Flashcards in Chapter 5 - Common Functions Within Insurance Organisations Deck (284):
Supporting, the areas central to all insurance operations are called...
Operational functions are more ?????? Than principal functions
The exact nature of insurance company will be divided by the nature of the products provided, give an example...
In life business, the actuarial team will have specialists in long term business, in motor the claims department will have detailed knowledge of motor industry.
The essential purpose of strategic planning is...
Set the business on a path of best performance
What are the principal functions?
-strategy and planning
-sales and marketing
-finance and treasury
What are the operational functions?
-legal and company secretarial
-it and data management
The strategy team usually in head office and report to...
Chief executive and finance director
In smaller firms the strategy will be set by....
Senior managers themselves
A company will use external strategy people when considering...
A new business,s perhaps in Asia
The strategy team will undertake projects for senior executives in ...
New areas of business and or expansion
The sorts of things the strategy team consider with new business and or expansion is..
Supply and demand, cost, regulatory hurdles, staff availability and expertise, start up costs etc.
Planning tools strategy team will use will be a what....
The strategy team will look give and receive information when considering mergers and acquisitions, the sorts of things they look at will be...
The information the strategy team will receive in regards to mergers and acquisitions will be extensive and they will often require a...
Data room. To be set up which all documents are placed. There may be a virtual room where electronic files are kept.
After considering all factors for a bid for a firm, an acquirer may offer or restate its bid. Will often include an element of...
Goodwill, which is the value of the intangible assets such as brand licensing and assets
The strategy team will look at what classes of business they are in and what they could potentially enter. The strategy team will do an Analysis of ...
Competition, and the reasonable prospects, e.g of cross selling etc.
Analysis of classes of business will include whether a firm should...
Enter or close down a line of business.
If a firm decides to close down a line of business, this will allow them to...
Redeploy capital to areas where more profit can be made.
In regards to strategy focus, an insurer may decide that it is operating in countries where...
Not possible to grow the premium income.
The purchase of insurance relative to the number of potential buyers is known as...
If there is a penetration rate of 80% in the UK, what sort of Perentage could this be like in Asia?
The strategy team will asses penetration in areas where they believe the firm has the ability to sell and service policies locally. This may mean...
Acquiring a local insurance firm as a platform for growth or making an application to the insurance regulator in the country to start up an operation.
Why might also in regards to strategic focus, a company decide to do business in other countries?
Spread their risk, e.g if catasrphic losses all in once place then business totally gone, whereas if spread about then they have less exposure.
Strategy focus will also consider what when working with other people?
A strategy for providing insurance on a white label basis is a form of strategic development that balances efficient sales with losing the...
Immediate brand recognition that a company may want.
In regards to partnerships and white labelling, an insurance company may lose its brand recognition, but this is likely outweighed by...
Being involved with a major outlet, for example John Lewis, BMW motor insurance etc
A partnership strategy common in insurance is to form networks of...
Firms that cooperate in managing multinational clients, in particular, insurance brokers are keen to offer an international service.
Partnerships multinationally between brokers allows smaller firms to...
Compete with larger international firms.
How is household legal expenses also a type of parnetship usually?
The household insurer might not have the legal expertise so the legal expenses will be provided by someone else, e.g DAS, Amtrust etc
In regards to strategy focus, firms may also look at outsourcing. (You know the advantages and disadvantages of this). The long standing strategy of claims management by outsourcing through loss adjusters whilst still continuing has developed into a broader ...
Third party administrator role.
In regards to outsourcing, the third party administrator looks at all aspects of claims including appoint of loss adjusters, engineers, surveyors etc, managers the claim files, settles the claim and does all the stuff. Similar to who bluefin use which is...
The strategy team will look at advertising and marketing strategy. This is because an insurer must create interest in its products. Lyyods typically work through brokers however this is changing because...
Lloyd's based insurers recruit marketting specialists to engage with clients and sponsorship and advertising campaigns are used to promote brand awareness.
Companies seeking to attract a younger group will use marketing techniques that appeal to the...
IT literate. Where use of logos and selling message are stylised for young people.
In regards to strategy focus, strategy team must look at whether to go through a broker or...
Most large scale commercial insurances are transacted through...
Reinsurance is handled by specialist reinsurance brokers, or reinsurance divisions of large brokers (with certain expectations) where the reinsurer deals direct with the...
Primary market for motor is...
Insurance aggregators as 56% of new business
As private motor reaches maturity in aggregator market, the trend is now towards...
