IIQE Paper 1 English Key Study Notes

Financial
Physical
Emotional

The risk which which offers the prospect of loss only, with no chance of gain is known as pure risk. Examples of such risks include fire, accident and other undesirable happenings.

Means of savings
Source of employment
Encouragement of economic development
Reduction in number of accidents/losses

Risk avoidance
Loss prevention
Loss reduction
Risk transfer
Risk financing

Simple contracts
Contracts by deeds

The propounded contract does not exist in law and completely lacks legal effect. In the terms of insurance, it generally means that all premiums which have already been paid under a void contract are returnable.

Void (or invalid) contracts
Voidable contracts
Unenforceable contracts

The promise by the insured to pay premium
The promise by the insurer to pay or compensate as per policy terms

Offer
Acceptance
Consideration
Capacity to contract
Legality
Intention to create legal relation

Mutual Agreement
Revocation
Breach
Death
Insanity
Illegality
Time

Assignment of the insurance contract (or insurance policy)
Assignment of the right to insurance money (or insurance proceeds)

Fraudulent Misrepresentation
Non-fraudulent Misrepresentation
Fraudulent Non-disclosure
Non-fraudulent Non-disclosure

It is a person’s legally acknowledged relationship to the context of insurance that gives them the right to effect insurance on it.

There must be some person , property, liability or legal right capable of being insured.
That person, property, etc. must be the subject matter of the insurance.
The proposer must have the legally acknowledged relationship to the subject matter of insurance if in case financial loss may result to him if the insured event occurs.

Matters of common knowledge
Facts already known, or seems to be known, to the insurer
Facts which diminish the risk

A fraudulent omission to provide material facts to the other party is known as fraudulent non-disclosure.

Insured peril
Excepted (or excluded) peril
Uninsured peril

An exact financial compensation for an insured loss, nothing less or more is called indemnity. It may not apply to all types of insurance.

It is the exercise of rights or remedies possessed by another against third parties for one’s own benefit. It allows proceeds of claim against third party to be passed to insurers, to the size of their insurance payments.

The doctrine of apparent authority applies when an agent is allowed to appear to have a greater authority than that actually available to him.

‘New for Old’ cover
Agreed value policies
Reinstatement insurances
Marine policies

It means that each party to a contract must clearly have the intention that it is to have legal consequences, to make a valid contract.

This is a type of peril that is neither insured nor excluded. A loss caused by an uninsured peril is irrecoverable except when it is an insured peril that has led to the damage.

Cash payment
Repair
Replacement
Reinstatement

It refers to the act of conceding the subject matter insured to the insurers in exchange for a total loss payment in certain situations. The subject matter insured is completely handed over to the insurer, who may eventually benefit from its residual value.

Individual product development
Product portfolio development
Product research

The selection of risks to be insured and the determination of the terms under which the insurance is given is known as underwriting.

Outstanding policy loans
Possible assignment of the policy to a third party
Uncertainty over the death or identity of the deceased
Complications with beneficiaries

Liability
Quantum

Selection of external agencies
Co-ordination of advertising campaigns
The extent to which TV or other media are to be involved
Expenditure analysis and control

Statutory
Academic
Practical

It is an unusual contract for a group of persons in which the accumulated contributions are payable to the last survivor/survivors at the end of a defined period.

Inwards reinsurance is when the company acts as re-insurer, along with covering risks which are already insured by other insurers/re-insurers.

Hong Kong Confederation of Insurance Brokers
Professional Insurance Brokers Association

Insurance Authority (IA)

It is a contract which provides a capital sum at the end of a term in order to replace one’s capital because, for example, debentures will become repayable. It is not related to human life.

It is the point at which assets are just sufficient to meet liabilities. A margin of solvency is the degree or amount by which assets exceed liabilities.

Suspend the agent’s appointment
Terminate the agent’s appointment
Issue a reprimand
Other action deemed fit by the IARB

Identify himself before business discussions
Give advice only when competent to do so
Explain policy cover and ensure the client understands what he is buying
Explain policy differences when making comparisons

One either has to obtain authorization from the Insurance Authority;or
Become a member of a body of insurance brokers that has been approved by the IA.

Maintain a minimum net assets value of HK$100,000 in his insurance broking business at all times.

The accounts and records should

Sufficiently explain transactions
Sufficiently show the financial position of the business
Enable ‘true and fair view’ financial statements to be prepared
Can be easily and properly audited

In the US Style classification, there is a very clear distinction between Life and Non-Life business. Non-life business is frequently being sub-divided into Fire, Marine, Bonding and Casualty.

The RP’s registration should be revoked for 3 months as a starting point by the IARB and he should be required to complete all outstanding CPD hours at the time of re-registration.

Utmost Good Faith
Due Care and Diligence
Priority of Client’s Interests
Information from Client
Information for Client
Capabilities

Special responsibilities regarding client’s monies
Duty always to act in utmost good faith
Duties under ‘Fit and Proper’ Tests

Principle 1 – purpose and manner of collection of personal data
Principle 2 – accuracy and duration of retention of personal data
Principle 3 – use of personal data
Principle 4 – security of personal data
Principle 5 – information to be generally available
Principle 6 – access to personal data

Personal data is defined as any data

which relates directly or indirectly to a living individual.
which makes it practically possible to directly or indirectly ascertain the identity of the individual.
in a form in which access to or processing of the data is practicable.

It is defines to include any goods, facility or service offered, or the availability of which is advertised, in relation to direct marketing.

Insurance of the person
Insurance of property
Insurance of liability
Insurance of pecuniary interests

Unit-linked or with profit single premium contracts
Single premium life insurance policies that store cash value
Fixed and variable annuities
Endowment policies

Placement
Layering
Integration

Anti-Money Laundering and Counter-Terrorist Financing(Financial Institutions) Ordinance (‘AMLO’)
Drug Trafficking (Recovery of Proceeds) Ordinance (‘DTROP’)
Organized and Serious Crimes Ordinance (‘OSCO’)
United Nations (Anti-Terrorism Measures) Ordinance (‘UNATMO’)

Purchased annuities
Unit-linked single premium contracts

Registering insurance agents and their Responsible Officers and Technical Representatives.
Handling complaints against insurance agents or their Responsible Officers  and Technical Representatives, according to the Code of Practice for the Administration of Insurance Agents.

It allows resources to be allocated in the most efficient way by maintaining the priorities so that the greatest risks receive the highest attention.

Effect of an assignment of the insurance contract
Effect of an assignment of the right to insurance money
Necessity for insurable interest
Necessity for insurer’s consent
Assignment of benefits as opposed to obligations

Reinstatement insurances
‘New for Old’ cover
Agreed value policies
Marine policies

The co-ordination of all external communications
Press conferences, to announce or explain things, as necessary
The co-ordination of media enquiries and interviews
Preparing press releases and copy for trade and other journals

Possible disputes or complications
Possible assignment
Dividend/bonus considerations with participating/with-profit policies
Possible outstanding policy loans
Uncertainties over actual death or the identity of the deceased