Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

CII > IF1- Chapter 2 > Flashcards

IF1- Chapter 2 Flashcards

(84 cards)

Start Studying
1
Q

who are the 5 main participants in the market

A

buyers- PH/insured
insurers- sellers
intermediaries- brokers
aggregators- price comparison websites
reinsurers- further means of spreading the risk

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

5 main types of buyers

A

private individuals
companies
partnerships
public bodies
charities, associations, clubs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Definiton of companies

A

large multinational or self employed- limited liability companies have seperate legal existence from those who own the company

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

definiton of partnerships

A

do not have seperate legal existance- each of the partners being jointly and severaly liable- medical, veterinary, legal professions

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

definiton of public bodies

A

local authorities and schools

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

who are exempt from insurance

A

policemen

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

charities, associations and clubs what type of insurance do they require

A

liability risks for damage to owned property

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

type of insurer as defined by ownership

A

Properietary companies
mutual companies
captive insurers
proctected cell companies
lloyds

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

definition of properietary companies

A

registered under Companies Act 1985- owned by shareholders who contribute to capital, profit after expenses belongs to shareholders
Limited liability companies- plc companies
publically quoted companies

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

private properietary companies

A

shares owned by a few or single shareholder- shares not available to general public- ltd companies, often small to meduim

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

mutual companies

A

owned by PH- PH share in profits of company by lower premiums
PH are liable for any losses made by company-
Trend for insurers owned in this way to become proprietary companies due to demutalisation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

captive insurers

A

established by parent companies providing cover primarily to parent company

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

benefits of captive insurers

A

tax efficient method of transferring risk-
premuims payable to captive may be tax deductible
captive established in favourable tax rate areas- Isle of man, bermuda
Captive insurers dont offer insurance to general public
Avoiding paying extra premuims to meet overheads- use of reinsurance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Protected Cell companies

A

‘ring’ fences assets of participating cells allowing them to operate as distinct insurance entities
PCC single entity
PCC used as risk transfer vechiles and also for niche products
Minimum establishment and administration costs due to tax favourable areas

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Takaful insurance

A

roots in Islamic financial services industry

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Rules of islamic law

A

forbids sale where there is risk to the buyer unless risk is reasonable
gambling forbidden- traditional insurance policies viewed as form of gambling
Forbidden to make money from money (interest)- wealth can only be made through assets and investments

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

The state

A

acts as an insurer in welfare benefits, pension- guarantor to the insurance sector for terrorism and flood risks

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

syndicates

A

groups of private individuals or corporate investors who carry the risks- underwriting members or names

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

managing agents

A

syndicates outsource day to day running of business to managing agent- regulated by FCA and PRA

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

capital and member/names

A

capital provided by corporate investors - used to have personal liability with no limit- no longer the case after series of exponential losses

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

what did reconstruction and renewal lead to

A

equitas created and no new individual names with unlimited liability permitted to join lloyds

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

member agents

A

advises on advantages and disadvantages of investing in the market- communication channel between member and various managing agents

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

subscription market

A

not sensible for single underwriter to accept 100% of a risk- each underwriter the broker approaches will accept a percentage share for their syndicate

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

london market and gross income

A

members of International Underwriting association- main providers of insurance and reinsurance companies- income 53.1 billion in 2023