The strategy team will also look at ???? Horizons.
The strategy team will look at the time horizons for the strategy for the business. The starting position will be the plan for the fianincla year ahead, and three to five year plans. In 2012 Lloyd's published their...
Vision 2025, a 13 year stategic plan
The longer the time horizon the...
Broader the plans
The business planning document, will look at classes...
Of business to be written
The business planning document will look at gross..
Premiums (before brokerage is applicable) for each class of business.
The business planning document will look at a profile of the gross premiums by...
The business planning will look at what spread?
The business planning document will look at levels(percentage of gross premiums) to be paid in...
The business planning document will look at main sources of business split between...
Split by direct And estimated income through each broker.
The business planning document will look at an expense profile detailing staff costs, building and it costs ...
Advertising budget, regulatory fees, outsourcing costs and general expenses
The business planning document will look at investment strategy and what other strategy?
The business planning document will include a summary of...
Key changes to be included the plan for the year ahead.
What is a dialogue process?
Management of business unit will meet with the senior management of the head office to discuss the plans.
Draft plans will go through several looks at and..
The agreed business plans are reviewed in terms of the solvency and operational capital, risk, regulatory and corporate governance required to support the plan. Senior managers will consider the various levels of capital required for different plans and make decisions where the best return on capital can be achieved. Based upon a strategy that balances risk taking and reward. The final plans are...
Agreed for the coming year.
During the year the business plan is monitored, as is the business environment. Should any materiel opportunities become apparent then a re planning review review will...
Take place to assess the opportunity.
The essential role of the underwriting department is to ...
Calculate the premiums to be charged for the risks to be insured.
Sufficent premium is required for profit and...
The underwriting department will be structured into....
Specialist areas such as property, liability, marine and motor.
Explain the underwriting hierarchy
From top to bottom
-director of underwriting
-head of department (e.g marine)
-assistant and trainee underwriters
The control of underwriting is through an underwriting ...
The underwriting manual will look at areas like construction, location etc etc, and also when to discount and when to ...
The underwriter will calculate a what premium?
Pure risk premium
What is a pure risk premium?
The amount before expenses and profit and sometimes brokerage is added.
In life assurance, the underwriting manual, sometimes known as rifles contains premiums per £1,000 assured and again there are loadings and discounts such as....
Dangerous occupations, health conditions, and whether or not the proposer is smoker
Insurance quotations can be done on the Internet, over the phone,for commercial sometimes a proposal form or equivalent is required by the insured, this will have details such as what for a printing company?
-PL and products
-directors and officers
Often quotations will be what by other people?
Im regards to underwriters quoting, needing information and negotiating with brokers, think of your own...
Job at bluefin
In addition to using in house staff, many insurance companies allow for some form of underwriting or policy administration to be carried out by outside entities. The aim is to...
Acquire business and reduce mangement expenses
Delegated authority can range from simple cover note book issuing to wider...
Transaction of business and authority
Often the policy wordings will have been specifically negotiated to fit a particular category of client e.g haulage contractors or hoteliers. These will be often referred to as ....
The party to whom authority has been delegated is known as the ...
An agreement called a ??????? ???????? Is set up between the parties, which sets out the scope and extent of the authority delegated to the cover holder.
Binding authorities are a particular important way of transacting business in the...
Lloyd's and London markets
The attraction of schemes from the insurers point of view is that...
Flow of business arising from the tailored policy wording.
With regards to premiums under delegated authority, agents with underwriting authority may have a schedule of rates to charge, the premium may be quoted to the client without...
Any input from the insurance company.
Managing general agents are a type of...
Delegated authority arrangement whereby the MGA organisation not only holds the underwriting pen but also takes on other activities such as marketting, selling, admin. It does not however provide claims
MGAs can be independent or owned by either an insurance broker or insurer. Insurers create these facilities for a number of reasons. Typically the principals and staff of the MGA will have a specific expertise in a given sector, this means that the insurer can gain access to a stream of revenue without...
The expense of committing its own staff and resources.
Allowing an external company the authority of binding insurances of behalf of the company is not something to be taken,lightly and relies heavily on...
As the intermediary acts on behalf of the client, and sometimes on behalf of the insurer, setting out the delayed authority is...
Very important and must be made clear.
A line slip, although a form of deflated authority has a number of...
Different features and specific use.
A line slip is...
An agreement between an individual broker and a group of two or more insurers whereby each insurer or underwriter agrees to accept a pre agreed proportion of a specified type of insurance.
