I10 6 Understand the Issues relating to Conduct and Culture of the Insurance Broking Business Flashcards
Tim is an account executive in a firm of insurance brokers. He is handling a written complaint from a client who feels he has been mis-sold a policy which incorporates options for which he is ineligible.
Tim follows correct regulatory procedures and informs the client he will keep him updated as to the
progress of the investigation over the next few days.
After two weeks, the client informs Tim that he intends to refer the complaint to the Financial Ombudsman Service (FOS) immediately. Tim’s firm is NOT yet able to give the client a final response.
The client then asks Tim what options he has if he disagrees with the FOS ruling.
After investigation, Tim discovers the client’s requirements were NOT correctly recorded at
inception.
Tim will initially classify this complaint as what type?
A. Complex.
B. Formal.
C. Investigative.
D. Simple.
A. Complex.
Tim is an account executive in a firm of insurance brokers. He is handling a written complaint from a client who feels he has been mis-sold a policy which incorporates options for which he is ineligible.
Tim follows correct regulatory procedures and informs the client he will keep him updated as to the
progress of the investigation over the next few days.
After two weeks, the client informs Tim that he intends to refer the complaint to the Financial Ombudsman Service (FOS) immediately. Tim’s firm is NOT yet able to give the client a final response.
The client then asks Tim what options he has if he disagrees with the FOS ruling.
After investigation, Tim discovers the client’s requirements were NOT correctly recorded at
inception.
In what circumstances will the client’s assertions regarding mis-selling be upheld?
A. If errors were made in completing the demands and needs statement.
B. If less than five products were compared before making a recommendation.
C. If incorrect advice was given regardless of intent.
D. Only if incorrect advice was deliberately given
C. If incorrect advice was given regardless of intent.
Tim is an account executive in a firm of insurance brokers. He is handling a written complaint from a client who feels he has been mis-sold a policy which incorporates options for which he is ineligible.
Tim follows correct regulatory procedures and informs the client he will keep him updated as to the
progress of the investigation over the next few days.
After two weeks, the client informs Tim that he intends to refer the complaint to the Financial Ombudsman Service (FOS) immediately. Tim’s firm is NOT yet able to give the client a final response.
The client then asks Tim what options he has if he disagrees with the FOS ruling.
After investigation, Tim discovers the client’s requirements were NOT correctly recorded at
inception.
In addition to supplying information to the client, to satisfy regulatory requirements Tim must also
take what action before starting to investigate?
A. Confirm the details of the complaint with the client within 24 hours.
B. Formally record the complaint in accordance with the firm’s procedures.
C. Obtain a complaint reference number from the regulator.
D. Supply the client with a copy of the original Terms of Business Agreement.
B. Formally record the complaint in accordance with the firm’s procedures.
Tim is an account executive in a firm of insurance brokers. He is handling a written complaint from a client who feels he has been mis-sold a policy which incorporates options for which he is ineligible.
Tim follows correct regulatory procedures and informs the client he will keep him updated as to the
progress of the investigation over the next few days.
After two weeks, the client informs Tim that he intends to refer the complaint to the Financial Ombudsman Service (FOS) immediately. Tim’s firm is NOT yet able to give the client a final response.
The client then asks Tim what options he has if he disagrees with the FOS ruling.
After investigation, Tim discovers the client’s requirements were NOT correctly recorded at
inception.
How should Tim respond to the client’s statement that the case will be referred to the FOS?
A. The client has an immediate right of referral but the FOS may decide not to accept the case.
B. The FOS will accept the case immediately.
C. The firm has a maximum of six more weeks to investigate before the FOS will become involved.
D. The firm will send an immediate letter of referral to the FOS
C. The firm has a maximum of six more weeks to investigate before the FOS will become involved.
Tim is an account executive in a firm of insurance brokers. He is handling a written complaint from a client who feels he has been mis-sold a policy which incorporates options for which he is ineligible.
Tim follows correct regulatory procedures and informs the client he will keep him updated as to the
progress of the investigation over the next few days.
After two weeks, the client informs Tim that he intends to refer the complaint to the Financial Ombudsman Service (FOS) immediately. Tim’s firm is NOT yet able to give the client a final response.
The client then asks Tim what options he has if he disagrees with the FOS ruling.
After investigation, Tim discovers the client’s requirements were NOT correctly recorded at
inception.
With regard to the client’s question concerning the FOS ruling, how should Tim reply?
