What is a contract?
An agreement between two parties which is legally binding.
What is needed for a contract to be Legally Binding?
-Offer
-Acceptance
-Consideration
What does caveat emptor mean?
Let the buyer beware
What Act applies to consumers in an insurance contract?
Consumer Insurance (Disclosure and Representations) Act 2012
What is the Consumer Insurance Act 2012?
Consumers are required to ensure that all information provided is full and accurate
What Act applies to Non-consumers (businesses)?
Insurance Act 2015
What is the Insurance Act 2015?
Ensure that there has been fair presentation to the insuer
What is the difference between consumer/non-consumer?
Consumers buy insurance for personal needs and that is not relatd to business or trade
What is a material circumstance?
It would influence the judgement of a prudent insurer in determining whether to take the risk
What are the three key elements of Fair Presentation?
-Disclosure
-Clear and accessible
-Good faith
What classifies a Vulnerable Customer?
Susceptible to Detriment, particulary when a firm is not acting with appropriate levels of care
What would some examples of vulnerability be?
-Poor Health
-Life Events
-Poor Literacy or Numeracy skills
What is the FCA’s focus when it comes to Vulnerable Customers?
-Understanding the needs of them
-Skills and capabilities of staff
-How firms can take practical action
What two things can cause a breach of the duty of fair presentation?
-Misrepresentation
-Non-Disclosure
What is the difference between the two breaches of fair presentation?
Misrepresentation is not done on purpose but still can affect the contract.
When do Insurers get remedy?
Where there has been a qualifying breach
This is under the Consumer Insurance Act 2012
What is a qualifying breach?
If the consumer did not take reasonable care, and if the breach led the insurer to enter the contract
What are the three states of mind that lead to consequences when there has been a breach?
Honest and reasoanble
Careless
Deliberate or reckless
What is the consequence if the insurers mind state of mind was honest and reasonable?
Insurer may have to pay the claim
What is the consequence if the insurers mind state of mind was Careless?
Insurer will recieve compensation based upon what the nsurer would have done if the proposer had taken care when answering the questions.
What is the consequence if the insurers mind state of mind was Deliberate or Reckless?
Insurer may treat the policy as if it never existed
What are the two main methods of obtaining information?
Proposal Forms
Statements of Fact
What are the other methods of obtaining information?
-Brokers
-Call Centres
-Surveys