In regards to a line slip, general criteria for risk acceptance and terms and conditions are agreed at the outset between the insurers and underwriters and there is usually some form of pre agreed rating, pricing scheme for...
The areas that are central to all insurance operations are called....
Risks placed on the line slip are usually notified to the supporting insurers via a monthly/quarterly/annually listing called a....
Risks placed on the line slip are usually produced in bulk to reduce...
In regards to delegated authority and such, the insurer will appoint an external ???????
To review the files are in accordance with the binding authority.
The underwriting performance will be compared with the plan, sometimes, daily schedules of new business written and policies renewed, together with claims reported, will be provided to the class underwriters and heads of department. A weekly underwriting ....
Committee meeting is had with the underwriters attending to look at income and claims development compared to expectations and then the summarised information is reviewed on a monthly basis.
The performance of the underwriting is discussed with ....
The strategy team to see if any deviations from the overall underwriting objectives and to asses whether the strategy needs to be reviewed and updated.
The role of the claims department is to ensure that...
When claims are made, the policyholder receives a fair and equitable settlement for their loss, in accordance with the contractual obligations of the insurance policy.
The job of the claims department is often one of managing expectations and protecting ...
The good reputation of the company for fair dealing.
Work carried out in the claims department is highly specialised and requires specific training for the type of subject matter insured. A legal degree for example might help when dealing with claims under public liability policies. Claims handlers need not hold a qualification however as many of their skills are developed....
On the job
Claims management processes are written down and captured in a ...
Similar to underwriting, there will be a claims...
An important claims idea is the idea of first...
In regards to claims, often a rapid response is required, so that ...
Steps can be taken to prevent further loss, e.g repairs and stuff
Policyholders may not have the knowledge or resources to take immediate steps to secure their property and the assistance of the insurers claims advice and practical steps is...
After the initial advice concerning a loss and the steps taken to prevent further loss, the claims handler will seek additional information. Again this depends on the type of insurance but the overriding aim is to ensure...
That the claim is dealt with effectively and correct payments are made.
For property classes of insurance, the main role of the insurer is approving repair estimates and contracts for the replacement of damaged or lost goods or possessions. Certain types of loss can take a great deal of time to investigate and settle. In legal liability cases, such as directors and officers liability insurances, the insurer will provide...
Legal defence for the insured and allegations will be defended.
In life assurance, usually settled on...
Production of death certificate
The claims team will also make enruquires to satisfy themselves that no part of the claim is fraudulent or...
Ultimately, the claims settlement will be settled within the terms of the policy, I,e the excess deducted from payments and any other conditions influencing the claim...
Taken into account.
Claims handler may need to seek authority to ...what the claim?
Payments may be made directly to the policyholder or...
Directly to the building repair companies etc, legal advisers and so on. In addition may need to pay the fees of solicitors and loss adjusters.
The final claims settlement may include an element of salvage where damage goods or property is taken into ownership of...
The main focus of the sales effort is to...
Capitalise on the brand or reputation of the company.
The marketing department in an insurer is advised of the wider business and underwriting plans for the company and compiles a marketting plan designed to...
Attract customers who will purchase the policies the firm has to offer.
The marketting plan takes into account the decisions made on the what channels?
Distribution, direct or through a broker.
The marketting teams role may include the following:
-customer profiling, target markets or segmentation
-development of strategic marketting plans
-development of operational marketing plans
-public relations and sponsership
-relationship management including sales management and customer service
It is impossible to satisfy the needs of the whole market, or of a market segment, unless you know...
What those needs are
In the circle of what the marketting team does, this would be to..
- Identify target markets
- Formulate marketting strategy
- Control marketting operations
- Monitor the successes of products of services
Develop marketting plans
Market research that provides accurate market measurements (both present and future) is critical to...
An important part of market research is investigating the activities of...
By combing information from government reports, trade association newsletters, independent company financial reports such as..., annual reports, commercial surveys, directories, industry experts, consultants and the media, an organisation can generate reasonbly accurate data about areas of the whole market.
Dun and Bradstreet
Advertising can be defined as...
Any form of impersonal presentation and promotion of ideas, goods or services by an identified organisation that must be paid for.
Private motor market largely based on a lot of what to get company's business?
Relationship marketting uses...
Information about individual customers as a device for building up a strong relationship between an organisation and its clients by pre-emptying a customers buying needs on the evidence of past purchases.
A feature of successful customer relationship management is knowing...
The customer and their needs and preferences, based on previous sales.
Personal communication methods are more likely to be effective than mass appeal for what type of management...
