Questions from study text - Chapter Two

Question 1

What is the process of identifying and clarifying a client’s requirements known as?

Answer 1

The process is known as establishing a client’s ‘demands and needs’.

Question 2

When submitting a risk to an underwriter, what must a broker ensure they provide?

Answer 2

The broker must provide:

• an accurate specification of cover and;
• all material underwriting

Question 3

List three limiting factors affecting a broker’s choice of insurer to trade with

Answer 3

Three factors from:

• Regulation
• Financial security
• Class of business
• Administration

Question 4

List three of the objectives when presenting and explaining terms to the client

Answer 4

Three objectives from:

• Convey the terms accurately and concisely
• Ensure the client understands the cover and the terms and conditions that may apply
• Ensure that the client understands where the cover may not match their requirements
• Provide a record of the advice to the client
• Bring special payment or standard credit terms to the client’s attention
• Provide full details of the insurers

Question 5

What does the suitability statement need to record?

Answer 5

The suitability statement needs to record the client’s demands and needs, how the recommendation addresses these needs, and the reasons behind the recommendation

Question 6

State the four ways a broker can deal with claims

Answer 6

Brokers can handle claims in the following ways:

• No service
• Claims advocacy role
• Full claims service
• Delegated authority claims handling

Question 7

List four activities a broker might undertake when dealing with a claim

Answer 7

Four activities from:

• Advising the client as to whether the claim is insured or not
• Giving immediate notification of losses to insurers
• Advising the client of their rights and obligations under the policy
• Arranging for the completion of appropriate claims forms
• Collecting claim payments from insurers
• Attending site meetings with the adjuster and the insurer’s personnel

Question 8

What is opportunistic fraud?

Answer 8

Opportunistic fraud is where the individual or firm exaggerates or inflates a genuine claim to increase the value of a payout. In some cases an entire claim may be fabricated.

Question 9

List four key issues faced by brokers in designing insurance programmes

Answer 9

Four issues from:

• Risk retention
• Packages and combined policies
• Programme term
• Limits
• Specialist cover
• Insurers