A. A financial award can be challenged through the FOS.
B. Both parties have 28 days to submit additional evidence for review by the FOS.
C. Both parties may agree to arbitration through the FOS.
D. The decision by FOS may be challenged by the client through the courts.
D. The decision by FOS may be challenged by the client through the courts.
Stephanie is an account executive at a firm of insurance brokers. She is efficient at delegating, training and mentoring junior team members. She has a high business retention rate, which she attributes to making sure that her clients get the best customer service. To maintain standards, she insists that all work procedures are performed in accordance with the guidelines issued by the firm.
This includes making sure that all clients’ demands and needs are fully assessed and documented and that all clients are provided with sufficient information to make an informed decision regarding
the insurance that they purchase.
She also tries to ensure that she is perceived as being honest and trustworthy in her dealings with insurers and that broking submissions are accurate and concise, with insurance premiums being paid
promptly.
The insurance business that Stephanie’s team provides sometimes involves business being sold in conjunction with the main insurance policy. There has been some pressure from within the firm to
increase the amount of this additional coverage in order to enhance commission volumes.
How does Stephanie demonstrate good conduct in her business relationship with clients?
A. By ensuring that key performance indicators are met.
B. By meeting the regulatory requirements applicable to clients.
C. By providing comprehensive insurance presentations.
D. By providing excellent customer service.
D. By providing excellent customer service.
Stephanie is an account executive at a firm of insurance brokers. She is efficient at delegating, training and mentoring junior team members. She has a high business retention rate, which she attributes to making sure that her clients get the best customer service. To maintain standards, she insists that all work procedures are performed in accordance with the guidelines issued by the firm.
This includes making sure that all clients’ demands and needs are fully assessed and documented and that all clients are provided with sufficient information to make an informed decision regarding
the insurance that they purchase.
She also tries to ensure that she is perceived as being honest and trustworthy in her dealings with insurers and that broking submissions are accurate and concise, with insurance premiums being paid
promptly.
The insurance business that Stephanie’s team provides sometimes involves business being sold in conjunction with the main insurance policy. There has been some pressure from within the firm to
increase the amount of this additional coverage in order to enhance commission volumes.
Stephanie demonstrates good conduct in her business relationship with insurers by
A. checking insurance policy documentation.
B. ensuring that contract certainty is achieved.
C. ensuring that insurance premiums are paid on time.
D. producing extensive insurance presentations.
C. ensuring that insurance premiums are paid on time.
Stephanie is an account executive at a firm of insurance brokers. She is efficient at delegating, training and mentoring junior team members. She has a high business retention rate, which she attributes to making sure that her clients get the best customer service. To maintain standards, she insists that all work procedures are performed in accordance with the guidelines issued by the firm.
This includes making sure that all clients’ demands and needs are fully assessed and documented and that all clients are provided with sufficient information to make an informed decision regarding
the insurance that they purchase.
She also tries to ensure that she is perceived as being honest and trustworthy in her dealings with insurers and that broking submissions are accurate and concise, with insurance premiums being paid
promptly.
The insurance business that Stephanie’s team provides sometimes involves business being sold in conjunction with the main insurance policy. There has been some pressure from within the firm to
increase the amount of this additional coverage in order to enhance commission volumes.
The type of corporate culture that Stephanie would like her team to use is
A. client first.
B. growth.
C. innovation.
D. sales.
A. client first.
Stephanie is an account executive at a firm of insurance brokers. She is efficient at delegating, training and mentoring junior team members. She has a high business retention rate, which she attributes to making sure that her clients get the best customer service. To maintain standards, she insists that all work procedures are performed in accordance with the guidelines issued by the firm.
This includes making sure that all clients’ demands and needs are fully assessed and documented and that all clients are provided with sufficient information to make an informed decision regarding
the insurance that they purchase.
She also tries to ensure that she is perceived as being honest and trustworthy in her dealings with insurers and that broking submissions are accurate and concise, with insurance premiums being paid
promptly.
The insurance business that Stephanie’s team provides sometimes involves business being sold in conjunction with the main insurance policy. There has been some pressure from within the firm to
increase the amount of this additional coverage in order to enhance commission volumes.
Stephanie tries to avoid errors and omissions from occurring by
A. insisting that Terms of Business Agreements are sent to all clients.
B. personally training team members.
C. recording all telephone conversations with clients.
D. requiring work to be performed in accordance with the firm’s guidelines.
D. requiring work to be performed in accordance with the firm’s guidelines.
Stephanie is an account executive at a firm of insurance brokers. She is efficient at delegating, training and mentoring junior team members. She has a high business retention rate, which she attributes to making sure that her clients get the best customer service. To maintain standards, she insists that all work procedures are performed in accordance with the guidelines issued by the firm.