Customer relationship management
The more policies and etc someone has with a business...
The less likely they are to leave to a competitor
Important aspect of customer relations is the ???? Team
Call centre staff will be trained with the best techniques to...
Close the sale
The marketting and selling of insurance products must comply with...
FCAs rules, particularly the insurance conduct of business sourcebook, ICOBS and treating customers fairly.
Actuaries have provided an important role in...
Life company's etc
Specialist pricing actuaries...
Take assessment of risk in life assurance and set premiums relative to the current age of the proposer.
The 4 types of actuaries are...
1. Pricing actuaries
2. Reserving actuaries
3. Modelling specialists
4. Those who focus on solvency capital
General pricing actuaries provide support to the underwriting team by...
Predicting loss ratios within a stated range for a particular book of business, based on the historical performance of this book, plus any additional factors that may be available such as industry loss data.
Undertake extensive reviews of the instal reserve set against a claim compared to the final costs in order to asses the trends in reserving movements.
Reserving analysts give greater...
Confidence to senior managers when they consider the end of year fianincla position which will include reserves.
Modelling specialists will look at and try to...
Exposure of company to things like hurricanes and earthquakes and do loss modelling work to predict the exposure to an insurers portfolio of business.
In regards to modelling specialists, specialist software is used that ...
Contains property values insured by the company and details of historical natural catastrophe events. The actuary uses this software to predict the costs to the company in the event of a hurricane flood, earthquake.
Actuaries and underwriters will work closely together but ??????? Will have ultimate responsibility for the ????????
Underwriters have ultimate responsibility for underwriting department.
In regards to solvency capital actuaries, they will use...
IT systems that take into account a full range of risks to the business such as reserving, credit, market, operational, group, stategic, insurance etc.
In regards to solvency capital actuaries and the IT systems they use, derailed risks within each category are estimated and entered into a model to provide an estimate of the near worst case scenario. Under solvency II internal model capital assessment, the programme that provides the capital estimate is known as.... And it sits at the centre of the capital assessment.
The role of the actuarial department also includes the engagement of external actuaries where an independent view of reserving and capital mangement is required. The larger the consulting actuaries also create market software for actuaries such as the ...
Igloo capital system from towers Watson and risk explorer from ultimate risk solutions.
The last ten years have seen significant growth in the resourcing of the risk management function in all insurance firms, partly driven by ??????? But also to capitalise on the benefits that risk management brings to ????????
Regulatory expectation and the benefits to operations and performance
Many organisations have created the role of ????????? Or ????????? To take the lead of risk management acitities.
Chief risk officer or head of risk mangement
The risk management standard mentioned in chapter 4 follows a logical process of:
-identifying The firms stategic objectives
-monitoring and iteration
In regards to risk mangement, and the identifying the firms strategic objectives, risk mangement activities at the highest level should..
Aim to protect the firm from interruptions to its objectives, avoiding loss or profit through risk events and protecting reputation.
In regards to risk identification, what are some of the methods used?
-brainstorming and risk workshops
-flow process analysis
What is scenario analysis?
A risk identification technique that asks questions like what if? To see exposures to the firm.
What is flow process analysis?
A risk identification technique, risk managers review the reliance on the various states of insurance processing such as sales/advice, admin, claims investigation, settlement and financial mangeging. The purpose is to identify potential bottlenecks or dependencies on every aspect of business processing.
What is risk analysis?
Once all the risks have been identified and been put in their categories, e,g strategic, investment/market, credit and operational, they are analysed to gain a profile on the probability of the risk event happening, and the impact this would have on the organisation. The controls in place to mitigate risks are also a analysed to asses their effectiveness and reliability. The risks are then ranked to identify the highest risks.
What is risk reporting?
Key risk indicators will be reported to ko they risk and compliance committee and then a summary sent to the board. Risk managers will also maintain a risk and events log that will carry details of every risk event that occurs, whether a minor property damage or regulatory breach.
What is monitoring and iteration in risk management?
Whole risk process is monitored to ensure that changes in the risk environment are identified and acted upon. The full risk identification and analysis process is carried out at regular intervals -perhaps as often as quarterly, but no longer than annually.
Risks that have been identified and analysed are then recorded in a...
The risk register is a centralised dats source on all risks that a company is known to face and it is the job of the risk mangement department to keep it current and...
Report significant findings.
Together with managers of the company, risk managers will undertake a quantified assessment of risk according to a...
