Chapter 5: Good Faith and disclosure

Question 1

consumer insurance act 2012 (Cidra)/ IA2015 what does it address

Answer 1

imbalance between bargaining positions between insurers and insureds

Question 2

duty of good faith

Answer 2

contracts subject to legal principle of good faith- parties must tell truth in negotiations

Question 3

duty of disclosure act

Answer 3

important during proposal- common law once policy in place duty of disclosure reignited at renewal

Question 4

marine insurance act 1906

Answer 4

every circumstance is materila which would influence judgement of insurer in fixing premium or determining risk

Question 5

consumers duty of disclosure- consumer

Answer 5

CIDRA removes commmon law duties on consumers to disclose information that is material- replaced with duty to not misrepresent

Question 6

duty to make fair representation

Answer 6

IA2015 changes obligation on parties during placement- insurers must make fair presentation of risk

Question 7

measure of insured and insurers knowledge

Answer 7

insured knows only what is known to them or individuals responsible for insurance

Question 8

what non individuals ought to know

Answer 8

knows only what is known to one or more individuals- senior management team

Question 9

what insurers ought to know

Answer 9

insurer knows something if it known to one or more individuals who participate on risk
insurer ought to know what an agent knows
common knowledge

Question 10

agents duty

Answer 10

non consumer- insurer can seek remedy for breach of fair presentation if agent does

Question 11

CIDRA on intermediary

Answer 11

considered to be insurers agent if intermediary is AR of insurer and collects information
authority to bind cover

Question 12

insurers duty of disclosure

Answer 12

duty of disclosure to insured- notify of entitlement to discount-

Question 13

effects of FCA rules

Answer 13

insurers and intermediaries must provide sufficient info- demands and needs

Question 14

disclosure post contract at inception

Answer 14

duty of disclosure starts when negotiation begins and ends when contract is formed- no further info need to be divulged unless it effects policy

Question 14

disclosure for public liability

Answer 14

continuing requirement- insured must notify on extensions of activity for cover to apply

Question 14

limitation of insurers rights to information

Answer 14

IA2015 non consumers are only under duty to fair presentation- if question asked but PH provides partial info and insurer doesn’t seek further details, insurer waived right to info

Question 14

Limitation insurers rights p2

Answer 14

if insurers clarify material circumstances they are unable at later date to claim they require further info

Question 15

features of material circumstance

Answer 15

courts test by loking at it from insurers POV

Question 15

breach of duty for insurers

Answer 15

have right to avoid policy- if insurer chooses not to , they waive their right and treat policy as remaining in force

Question 15

material circumstances

Answer 15

IA2015 ‘ circumstance or representation is material if it would affect judgement of insurer in determining to take risk’

Question 15

material circumstances in non life proposals

Answer 15

material circumstances relate to physical or moral hazard

Question 16

physical hazard- fire insurance: construction of building
theft- nature of stock

Answer 16

moral hazard- applies to non life insurance
insurance history, convictions etc

Question 17

circumstances that dont need to be disclosed

Answer 17

information that lessens risk
info insurer knows
info insurer ought to know
presumed to know
info waived by insurer

Question 18

spent convictions

Answer 18

changed under rehabilitation of offenders act 1974

Question 19

life and similiar sentences for violence

Answer 19

never

Question 20

more than 4 year conviction

Answer 20

7 years from end of sentence

Question 21

one to 4 years conviction

Answer 21

4 years from end of sentence

Question 22

one year or less conviction

Answer 22

1 year from end of sentence

Question 23

driving endorsements convictions

Answer 23

5 years from date of conviction

Question 24

driving disqualifications

Answer 24

end of disqualifications

Question 25

fine conviction

Answer 25

1 year from conviction

Question 26

for offenders under 18:

Answer 26

rehabilitation period halfved for less serious offences- time that conviction 'live' known as 'buffer period'

Question 27

conseqences of misrepresentation by consumers

Answer 27

non negligent misrepresentation considered unreasonable grounds for refusing to pay claim deliberate- insurer can avoid policy

Question 28

remedies available to insurers under CIDRA

Answer 28

consumer insurance (disclosure and representations 2012) CIDRA replaces duty on consumeres to volunteer info before taking insurance

Question 29

remedies for insurers p2

Answer 29

misrepresentation by mistake- insurer may have to pay claim if deliberate- insurer avoid contract and refuse claim and keep premiums careless misrepresentation- increased premiums/ refuse to offer terms- what they would have done with correct information

Question 30

consequences of breach of fair representation

Answer 30

non consumer contract unless insurer opted out of duty- insurer only be able to avoid policy if deliberate breach

Question 31

remedies available to insurers under IA2015

Answer 31

remedy if insurer shows for breach of duty they wouldn't have entered into contract/ done so on different terms breach that triggers remedy- qualifying breach

Question 32

original placement

Answer 32

deliberate breach insurers may avoid contract , refuse all claims and retain premium

Question 33

if insurer would have entered into contract but charged higher premium then claims can be reduced proportionally

Answer 33

x=premium charged/ higher premium x 100

Question 34

variations of contract

Answer 34

IA2015 breach deliberate insurer puts on notice that contract terminated from time variation made- premiums not returned if insurer agreed on variation on different terms- contract treated as if those terms applied and higher premium

Question 35

reduce propoertionally insurer pay x% of claim

Answer 35

x=premium charged/ p x 100

Question 36

What is p for formula-

Answer 36

p: total premium insurer would have charged original premium

Question 37

breach of warranty marine insurance act 1906:

Answer 37

provides that warranty must be complied with whether material risk or not

Question 38

breach of warranty marine p2

Answer 38

IA2015 breaches of warranty no longer terminate contract- insurer's liability suspended from time of breach- liable for losses after breach remedied

Question 39

IA2015 material circumstances if complied with could reduce risk of:

Answer 39

particular kind of losses losses at particular location losses at particular time