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
contract certainty
all parties are aware of coverage and terms of policy before a risk starts
26
distinctions for contract certainty
Certainty as to final share of risk each insurer takes documentation within 30 days if broker involved in placement, brokers and underwriters share the responsibility for making sure contract certainty achieved
27
intermediaries
agent bringing two parties together- 'agent' authorised by one party 'principal' to bring principal into contractual relationship with a third party
28
Who are we regulated by and what are exemptions
FCA- if exempt intermediary must adopt status of an appointed representative or introduced appointed representative
29
Insurance distribution directive
ancillary insurance intermediary- distributes insurance on an ancillary purpose
30
authorised person
individual or firm authorised by FCA to engage in regulated activities
31
Appointed representatives
individual or company appointed by 'principal' AR can act for more than one principal Includes those with non-insurance main products- EG motor garage
32
issues with AR
shortcomings from principal firms not having enough control- inadequate oversight and control once AR begins regulated activities
33
introducer appointed representatives
scope of appointment by the firm limited to effecting introduction and distributing 'non real time financial solutions' principals responsible for IAR
34
services provided by intermediaries
intermediaries act on behalf of client when placing business- advises whether product recommended is a personal recommendation
35
intermediaries service for clients
decide best market and negogiate provide advice around policy wordings review client needs
36
intermediaries service for insurers
commiting insurer to cover risk settling claims on behalf of insurer
37
broker networks
market consolidation- benefits such as centralised services, cost saving
38
consolidators
companies growing by acquisition- insurers want to transact business due to potential for growth
39
what do some consolidators demand
preferential rates and enhanced commission- blurs line between insruers and intermdiaries
40
what is legislative reform act 2008
removed 'divestment rule'- where broking and underwriting activities must be completely seperated
41
direct marketing and distribution
employees of the insurer sell the insurance products or direct mailing to promote sales
42
indirect marketing
intermediaries paid by insurer to promote products on insurers behalf
43
delegated authority
known as binders give flexibility to intermediaries
44
managing general agents
specialist type of intermediary with authority to act for one or more insurers
45
bancassurance
arrangement between bank and insurance company- products sold to banks clients- leads to m and a
46
benefits of bancassurance
access to each parties resources lower risk to business and value chain efficiency opportunities for joint product development and market development
47
PCW/ aggregators
web based tools to collect info Aggregation- retrieval for goods and services online
48
reinsurance
transfer of risk by using reinsurers- can be individual risk basis, event or portfolio
49
purposes of reinsurance
large losses shared between reinsurers losses shared by risk by risk basis smooth peaks and troughs in trading results protect portfolio
50
smoothing peaks and troughs
insurers keen to ensure their trading results show gradual trends rather than huge peaks- stability reinsurance spreads cost of large losses over period of time
51
Facultative reinsurance
protecting portfolios- reinsurance on a single risk insurers also need to protect pool of accumulated funds
52
captives usually only offer cover to companies...
owned by same parent company
53
types of insurer
specialist reinsurance companies- don't transact original (direct) business lloyds syndiactes insurance companies that also act as insurers
54
Types of reinsurance terms
retroceding- transfering their risks to other insurer risk is placed- retrocession
55
2 main reinsurance centres
lloyds international underwriting association
56
tasks of underwriter
manage pool effectively and profitably assess risk decide whether to go ahead with risk or not determine t and c - scope of voer calculate premiums to cover claims, reserves, expenses and profits
57
loss adjusters
acts for the insurer investigate circumstances decide if policy covers the loss emergency measures for EG property negogiate amounts claimed- recommendation for settlement to insurers
58
loss assessors
acts for the insured determine exact cause for loss gather evidence to suggest fraud/ accelerants if lack of maintenance caused damage proximity of cause of a loss
59
acturies:
applies probability and theory to insurance, investment, financial and risk management- life insurance probability of loss and prediction of claim numbers and future values
60
risk managers
develop formal strategy for probability of loss and prediction of claim numbers- meets solvency II requirements members of trade associations- Airmic
61
functions of risk managers
identification, analysis, economic or control risks that threaten business provision of guidance on best practices and transfer of appropriate risks
62
compliance officeres
oversight and function reports to governing body communicating policy to staff regular reports on governance, finance review stages of business perform role of money laundering
63
internal auditors
monitor and evaluate how risks are managed- business being governed They look into wider issues such as company reputation under solvency II- auditors role in asessing reliability of financial reporting and compliance
64
association of british insurers
market association- 300 member companies Gather relevant statistics, framing codes of practice public voice of sector
65
british insurance brokers association
non statutory trade association for insurance intermediaries- 1800 firms promote member views on legislation nominating memberes to sit on committees
66
lloyds market association
provides representation, info, services to underwriting businesses- all lloyds member agents are members of LMA represent members interest to governments, regulators, EU
67
london market group
brings together specialist commercial reinsurance- works with government to promote london market encourage young ppl to see insurance as a career
68
international underwriting association of london
IUA worlds largest organisation for internional and wholesale insurance and reinsurance companies strengthen business environment- transform business process deliver knowledge and expertise
69
Managing General agents association-
function provision of underwriting services to insurers their clients often SME
70
Chartered insurance of loss adjusters
impartial specialists- membership consists of individual loss adjusters rather than firms that employ them
71
institute and faculty of acturies:
UKs only chartered body dedicated to acturies- 32000- they operate as single entity provides manuals of practices- provide education
72
association of insurance and risk management in industry and commerce
Airmic-promotes interest of corporate insurance buyers and those involved in risk membership individual or corporate support by training, info, and encourage best practices
73
insurtech 2019
trade body- to position UK as leading force in technological innovation
74
PPI
designed to cover monthly loans and credit card payments opposed to replacing percentage of insureds income
75
liability insurance
legal liability to pay compensation and costs awarded against insured in favour of another party- death , disease
76
employers liability
compensate in respect of legal liability to pay damages to employees arising out of injury, disease, illness, death
77
public liability
compensate in respect of claims from members of public- accidental injury
78
products liability
cover for 3rd party injury or damage caused by products
79
directors and officers liability
costs incurred by individual directors and officers for financial loss
80
professional indemnity
protects people acting in professsional capacity against claims alleging injury or loss from negligence
81
pecuniary insurance
relating to money- intangibles such as income, revenue or value also covered; political risk, business interuption credit
82
fidelity guarantee
financial results from lack of fidelity arising from dishonesty of employee- losing money or stock
83
cyber insurance
protects businsses for 3rd and first party losses arising from cyber attacks
84

CII (11 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions