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IF1 > Weak Areas > Flashcards

Weak Areas Flashcards

1
Q

What does it mean if you are risk averse?

A

buy insurance

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2
Q

What does it mean if you are risk seeking?

A

self- insurance

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3
Q

Is a speculative risk insurable?

A

No

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4
Q

What is a speculative risk?

A

gain/break even. e.g gambling

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5
Q

what is a pure risk?

A

opposite to speculative - no possibility of gain- either no loss or total loss

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6
Q

what is a particular risk?

A

specific/small - opposite to fundamental

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7
Q

what is a fortuitous risk?

A

accidental

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8
Q

what is coinsurance?

A

one policy 2 insurers

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9
Q

what is dual insurance?

A

2 or more policies - contribution

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10
Q

what is a proprietary insurance company?

A

owned by Shareholders

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11
Q

what is a mutual company?

A

owned by Policyholders

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12
Q

what is a mutual indemnity company?

A

Marine

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12
Q

what is a captive company?

A

1 insured- large cooperation self insurance

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13
Q

What is a ‘Name’ in Lloyds Market?

A

unlimited liability

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14
Q

what is a managing agent?

A

companies that manage the syndicates and appoints underwriters

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14
Q

What is a corporate name in Lloyds?

A

companies that back syndicated financially - limited liability

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15
Q

what is a member agent?

A

gives advice to potential investors

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16
Q

what does an underwriter do in Lloyds?

A

accepts risks for syndicates

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17
Q

What is a principal?

A

individual/policyholder/consumer

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18
Q

what is an agent?

A

broker

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19
Q

who are brokers authorised by in order to sell insurance?

A

FCA

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19
Q

who is an appointed representative authorised by if they are exempt?

A

principal/client

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20
Q

what is an actuary?

A

they build the premium/quote behind the aggregator website

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21
Q

ceding is when…

A

an insurer gets insurance from reinsurer?

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22
Q

retroceding is when…

A

a reinsurer gets insurance from another reinsurer

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23
Q

invitation to treat

A

NEVER AN OPTION

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24
Q

what is agency by ratification?

A

when broker acts above their authority and breaks the agreement by the client approves

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25
Q

when is insurable interest required for life insurance policies?

A

inception

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26
Q

Who does CIDRA apply to?

A

consumers/personal individuals

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26
Q

when is insurable interest required for marine policies?

A

time of loss

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27
Q

what do consumers have to do to comply with CIDRA?

A

duty to not make a misrepresentation and to answer all questions fully & accurately

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28
Q

who does Insurance Act apply to?

A

commercial/business

29
Q

what is replacement / new for old likely to be used for?

A

machinery

29
Q

what do commercial customers have to do?

A

make a fair presentation of the risk and signpost anything important

30
Q

what is reinstatement used for?

A

buildings

31
Q

average/underinsurance equation

A

SI/Correct Value * loss

32
Q

contribution equation ( independent liability method)

A

SI / Value of risk * loss

32
Q

contribution equation (max liability method)

A

SI Proportion / total SI * loss

33
Q

PRA

A
  • Capital adequacy & governance
  • Judgement based - forward looking
    -Judges proximity to failure & have a Proactive Intervention Framework
34
Q

SMCR

A
  • Certificate = key roles in firms
  • Senior Managers = statement of responsibilities, responsibility map, fit and proper testing
34
Q

What is the ideal % of capital adequacy and what is the minimum %

A

99.5%
minimum 85%

34
Q

FCA

A
  • function of market, day to day
  • consumer protection
    risk based approach
35
Q

Under Solvency II, there are 2 reports annually. One is public

A

Solvency & Financial Condition Report - public
Regulatory Supervisory Report- private

36
Q

What Law investigates/prosecutes financial crime?

A

National Crime Agency

36
Q

What Law defines Money Laundering?

A

Proceeds of Crime Act

37
Q

How long must an insurance company keep complaints for?

A

3 years

38
Q

What is the main purpose of IPT?

A

to raise revenue for the gov

38
Q

How long does an insurance company have to respond with a final response?

A

8 weeks

39
Q

For coninsurance situations, if one insurer becomes insolvent- how much of the claim does the other have to pay?

A

only their signed percentage

40
Q

What type of company is owned by a non-insurance parent company?

A

Captive

41
Q

when broker/agent is collecting money from client for insurer, they are obliged to…

A

keep the money seperate from their own

42
Q

who has a duty of fair presentation within a contract?

A

both the insured and the insurer

43
Q

why would an insurer offer the market value of their car and not a brand new car?

A

because this is the extent of their financial interest

44
Q

what type of requirement is fair treatment of customers?

A

regulatory requirement

45
Q

if an approved person does something wrong, who will be punished?

A

broker as well as the approved person

46
Q

what is a fidelity guarantee policy?

A

covers the risk of fraud/dishonesty of an employee

47
Q

does IPT apply to all insurance premiums?

A

only some GI policies

48
Q

what type of body is the CII?

A

Professional

49
Q

what is a tied agent?

A

represents only 1 insurer

50
Q

can a client avoid a contract under a TOBA?

A

no he is bound by it

51
Q

under a TOBA, an insurer and intermediary wouldn’t be to fault if the failure i caused by force majeure…

A

major things outside of anyone’s control which stops a cointract from completing

52
Q

what measure of indemnity is used for total loss of building?

A

cost of reconstruction at the time of loss

53
Q

what is a statutory requirement?

A

BY LAW

54
Q

when must insurable interest first exist for motor insurance?

A

at the time the policy goes on risk

55
Q

who initially collects IPT on behalf of the gov?

A

the insuRER

56
Q

protection and indemnity clubs underwrite which LOB?

A

Marine

57
Q

what regulation allows FCA to issue penalties and prosecution?

A

The Financial Services Act 2012

58
Q

what are the 3 pillars for Solvency II

A

financial requirements
governance / supervision
reporting/disclosure

59
Q

what are the main elements of CII’s high standard of service?

A

accuracy
transparency
suitability

60
Q

Who owns a captive company?

A

A parent company

61
Q

What form of consideration is a principal likely to give an agent?

A

Commission on premium received

62
Q

What is the GABRIEL system that is submitted to FCA

A

Framework with provides the FCA with supervision of an insurers activities

63
Q

If there’s a term in the contract unknown my policyholder, what law does this breach?

A

CONSUMER RIGHTS ACT

64
Q

What does a the contracts act allow a third party to do

A

Enforce the policy against the insurer

65
Q

Under which act was the assets recovery agency established?

A

Proceeds of crimes act

66
Q

Highest travel premium for travel

A

North America

67
Q

When a broker is advising a client on insurance who are they acting as the agent of

A

The principal

68
Q

Who does a money laundering reporting officer report to

A

National crime agency

69
Q

What is the principle purpose of the proceeds of crime act

A

To empower authorities to confiscate funds where it is believed they have been obtained unlawfully

IF1 (3 decks)

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