker must as a minimum explain any warranties that apply and explain the repercussions for non-compliance

7

Material Facts

Brokers needs to collect relevant risk data including material facts, so they can be presented to a suitable insurer - every circumstance is material which would influence the judgement of a insurer in fixing the premium or determining whether he will take the risk

8

Loss Experience

This a key material fact it SHOULD be disclosed to the underwriters, this data needs to be captured as well as claims made and any uninsured losses that have occurred on a previous policy

9

Duty Of Disclosure

Within capturing data brokers must provide an ideal opportunity for client to disclose anything that would constitutes a material fact. Clients have a duty of disclosure and brokers will remind clients what the consequences of non disclosure are

10

Remuneration

This is payment or compensation received for services or employment. This includes the base salary and any bonuses or other economic benefits that an employee or executive receives during employment.

11

Contract Certainty

All the terms and conditions of the insurance policy have all been agreed before any insured or insurer commits to the contract

12

Insurance: Conduct of Business Sourcebook (ICOBS)

The FCA provides a specific guidance on how brokers should select insurers and give advice through the ICOBS. When quotations are made the broker is required to tell the client the basis in which they have carried out the broking on each risk

13

Fair Analysis

A broker is able to make recommendation based on a fair analysis, for this to take place the broker must:
- Consider a fair amount of insurers
- To evidence the analysis by adhering to and documenting a set process

14

Fraud

The broker has responsibilities regarding fraud. A broker who peruses a claim on their clients behalf when they know it is fraudulent is commuting an offence.

15

Soft Markets

The higher frequency of claims and the higher claim costs, coupled with lower premiums drives capital out of the market

16

Hard Markets

Insurers are able to increase their premiums and restrict cover as they become more selective in the business that they write. This increases profitability.

17

Upmost Good Faith

A summary of the principle of upmost good faith;
- The principle means that every person who enters into a contract of insurance has a legal obligation to act with utmost good faith towards the company offering the insurance.

18

Market Reform Contract (MRC)

Risks are presented to London Market underwriters on a standard form (MRC) this was introduced in 2007 and has 6 sections:
- risk details
- information
- security details
- subscription agreement
- fiscal and regulatory
- broker remuneration and deductions