Risk matrix (e,g a 4x4, 3x5 or 5x5 grid) which assists in ranking the risks according to materiality.
In the risk analysis, risks will be assessed from both an ?????? And ??????? View point.
Inherent and residual.
The inherent risk analysis describes the risk...
Without any special controls applied, except perhaps the basic common sense controls.
In regards to the risk rating and assessment framework, if green rating is a score of 1-4, Amber 5-8, then red will be ...
A risk with an impact of £1mil to £10mil is rated very possible, is scored as a...
The risk assessment rating framework looks at impact at levels 1, 2 and 3. With one being less than a mil, 2 being between a mil and 10 mil and level 3 being 10mil plus. The probability section features levels 1 to 5 with 1 being remote at every 25 years and finish the rest...
2- possible, 15 years
3- very possible, 10 years
4- highly likely, 3 years
5- imminent, 1 year
Any risks in the red category will...
Warrant immediate attention and a process of risk reduction will be recommended.
All insurance companies hold some form of asset in order to fund the business. There are three main types of asset....
2. Claims reserves
3. Shareholders funs, retained profits and loans
An insurer usually has a department that is responsible for managing the investments to get the ...
Best return possible, while at the same time keeping the assets readily available to meet the expenses of running the business and to pay claims.
Insurers will often bring in external investment managers, who are measured in their success by the returns they get, they will often be keen to show how much better they are then their competitors by exceeding...
Benchmark or average returns
The investment return consists of interest and dividend payments and capital growth. These returns are a major source of income for insurers and indeed life and pension policies are sold with the projected returns linked to the overall...
Investment team will speak with underwriting, claims and strategy about...
Nature of the insurances the company intends to write.
If insurances the company write are short tail then the investments need to be...
In life and pensions businesses, the contractual undertakings in the polices may be longer term up to 30 years or more and so these types of liability can be matched by the long term investment of the company's...
For short tail insurances, what is used for paying the claims quick?
Cash at the bank
Investment into corporate or government bonds may be for ...
One year or a longer period.
Where equities are held, this is usually regarded as a ?????? To ???????? Investment.
Medium to long term
Many life and pension firms bold part of their investments in commercial property - this is again a ???? Investment class
The investment when lidquidated into cash this must take place in a...
The investment department will provide regular probably monthly summaries of the value of the investment portfolio to the invesmtnent committee with commentary on any reductions in value, performance against plan, changes to the investment mix and changes to the ...
Management of finances is a core activity and an area of interest for...
Senior management and board
Reporting to the CFO will be a financial controller or...
Descions regarding the insurances to be transacted, management of costs and expenses, investment strategy and capital raising and solvency ratios are all under the direct influence of the...
The finance department including accounting takes responsibility for the ...
Banking and reconciliation of all aspects of income. The main source of income are premiums, but other sources include investment income, fees and commissions for services, recoveries under reinsurance claims, property rental income and sales of salvaged property.
The finance and accounting control activities are centred ensuring that the amounts of income receivable are in da f collected and the ledgers can be matched (???????) with balances shown on the bank statements.
An important part of the firms financial management is credit...
There is no credit risk if...
Premiums are collected by debit/credit card.
The period of credit for the broker may be 30-60 days which allows the broker to collect premiums from clients and then pay these over to the insurer on a monthly basis in one payment. The risk to the insurer is that..l
Broker may take longer to pay premiums(with the consequent loss of interest it the insurer) or indeed may be in finanal difficulty and go into ligiqudaiton.
Usually premiums collected by the broker are...
Held in a separate bank account so the insurer has some form of protection from bankruptcy.
The business planning process involves an assement of the company's financial....
Capital may already be avlaible in the form of shareholders funds, bank loans and other forms of borrowings. As the company grows, further capital will be required and there will also be times when existing investors withdraw and need to be replaced. The treasury team may undertake the practical aspects of raising new funds and managing the relationship with...
Investment banks and investors. It may do this as part of the finance department, or as a unit in its own right.
The finance department is repo smile for assessing assent and liability, ?????? And ??????? Risks.
Market and credit
The finance team will structure the solvency capital from various resources from funding that it holds. The solvency capital requirement must be kept under review as changes in the risk profile of the firm may result in a recalculated ...
The finance team may need to realise additional capital, this could be at short notice so...
Finance team needs to maintain good working relations with the banks and investors that provide capital.
In insurance firms that have multiple companies and divisions, including oversees subsidiaries, an important role of the finance department is the...
Consolidation of accounts for each entity.