This includes making sure that all clients’ demands and needs are fully assessed and documented and that all clients are provided with sufficient information to make an informed decision regarding
the insurance that they purchase.
She also tries to ensure that she is perceived as being honest and trustworthy in her dealings with insurers and that broking submissions are accurate and concise, with insurance premiums being paid
promptly.
The insurance business that Stephanie’s team provides sometimes involves business being sold in conjunction with the main insurance policy. There has been some pressure from within the firm to
increase the amount of this additional coverage in order to enhance commission volumes.
How does Stephanie try to ensure that her team does NOT mis-sell additional insurance products to clients?
A. By providing accurate policy documentation.
B. By providing concise underwriting submissions.
C. By providing prompt customer service.
D. By providing sufficient product information to make an informed decision.
D. By providing sufficient product information to make an informed decision.
A firm of insurance brokers is concerned about conduct and cultural issues following several complaints from an insurer with which the firm regularly places business.
The insurer alleges that it has discovered several instances where the firm’s employees have failed to ensure that clients
disclose all previous claims at inception. No delegated authority agreement exists.
The firm has an operating procedure manual and is taking remedial action to ensure full compliance with the prescribed practices following the insurer’s allegations.
The firm recognises that the processes and procedures established to enhance its reputation and brand, although understood by employees, are NOT being followed.
Suitable remedial action is being identified and communicated to employees with particular regard to good conduct with
clients. The firm expects that the steps taken will avoid further allegations from insurers, whilst enhancing the client service excellence.
If previous claims are NOT being disclosed, what action is the insurer most likely to take
affecting the firm’s existing clients?
A. Claims may be declined.
B. Commission will be reduced.
C. Cover will always be withdrawn.
D. Premiums may be reduced.
A. Claims may be declined.
A firm of insurance brokers is concerned about conduct and cultural issues following several complaints from an insurer with which the firm regularly places business.
The insurer alleges that it has discovered several instances where the firm’s employees have failed to ensure that clients
disclose all previous claims at inception. No delegated authority agreement exists.
The firm has an operating procedure manual and is taking remedial action to ensure full compliance with the prescribed practices following the insurer’s allegations.
The firm recognises that the processes and procedures established to enhance its reputation and brand, although understood by employees, are NOT being followed.
Suitable remedial action is being identified and communicated to employees with particular regard to good conduct with
clients. The firm expects that the steps taken will avoid further allegations from insurers, whilst enhancing the client service excellence.
In what way could the firm of insurance brokers improve its delivery of service excellence to clients?
A. Avoiding peer review to speed up the service.
B. Ensuring procedures are in place to reduce mistakes.
C. Ensuring the lowest premium is always quoted.
D. Ensuring the widest coverage is provided whether required or not.
B. Ensuring procedures are in place to reduce mistakes.
A firm of insurance brokers is concerned about conduct and cultural issues following several complaints from an insurer with which the firm regularly places business.
The insurer alleges that it has discovered several instances where the firm’s employees have failed to ensure that clients
disclose all previous claims at inception. No delegated authority agreement exists.
The firm has an operating procedure manual and is taking remedial action to ensure full compliance with the prescribed practices following the insurer’s allegations.
The firm recognises that the processes and procedures established to enhance its reputation and brand, although understood by employees, are NOT being followed.
Suitable remedial action is being identified and communicated to employees with particular regard to good conduct with
clients. The firm expects that the steps taken will avoid further allegations from insurers, whilst enhancing the client service excellence.
Bearing in mind the insurer’s allegations, in what main way may the firm have breached its operating procedures?
A. Acting without skill, care and diligence.
B. Bringing the financial services industry into disrepute.
C. Failing to ensure knowledge and expertise is kept up to date.
D. Failing to ensure transparency in each transaction.
A. Acting without skill, care and diligence.
A firm of insurance brokers is concerned about conduct and cultural issues following several complaints from an insurer with which the firm regularly places business.
The insurer alleges that it has discovered several instances where the firm’s employees have failed to ensure that clients
disclose all previous claims at inception. No delegated authority agreement exists.
The firm has an operating procedure manual and is taking remedial action to ensure full compliance with the prescribed practices following the insurer’s allegations.
The firm recognises that the processes and procedures established to enhance its reputation and brand, although understood by employees, are NOT being followed.
