What is the purpose of compulsory insurance
To provide funds for compensation
In response to national concerns
Types of compulsory insurances in the UK
Third Party Motor Insurance (Road Traffic Act 1988)
Employers Liability (Employers Liability Act 1969)
Public Liability (Riding Establishments Act 1970)
Liability for dangerous wild animals and dangerous dogs
Professional Negligence/professional indemnity
What are compulsory insurances in other countries
U.S.A - Workers compensation (Employers liability)
Turkey - Property owners insurance against earthquakes and some compulsory motor insurance
Australia - Third Party Motor
Germany - Third party liability for any event which a German court might consider you negligent
Consumer Right Act 2015
Terms and notices in consumer contract have to be fair
An unfair term will not be binding on the consumer unless they choose
A term should be transparent and prominent, expressed in plain and intelligible language
Contracts (Rights of Third Parties) Act 1999
Allows an expressly identified third party to enforce a contract
Rates of IPT (Insurance Premium Tax)
Standard rate is 12%
Higher rate is 20% for travel insurances, and insurance that is sold in conjunction with the purchase of vehicles and electrical appliances / wider deals
The insurer is responsible for collecting the premium tax and paying it onto the tax authorities
Senior Managers and Certification Regime (SM&CR)
Replaces the APER (Approved Persons Regime)
Requires firms to ensure senior managers have a statement of responsibilities, firm responsibilities map, are pre approved by regulators before carrying out their roles.
Encourages staff to take responsibility, Improve conduct, ensures firms and staff understand and can demonstrate who does what within the firm.
Three parts of Senior Managers and Certification Regime (SM&CR)
Senior managers regime
Certification regime
Rules of conduct
What are the SM&CR Individual Rules of conduct
You must act with integrity
You must act with due skill, care and diligence
You must be open and cooperative with the FCA, the PRA and other
regulators
You must pay due regard to the interests of customers and treat
them fairly
You must observe proper standards of market conduct
What are the SM&CR Senior Manager conduct rules
You must take reasonable steps to ensure that the
business of the firm for which you are responsible
is controlled effectively
You must take responsible steps to ensure that the
business of the firm for which you are responsible
complies with the relevant requirements and
standards of the regulatory system
You must take reasonable steps to ensure that
any delegation of your responsibilities is to
an appropriate person and that you oversee
the discharge of the delegated responsibility
effectively
You must disclose appropriately any information of
which the FCA or PRA would reasonably expect
notice
What is the role of a Compliance officer
Ensure their firm abides by UK law and the rules and regulations set down by the regulator
They should:
Communicate the companys policies
Complete regulatory returns
Review company procedures
Ensure all stages of the business process are being conducted in accordance with the compliance manual
Money Laundering Reporting Officer (MLRO)
A nominated person to ensure there is money laundering checks and procedures in place.
What are the three ways in which an agency agreement can be created in law
By agreement (Agreed expressly and in writing)
By Ratification (Behaviour is accepted or condoned after the fact)
By Necessity (Emergency decision)
What are the duties agents have towards their principals
– Follow their instructions.
– Act in good faith towards their principal.
– Not to sub-delegate without permission. (I.e. if one
broker has some work for a client, the broker should not
give it to another broker without the client’s permission).
– Account for funds. (I.e. other people’s money – for
example their clients’).
– Act with all due care and skill.
– Follow their instructions.
– Act in good faith towards their principal.
What 3 options does a principal have if an agent acts outside of their authority
Ratify their actions and continue as if nothing has happened
Ratify their actions and make a claim against them for damages
Refuse to ratify their actions and expose the agent to the third party
Wholesale Broker
Direct contact with the insurer
Retail broker
Direct contact with the insured
Producing broker
The broker that produces or creates the work for the client
Single Tied Agent
Representative of the insurer
Only sells products from a single insurer
Does not work in the London Market
Multi-Tied agent
Representative of the insurer
Can sell different insurers products, but only one product per insurer.
Does not work in the London Market
Independent intermediary
Traditional London Market broker who works for the insured or reinsured
They take an unbiased view of the entire market (London and elsewhere) and advises the client on the best option for their needs
Surplus Lines Broker
If none of the local / admitted markets can accept the risk in the USA, a licenced Surplus Lines Broker must be used in the chain if the risk is entered into the London Market
Open Market Correspondent
Not a Lloyds approved cover holder (A party holding delegated authority from a Lloyds syndicate to write insurance on its behalf)
They introduce business to Lloyds either directly or via a Lloyds broker / Open market basis
Lloyds Broker
A broker already approved by their own regulator, who goes through a separate process to be accredited by Lloyds