Consolidating the accounts of the whole business and different overseas etc will be daunting for the finance and treasury team because...
Different currencies etc, local regulatory practices, different classes of business etc all difficult to get head around basically.
As the financial reports are received from operations, the information is consolidated and forms a key part of the...
Annual report and accounts
The company secretarial function (sometimes known as the company secretariat) carries out administrative operations that ensure the companies act 2006 and ... Are complied with.
Stock exchange listing rules
The legal and company secretary function of a company looks after all documentation, filings and registrations required by...
The secretarial team is responsible for managing the ?????? ??????? Although this is likely to be outsourced to an external ???????
Share register, sometimes outsourced to external registrar
A key feature of the company secretary role is the organisation and operation of...
Board meetings and the meetings of board committees.
The company secretary (or their team) is required to establish an annual time table of events, including the...
Annual general meeting.
With regards to the meetings the company secretary look over, these will be done in a...
Sequence, mamagers report affairs to the committees and then summarised reports are submitted to the next board meeting.
A typical timeline for meetings includes the following stages:
-company secretary agrees the agenda for each board and committee meeting with the board chairman, or the chair of the committee, perhaps three or four weeks ahead of the meeting and from this functional managers prepare their relevant papers.
-a week before the meeting the secretary sends the meeting packs to directors and other attendees so that they can read the papers and prepare for the meeting.
-at the meeting itself the company secretary or an assistant takes the minutes. These are agreed after the meeting with the chairman and are then circulated to directors for any action points that where agreed
-at the following meeting the minutes are reviewed again and if agreed, are signed by the chairman and filed by the company secretary in the minute book or an equivalent record system.
The solicitor heading the in house legal department is sometimes known as ...
The general counsel is responsible for...
Dealing with all legal affairs of the company.
The company will engage external law firms to advise on specialist matters such as mergers or acquisitions, litigation against directors, property acuistion and international ...
External law firms may be engaged to deal with insurance claims either on...
A bulk contract basis or case by case where disputes emerge from a claim.
In all cases, the central legal department should approve the selection of the...
External law firm
When the company is entering a contract with for example an outsourcing supplier, exceeding a stated amount, e,g £25,000 the usual requirement is that this is referred to...
A key role of the compliance department is to...
Ensure as far as possible, that the operations of the firm are compliant with regulatory requirements.
The compliance team is usually headed by...
A compliance officer or compliance director.
The activities of the compliance team feature in virtually all aspects of insurance companies and insurance...
Compliance team will communicate to all relevant staff the regulatory requirements of their role as well as...
Any updates or changes that are introduced.
The compliance team should act as a point of contact for...
Regulators in their dealings with the firm.
Compliance should check individual sales to ensure...
All customer protection procedures have been carried out.
Compliance team should carry out anti money laundering and ...
Anti Fraud procedures.
Compliance team should ensure proper...
Credit checks are carried out.
Using the TCF rules, compliance should deal with customer..
Compliance should develop new compliance...
Compliance will audit current processes and practices to make sure they...
Conform to regulations.
Compliance should ensure that all members of staff carrying out controlled functions (as defined by the regulator) are duly registered as...
Registered as approved persons
Compliance should arrange or undertake training for key regulatory or legal issues such as the...
-proceeds of crime act 2002 (for anti money laundering)
-data protection act 1998 (for personal data)
-and the bribery act 2010
Compliance should report on any...
Regulatory reporting on compliance and any breaches
Compliance should create and maintain a compliance..
The compliance team may also be responsible for managing the ???????? ????????? ??????????? Although in some firms this is the responsibility of the company secretary. The ??????? Will contain all of the firms policies.
Corporate govnerance manual
There will be a close liaison between compliance and...
Operational ma mangement and HR to ensure business practices are carried out compliantly and members of staff are appropriate trained.
Know your client techniques are where...
Advice may only be given out after a thorough examination of a clients needs. And claims handling.
The FCA state in regards to compliance and treating customers fairly that...
Firms must be able to demonstrate that they consistently delivering fair outcomes to consumers and that their management are taking responsibility for ensuring that the firm and staff at all levels deliver the consumer outcomes relevant to the business throughout establishing an appropriate culture.
FCA in regard wit TCF want firms to have :
-senior management instill TCF as corporate culture
-be measuring performance of TCF and acting on results
-be able to demonstrate through these measures they are delivering fair outcomes
-have no serious failings
The FCA has ? Outcomes that explain what It wants firms to achieve in dealing with consumers.