Suitable remedial action is being identified and communicated to employees with particular regard to good conduct with
clients. The firm expects that the steps taken will avoid further allegations from insurers, whilst enhancing the client service excellence.
What steps should be taken by the firm of insurance brokers to most appropriately enhance its brand and reputation?
A. Give higher rewards for successful achievement of sales targets.
B. Improve client communication and interaction.
C. Increase sales targets.
D. Offer restricted cover at a lower premium.
B. Improve client communication and interaction.
A firm of insurance brokers is concerned about conduct and cultural issues following several complaints from an insurer with which the firm regularly places business.
The insurer alleges that it has discovered several instances where the firm’s employees have failed to ensure that clients
disclose all previous claims at inception. No delegated authority agreement exists.
The firm has an operating procedure manual and is taking remedial action to ensure full compliance with the prescribed practices following the insurer’s allegations.
The firm recognises that the processes and procedures established to enhance its reputation and brand, although understood by employees, are NOT being followed.
Suitable remedial action is being identified and communicated to employees with particular regard to good conduct with
clients. The firm expects that the steps taken will avoid further allegations from insurers, whilst enhancing the client service excellence.
If the steps taken by the firm are successful, what is the outcome regarding the firm’s relationship with the insurer?
A. Enhancement of market share.
B. Recognition of an increased sales focus.
C. Reduced insurance premiums.
D. Restoration of confidence.
D. Restoration of confidence.
Greg is an account handler in a firm of insurance brokers. He has received a verbal complaint which was triggered by a recent claim from a client who is classed as a consumer.
The claim was refused by the insurer due to non-compliance with a policy condition. The client is adamant that he did NOT understand the potential implications of non-compliance.
The firm always tries to resolve complaints quickly to avoid an errors and omissions claim. Greg is reviewing the client file and is concerned that a potential errors and omissions situation may exist owing to a failure by the broker to explain the terms and conditions in full. He is aware that
the firm has stringent procedures for dealing with claims.
The client has told Greg that he intends to take his complaint to the Financial Ombudsman Service (FOS) and demands compensation for his full loss of £3,000.
Greg recalls he had some involvement in placing the client’s household insurance policy and believes that this affects his ongoing involvement in the complaint process.
Greg is also aware of similar instances within the firm in recent months, as well as complaints about the selling of legal expenses cover for additional premium.
In this situation, a potential errors and omissions claim could be pursued against the firm of insurance brokers if Greg’s review shows that
A. the firm’s explanations to the client were not fully documented.
B. the firm had accepted the insurer’s standard terms without challenging them.
C. the firm had tried to resolve the issue before referring it to the professional indemnity insurer.
D. the policy condition was clearly stated within the policy wording.
A. the firm’s explanations to the client were not fully documented.
Greg is an account handler in a firm of insurance brokers. He has received a verbal complaint which was triggered by a recent claim from a client who is classed as a consumer.
The claim was refused by the insurer due to non-compliance with a policy condition. The client is adamant that he did NOT understand the potential implications of non-compliance.
The firm always tries to resolve complaints quickly to avoid an errors and omissions claim. Greg is reviewing the client file and is concerned that a potential errors and omissions situation may exist owing to a failure by the broker to explain the terms and conditions in full. He is aware that
the firm has stringent procedures for dealing with claims.
The client has told Greg that he intends to take his complaint to the Financial Ombudsman Service (FOS) and demands compensation for his full loss of £3,000.
Greg recalls he had some involvement in placing the client’s household insurance policy and believes that this affects his ongoing involvement in the complaint process.
Greg is also aware of similar instances within the firm in recent months, as well as complaints about the selling of legal expenses cover for additional premium.
How does Greg’s prior involvement in the case affect his ability to initially investigate and resolve this complaint within the regulator’s guidelines?
A. He may continue to investigate but must hand over the resolution process to a colleague.
B. He may continue to investigate and resolve the complaint providing the firm considers him competent.
C. He must be fully supervised during both the investigation and resolution.
D. He must take responsibility for resolving the complaint.
B. He may continue to investigate and resolve the complaint providing the firm considers him competent.
Greg is an account handler in a firm of insurance brokers. He has received a verbal complaint which was triggered by a recent claim from a client who is classed as a consumer.
The claim was refused by the insurer due to non-compliance with a policy condition. The client is adamant that he did NOT understand the potential implications of non-compliance.
The firm always tries to resolve complaints quickly to avoid an errors and omissions claim. Greg is reviewing the client file and is concerned that a potential errors and omissions situation may exist owing to a failure by the broker to explain the terms and conditions in full. He is aware that
the firm has stringent procedures for dealing with claims.
