Short Answer Flashcards
(60 cards)
Why do we Have Insurance?
Insurance exists out of the need to protect ourselves from the possibility of economic loss.
How Economic Losses are Met
- Prevention
- Losses May be Transferred
- Losses May be assumed
- Losses may be shared
When was the new Insurance Act Passed?
Dec 1996 and was proclaimed by the Governor General Feb 1997
When was the insurance Act. Cap 310 Passed?
This Act was passed in 1970 and came into force in 1972 by the proclamation of the Governor General.
In how many parts is the Insurance Act divided?
Seven Parts
How many Sections are in the Insurance ACT?
189 Sections
What is the role of the Financial Services Commission under the Insurance Act
To regulate the Insurance industry by enforcing the provisions of the Act, including registration, solvency, conduct, and compliance
What are the two main classes of insurance?
Long Term Insurance & General Insurance
Who approves the registration of an insurance company?
Financial Services Commission.
What types of Insurance business require assets to be placed in trust in Barbados?
Long Term Insurance Business & Motor Vehicle Insurance Business.
What Financial restrictions are placed on companies under the Act regarding Directors and their Families
Prohibited Loans & the Granting of unsecured credit facilities is restricted.
What Documents must an insurance company submit within four months after its
Statistical returns and audited accounts.
What Provisions must a long term Insurance Policy contain to protect the policy holder?
Non-forfeiture options and cash surrender values
What kind of investments must a company hold to meet its liabilities?
Investments that are appropriate and sufficient to match its liabilities as required by the Act.
What special provisions apply to Motor Vehicle Insurance under the Act?
Requirements regarding reserves, solvency, and possibly contributions to insurance pools or self-insurance schemes.
What is the function of insurance pools and self-insurance?
To spread risk and ensure coverage is available for high-risk areas like motor vehicle insurance.
Describe what is mean by an insurance intermediary?
Individuals or organizations that act as a link between insurance companies and customers.
List the Type of Insurance Intermediaries
- Insurance Broker: Represent the client and can offer products from multiple insurance companies
- Agent: Represent a specific insurance company and sell that company’s products.
- Salesmen / Sub-agents: Work under agents to promote and sell insurance.
- Adjusters: Investigate and assess insurance claims to determine amount payable.
- Loss Assessor: Work on behalf of policy holders to evaluate and support claims.
- Surveyor: Inspect property or risks before insurance is issued.
What is the definition of “Replacement” as it relates to a life underwriter, and what key actions are considered replacement under the Code?
Replacement refers to a life underwriter including or attempting to induce an insured to :
- Lapse
- Forfeit or surrender an existing life insurance policy.
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Under what conditions is a sale of life insurance considered completed, and what conditions would cause it to be no longer considered completed?
A sale Is considered completed when:
- The application is signed and the first premium is settled
- In the case of single premium annuity or preliminary term coverage, the premium is paid.
It is no longer considered completed if:
- No further payment is made within 60 days after a partial settlement.
- No medical exam is completed 60 days.
- The contract is issued on different terms and not accepted by the applicant.
What ethical responsibility does a life underwriter have regarding confidential information obtained from policy owners or prospective purchasers?
The life underwriter must respect confidentiality and safeguard any personal or business information obtained from policy owners or prospective purchasers.
What is the life underwriter required to do if a policy owner decides to cancel existing life insurance and apply for new insurance with a different company?
The underwriter must notify the head offices of both the original and new insurance companies in writing, explaining the policy owner’s intention and reasons. A copy must also be sent to the policy owner.
What are the key components that constitute rebating, and why is it prohibited under the ethical code?
Rebating includes:
- Agreements to pay a different premium than stated.
- Gifts or inducements to insure.
- Offers of employment or services as inducement.
- Reduced premiums with invention
What type of contract is a life insurance policy and why?
A life insurance policy is a unilateral contract because only the insurer makes a promise to pay the policy proceeds if the insured dies, while the insured makes no promise.