The compliance department monitors the firms performance in achieving the outcomes of the FCA and works closely with the customer service teams to ensure these outcomes are understood and ... Within the operations.
While the internal audit department covers all areas of the business, the key focus is on ...
The financial statements in the firms annual reports and accounts.
The internal audit team works very closely with the external auditors undertaking the statutory audit. The essential role of the IA team is to undertake acitities that...
Analyse the firms compliance with its control environment and thus together with external auditing, provides assurance to senior managers and the board that the firms affairs are in good order and reanaoble confidence can be placed on the accuracy and completeness of the financial statements.
What is outsourced or co sourced internal audit?
If there should be a shortfall in the IA resources then external consultants may be engaged to undertake the work.
The head of internal audit manages the team and priorities through the operation of an...
Audit plan is typically agreed with the chairman of the audit committee with input from the...
Chief executive and other senior managers and directors.
The audit plan lays out the particular audit projects to be undertaken in the coming year. An estimate of the resources required to do the work is made in terms of number of days work on preparation and carrying out the audit, people required and a period for the report writing and presentation. The total amount of man days noted in the plan dictates...
The staff numbers that the department requires.
The audits may address a particular department or activity of there may be ?????? Reviews.
The process of the typical audit is for the nature of the audit to be agreed by senior management and then discussed with the department managers to agree the details. Usually there is an audit...
Experienced auditors carry out the ??????? And the initial findings are discussed with a ????? ???????
Fieldwork. Then discussed with senior auditor.
When the first draft report has been created the details are unusually shared with the department managers to check the facts and to affirm the findings. The mamagers are given the opportunity of commenting on the report and their responses are then ...
Incorporated in a final report.
Depending on the seriousness of a problem in the internal audit, mamagers are given a period of perhaps ?? To ?? Days to reciting the problem.
30 - 60
The audit team recheck areas of a breach for...
Proof errors or breaches are no longer happening.
Key measures of good corporate governance are the numbers of negative audit findings and the numbers of requirements for improvement that are beyond their completion date. The audit committee will look very carefully at this information and in any cases of serious non compliance may wish to ...
Interview the managers involved.
A core role of the internal audit is to ensure the financial resources of the firm are...
Protected against fraud and errors.
Audits of the firms income ledgers, payments and bank balances seek to identify any...
Whilst the reconciliation of accounts is an important feature of the audit, the IA team also spends time...
Examining the processes, checks and controls that surround the accounting management to assess the effectiveness of the controls and compliance with the controls by all members of staff.
The external statutory audit details are discussed with the head of internal audit before being tabled at...
The audit committee meeting.
The head of internal audit has an unusual reporting structure in that they usually...
Report to two people. A senior executive such as finance director or CEO and chairman of the audit committee.
Why does head of internal audit report to chairman of audit committee?
Maintain independence from the operating divisions, also allows open discussions of any problems found in the auditing work.
The approach of IT should be used for a ...
A key element of IT operations is...
Any interruption to IT service can...
Be damaging to the income, profitability and reputation of a firm.
How can IT department help in business strategy?
They are aware of the new technology etc.
The central function of IT is to...
Establish the hardware requirements, including servers, desktop PCs and printers and the whole of the system of connections.
IT may also be involved with telecommunications, including the specification of...
Telecoms capability within buildings services
The hardware strategy could be to fully own and maintain the firms requirements In house or...
Outsource the operations to a fully operational service.
Whether it outsource hardware management strategy not, taking into consideration will be...
-whether in house specialist knowledge is avlaible
-issues like international operations
IT managers the training and use of systems software and assurance. This may be bespoke software or...
Off the shelf products.
The essential asset an insurance firm has is the information upon...
Which it bases its business.
The record keeping task is a key responsibility for the IT team and its roles include capture, storage, security and...
accessibility of the data
Options are considered in terms of data storage, where servers will be positioned within the firms offices, or perhaps an external ..
Server farm where server storage space can be rented - this forms part of the wider it management strategy.
What is a server farm?
Where server storage space can be rented
What must be stablished so that people's personal data is not assessed?
IT and internal audit will work closely to...
Establish defenise security measures, including monitoring attempted intrusions and even carrying out their own attempts to break down security.
Data should be managed so that the information is...
When data is captured, the structure used must be...
The IT systems setup is designed to minimise the chances of inconsistent data capture and to reject any cases where information uploaded is
Incomplete or incorrect
The HR team undertakes a wide range of activities in the...
Resourcing of staff and ensures the best practice recruitment, employment and staff development techniques are used.