The client has told Greg that he intends to take his complaint to the Financial Ombudsman Service (FOS) and demands compensation for his full loss of £3,000.
Greg recalls he had some involvement in placing the client’s household insurance policy and believes that this affects his ongoing involvement in the complaint process.
Greg is also aware of similar instances within the firm in recent months, as well as complaints about the selling of legal expenses cover for additional premium.
What action should the firm of insurance brokers take as a result of the complaint made against it?
A. A consultation must take place with the firm’s professional indemnity insurer to prevent ongoing risks.
B. A full report should be sent to the regulator detailing the circumstances.
C. A full review of the firm’s procedures should be undertaken to identify remedial action.
D. A review must be requested from the FOS to identify areas of improvement.
C. A full review of the firm’s procedures should be undertaken to identify remedial action.
Greg is an account handler in a firm of insurance brokers. He has received a verbal complaint which was triggered by a recent claim from a client who is classed as a consumer.
The claim was refused by the insurer due to non-compliance with a policy condition. The client is adamant that he did NOT understand the potential implications of non-compliance.
The firm always tries to resolve complaints quickly to avoid an errors and omissions claim. Greg is reviewing the client file and is concerned that a potential errors and omissions situation may exist owing to a failure by the broker to explain the terms and conditions in full. He is aware that
the firm has stringent procedures for dealing with claims.
The client has told Greg that he intends to take his complaint to the Financial Ombudsman Service (FOS) and demands compensation for his full loss of £3,000.
Greg recalls he had some involvement in placing the client’s household insurance policy and believes that this affects his ongoing involvement in the complaint process.
Greg is also aware of similar instances within the firm in recent months, as well as complaints about the selling of legal expenses cover for additional premium.
Greg’s initial response to the client’s verbal complaint should be to
A. explain that the case is being referred directly to the firm’s professional indemnity insurer.
B. explain the complaints procedure and ensure the client has a copy.
C. insist that the client submits the full details of the complaint to the firm in writing.
D. point out that a joint investigation with the client’s insurer is necessary
B. explain the complaints procedure and ensure the client has a copy.
Greg is an account handler in a firm of insurance brokers. He has received a verbal complaint which was triggered by a recent claim from a client who is classed as a consumer.
The claim was refused by the insurer due to non-compliance with a policy condition. The client is adamant that he did NOT understand the potential implications of non-compliance.
The firm always tries to resolve complaints quickly to avoid an errors and omissions claim. Greg is reviewing the client file and is concerned that a potential errors and omissions situation may exist owing to a failure by the broker to explain the terms and conditions in full. He is aware that
the firm has stringent procedures for dealing with claims.
The client has told Greg that he intends to take his complaint to the Financial Ombudsman Service (FOS) and demands compensation for his full loss of £3,000.
Greg recalls he had some involvement in placing the client’s household insurance policy and believes that this affects his ongoing involvement in the complaint process.
Greg is also aware of similar instances within the firm in recent months, as well as complaints about the selling of legal expenses cover for additional premium.
What practice by the firm of insurance brokers could result in a mis-selling allegation?
A. Complaints handling being processed by account handlers.
B. Lack of explanation of policy conditions.
C. Non-payment of valid claims.
D. The sale of legal expenses cover.
D. The sale of legal expenses cover.
With regards to the Insurance Product Information Document [IPID], which of the following statements is INCORRECT?
A. It replaces the current documentation.
B. It should be supplied at each quotation.
C. It is a short, pre-contractual policy summary.
D. It allows customers to easily compare similar products.
A. It replaces the current documentation.
Clients may move their business between insurance brokers from year to year, which in turn can affect a broker’s renewal retention rates. This process is known as:
A. churn.
B. spin.
C. flow.
D. trim.
A. churn.
An insurance broker successfully sells a £30 travel insurance policy to an existing client who already has their van insured through the broker at a premium of £1,500. Which of the following is a common expression to describe the sale of the travel insurance?
A. Up-selling.
B. Extra-selling.
C. Re-selling.
D. Cross-selling.
D. Cross-selling.
Which of the following would NOT be considered broker funds?
A. Earned commission transferred 2 days ago from the client account to the office account.
B. A mid-term adjustment which results in a return premium of £50.
C. A policy fee of £25 which has been withdrawn from the client account.
D. £100 cleared commission received into the office account.
B. A mid-term adjustment which results in a return premium of £50
