1. Material Information

Question 1

What is a contract

Answer 1

Legally binding agreement

Must have:

Offer
Acceptance
Consideration (benefit/premium)

Question 2

Unerrima Fides

Answer 2

“Utmost good faith”

Applies to insurance contacts to make parties aware of information

Applies to proposer and insurer

Question 3

Consumer Insurance (Disclosure and Representation) Act 2012

Answer 3

Consumers must ensure all information provided in response to questions asked or any information they volunteer is full and accurate

Question 4

Insurance act 2012 (non consumer)

Answer 4

Non-consumers must ensure that there has been fair presentation to the insurer that a reasonable search has been carried out of their business and that important information has been signed post for insurers 

Question 5

What are consumers?

Answer 5

Individuals who buy insurance policies for their own private needs and not related to their profession business or trade

Question 6

What is a material circumstance?

Answer 6

A circumstance of representation is material if it would influence the judgement of a prudent insurer in determining whether to take a risk and if so on what times

Question 7

What is fair presentation?

Answer 7

Proposer must disclose every material circumstance which it knows or notify the insurer that it needs to make further enquiries about certain material circumstances

The proposer must ensure that it’s representation of the risk is clear and accessible

All material circumstances represented must be substantially correct and made in good faith

Question 8

Failure to declare material facts

Answer 8

Allows insurance to avoid a policy/say it had never existed

Consumers no longer have to volunteer material facts but they must answer all questions asked by the insurer fully and accurately and ensure all information they volunteer is full and accurate

Question 9

What is a vulnerable customer?

Answer 9

Someone who due to their personal circumstances is especially susceptible to detriment particularly when a firm is not acting with appropriate levels of care 

Question 10

FCA guidance regarding vulnerable customers

Answer 10

Understanding the needs of vulnerable customers

The skills and capabilities of staff

How farms can take practical action

Question 11

How can AI be used to identify vulnerable customers?

Answer 11

Identify customer language that may signal stress, confusion or keywords that expose vulnerability. These tools can allow human advises that there is a need for more professional support. 

Question 12

When does duty of fair presentation start?

Answer 12

When negotiations begin and when the contract is formed (at inception)

And when a claim is made to avoid the potential for exaggeration and fraud

Only at inception for life policies

Question 13

What is misrepresentation?

Answer 13

When a statement is substantially false relates to the subject matter of the proposal and has introduced the insurer to enter the contract

Question 15

What is non-disclosure?

Answer 15

Whether the proposal fails to tell the insurer something they know and it is something that would have made the insurer either not enter into the contract or do so on different terms

Question 16

What is a qualifying breach?

Answer 16

The consumer did not take reasonable care and the breach leads the insurer to enter the contract

Question 17

Remedies of a qualifying breach

Answer 17

If honest and reasonable, the insurer may have to pay the claim

If careless the insurer will have a compensatory remedy based upon what the insurer would have done had the proposal taken care to answer the questions accurately

If the deliberate or reckless the insurer may treat the policy as if it had never exist existed and decline all claims

The insurer can choose to ignore the breach

Question 18

What if the breach was deliberate or reckless? Non-consumer.

Answer 18

An insurer can avoid the policy and keep any premiums that have been paid

Question 19

What if the breach was not deliberate or reckless? Non-consumer

Answer 19

The insurer can avoid the policy but must return the premiums paid

The contract is treated as if it included those terms

The insurer may proportionally reduce the amount to be paid on the claim

Question 20

What is concealment

Answer 20

When the breach is fraudulent and the insurer has additional rights

The policy is voidable

The ensure I can keep the premium and sue for damages 

The insurer can ignore the breach in which case the policy continues and the insurer would have to pay any claims 

Question 21

What is a hazard?

Answer 21

Something that gives rise to a loss

A fire or storm

A feature of a risk which makes a loss more likely to happen or would cause a loss to be potentially larger or smaller in size

Question 22

What is a physical hazard?

Answer 22

The physical measurable dimensions of the risk such as the construction of a building building

Question 23

What is a moral hazard?

Answer 23

Arises from the attitude and conduct of the people such as a drivers carelessness or a persons dishonesty

Question 24

Common ways for the insurer to obtain information regarding a risk

Answer 24

Proposal forms

Statements of fact, bees do not require a formal signature

Brokers

Risk surveys

Supplementary questionnaire

Meeting with clients

Call centres

Internet (quote can be fully completed online)