The approach to staff resourcing, development and remuneration is a key element of the corporate strategy and staff costs are...
Usually an insurance companies second largest overhead after claims.
The recruitment process starts with an analysis of the type of experience and skills that are required to carry out the particular...
Roles to be filled.
The HR team assists a member of operational management in...
Drawing up a job specification and a person profile.
HR carries out external research to...
Gain a picture of salaries and benefits being offered to people employed in similar roles in order to set a competitive package and attract candidates.
The first step of the recruitment process is the sign off, what is this?
Usually a sign off process to comfort that the recruitment has been authorised by a senior manager.
What is the recruitment stage of recruiting?
HR team is the equipped to commence the recruitment, which may be through direct advertising, a recruitment agency or a search company. (Usually known as head hunters). In addition, companies will frequently use internet based job sites and social networking sites to advertise job vacancies.
What is the interview stage of the recruitment process?
Interviews are arranged and HR often undertakes a pre selection process before a shortlist of candidates is interviewed by the operational manager. It is important that at this stage all legal requirements are adhered to in terms of sex descriminaiton, ageisim, and equal opportunities. During this process the HR may carry out checks on the candidiates for credit history, criminal records, qualifications and past employment history.
What is the job offer stage of recruitment?
Once preferred candidate is selected, job offer is made. Important to make clear here the salary, contractual obligations etc.
What is the induction stage of recruiting process?
When the new member of staff joins the firm the HR team arranges an induction programme and the amdisnitrative matters. Where there is a probationary period the HR department keeps a diary record to meet with the operational manager ahead of the end of the period to discuss whether the position can be confirmed as a permanent role.
An important dimension to the role of HR is promoting and organising training and development programmes. For some larger firms there may be a specialist head of learning position within the HR team to manage the programmes. In many cases it is a regulaotry requirement to...
Make sure staff see trained and Carry out their functions assed as being competent on a continuous basis.
Each type of training will will emerge from a skills assessment or audit and focus on tangible improvement to the employees capciaiblties. The firm usually undertakes development needs assessment through the...
Annual appraisal scheme
Training and development team will encourage professional development through study and examinations to appropriate employees. This will include the chartered insurance institute for technical staff, the institute of risk management for risk team accountig, treasury etc. for higher level development the firm may support staff undertaking an ....
MSc or MBA
The training and development team will be required to provide a ....
Return on investment report on larger scale training programmes in order to outline the business and individual benefits of the invesmtnent in training.
Payroll can be outsourced however ownership will be with...
The payroll and benefits section role includes ensuring the correct amount of tax is paid and national insurance is collected And payments made are to...
Pension schemes, healthcare, and other insurance and benefit providers.
HR is heavily involved in making sure redundancies are...
Compliant with the law.
The firm may also consider its reputation in compulsory staff reductions seeking to maintain fair dealing and perhaps...
Offering a package of compensation higher than the legal minimum.
The health and safety manager may be a part of...
Office less risky for health and safety than other industries however training and such still needed on...
Use of it equipment, seating positions, lifting heavy items etc.
The role of facilities management may include...
Procurement of an office of other property to meet the accommodation needs to the company. To achieve this, external property agents will be employed to seek the type of property required and advise the firm on rent, services charges and local authority rates.
Special needs such as dual sources of power to reduce the risk of an interruption to operations through a power failure are identified as well as workforce cpacpaity and location by the what team?
Fitting out in regards to facilities management will include...
-facilities for visitors
-meeting rooms including a boardroom
The FM team is likely to have responsibility for ensuring that the design and construction of the building allows for...
Fitting of full telecommunication facilities. Although the IT department may produce the technical specification and fitting of this equipment.
When buildings are occupied, the FM team underakes the maintenance, operation, cleaning and repair and security of the premises. FM work closely with the health and safety team to ensure that the building is safe to use, there are no dangers to staff and visitors and that fire escape routes are kept clear and well signpost. Regular fire alarm tests need to be carried out and the FM team will organise ...
Fire evacuation tests.
The FM team also plays a central part in business...
Recovery planning and the arrangements for a relocation site in the event of an emergency such as flood or fire damage to buildings.
The alternative arrangements after a fire or flood for example could be a warm site location. What is a warm site location?
This is where the alternative office is fitted out with desks and IT equipment ready to be switched on.
What is a hot site location?
Where the IT runs parallel in real time and the building can be occupied at short notice.
What are the possible advantages of a merger or acuistion?
The possible advantages include cost efficiency through a greater scale or access to new areas of business.