Name three key factors within the general business environment that impact the management of a life insurer.
Regulation, economic conditions, and technology.
In the context of life insurance regulation, what is the primary focus regarding ‘mis-selling’?
Poor sales tactics, inappropriate advice, and unsuitable products.
What specific mis-selling issue occurred in the UK regarding personal pensions?
Policyholders were advised to switch out of valuable occupational schemes into less valuable personal ones.
How can positive political changes, such as reduced tax rates, impact life insurance sales?
They lead to higher economic growth and increased consumer disposable income.
What is the typical negative impact of trade tariffs on the life insurance industry?
They slow economic growth and reduce the consumer’s ability to purchase products.
What are the three main types of tax advantages governments use as policyholder incentives?
Tax relief on premiums, tax-free investment environments, and tax-advantaged gains on withdrawal.
How does high stock market volatility affect the demand for products with guarantees?
It makes products with guarantees more attractive to consumers, despite their higher cost.
In emerging markets, why might private sector incentives for high sales compromise individual financial decisions?
New consumers often have little experience or awareness of life insurance products.
How is Artificial Intelligence (AI) specifically used in the new business acquisition phase of the life insurance value chain?
AI is utilised for qualifying leads and offering online on-demand products.
Which non-traditional data source might insurers use to assess health risks during underwriting?
Supermarket loyalty card data, which can indicate diet and drinking habits.
What technological tools allow advisers to view a client’s policies from multiple providers in one place?
Adviser platforms.
How does wearable technology impact the relationship between insurers and policyholders?
Insurers offer incentives and premium discounts in exchange for monitoring physical activity.
How does data science lead to a decline in cross-subsidy within life insurance?
Finer risk analysis allows healthier individuals to pay lower premiums while higher-risk individuals pay more.
Under the GDPR, what is the significance of the year 2018 for insurers operating in the EU?
It was the year compliance with these data protection regulations became crucial.
Name a potential financial loss resulting from a cyber risk event beyond data replacement costs.
Lost profits due to business interruption during the event.
What demographic factor in developed countries like Japan is driving demand for life insurance products?
The increasing proportion of pensioners relative to the working population.
Definition: Life insurance ‘income protection gap’
The difference between money set aside for loss of income due to disability and the actual amount needed.
How do non-traditional competitors, such as supermarkets, compete with established life insurers?
They leverage existing brand loyalty to sell financial products.
Why might a life insurer in a less developed country be required to partner with a local insurer?
To comply with local legislation or to overcome trust issues through microinsurance.
What is the primary purpose of industry bodies like the Association of British Insurers (ABI)?
To ensure best practice, provide lobbying power, and increase public confidence.
The phrase ‘Life insurance products are typically sold, not bought’ refers to what type of demand?
Push demand.
Why might a lack of government incentives lead to consumer reluctance to purchase life insurance?
The products become less financially attractive compared to other savings or investment options.
What is the primary role of an Independent Financial Adviser (IFA)?
To recommend the best product in the marketplace to suit a client’s specific needs.
How does the role of an Appointed Representative (Tied Agent) differ from an IFA?
A Tied Agent can only sell the products of one specific insurer.
