IIQE Paper 2 English Key Study Notes

Insurances of the Person
Insurances of Property
Insurances of Pecuniary Interests
Insurances of Liabilities

It means that loss or damage caused from any possible risk is covered by the policy unless an exclusion applies. The claimant just has to show that an accidental loss has occurred without pinpointing the exact cause.

A fundamental risk is one that offers such an extensive potential of loss that it is considered non-insurable by commercial insurers. Examples are

War and associated risks
Nuclear risks

Third Party Only cover
Third Party, Fire & Theft cover
Comprehensive cover

The scope of cover
The engine power/carrying capacity
The insured’s estimate of car value
The use of the vehicle
The regular drivers of the insured vehicle
The physical features of the vehicle

An excess means the amount which is already stated up to which the loss is not insured. An excess is of two types: voluntary excess or a compulsory excess. A compulsory excess is again divided into two types: an underwriting excess or a standard policy excess.

Consequential loss
Depreciation, wear and tear, and electrical or mechanical breakdown
Damage to tyres
Any policy excess(of any kind)

Driving by an Unnamed driver
Driving by a Young driver
Driving by an Inexperienced driver
Loss or damage while the car is parked
Loss or damage caused by theft

Lump sum benefits: single amounts payable in case of death or other mentioned injury caused by an accident.
Weekly benefits: periodic payments related to temporary total disablement or temporary partial disablement.
Medical expenses: The expenses caused by accidental injury.

Permanent: lasting for at least 12 months, without any reasonable hope of improvement.
Loss of limb: physical separation at or above the wrist or ankle, or permanent loss of use of a limb.
Loss of sight: total and irrecoverable loss of all sight in the eye(s).

Fundamental risks
Hazardous activities
Anti-social activities
Other exclusions, e.g., childbirth or pregnancy and while on duty with the fire or armed services.

PA exclusions
Congenital conditions
Pre-existing conditions and disabilities
Birth control/infertility treatment
Cosmetic surgery
Routine medical examinations and check-ups
Dental treatment (except for arising from an accident during policy cover)

These policies have pre-determined restrictions in cover and sums insured and limits of liability. It has a totally different rating structure then combined policies.

This type of insurance represents a major element in private insurances which most offices issue through their Fire Department. It represents one of the oldest forms of a “package” policy, including property insurance, liability insurance and insurance of the person and pecuniary insurance.

Buildings only cover
Contents only cover
Buildings and contents cover

War, riot and similar risk
Nuclear risks
Consequential loss
Unoccupancy
Policy excesses
Pro rata average condition

These are the costs of returning the domestic helper or his or her remains to his or her home country in case of his or her physical incapability to continue to be employed or death.

Medical expenses
PA benefits
Luggage loss/damage
Loss of deposits
Loss of money
Delays
Repatriation expenses
Personal liability cover

Geographical area
Duration
Persons covered
Annual policies

Combined Property and Pecuniary Policy
Combined Liability Policy
Combined “Umbrella” type cover

Inevitable loss: wear and tear, depreciation, etc.
Lack of routine care
“Standard” exclusions: War and nuclear risks
Unreasonable causes

Boiler Explosion Insurance
Machinery Breakdown Insurance
Contractors’ “All Risks” Insurance
Erection “All Risks” Insurance

Employers’ Liability Insurance
Products Liability Insurance
Professional Indemnity (PI) Insurance
Directors’ and Officers’ Liability Insurance
Public Liability (PL) Insurance

Where the subject matter insured is wrecked
Where the subject matter is so damaged as to stop to be a thing of the kind insured
Where the assured is irretrievably deprived of the subject matter insured

General Average sacrifice
Specified major casualties
Earthquake, volcanic eruption and lightning
Discharge of cargo at a port of distress
Jettison and washing overboard
Entry of sea, lake or river water
Total loss of any package lost, etc. while loading or unloading

The GA act must have been done deliberately.
The sacrifice must achieve its desired objective.
The loss is shared by all interests in the marine adventure.

These are the documents on which the potential insured submits details of the risk to be insured. These are documents in the form of a questionnaire which the proposer completes while making an application for insurance cover.

Each and every situation which would impact the judgment of a advisable insurer in fixing the premium, or deciding whether he will accept the risk is known as a material fact.

The duty of utmost good faith revives at renewal.
The renewal comprises the making of a new contract.
Terms of the renewal are subject to discussion between the parties.

Rational cooperation with the insurer
A duty to minimize loss as far as possible
Not to jeopardize the insurer’s rights
Absence of fraud (in any form)

Reasonable proof of a valid claim
Preservation of damaged property
Cooperation with the insurer
Not to compromise the insurer
Disclosure of any other insurances
Absence of fraud

Receipts and other proof of quantum
Contractually required documents
Marine insurance claims
Medical evidence
Witness and Police Reports, etc.

Surveyors are mostly concerned with marine losses.
All marine claims require a surveyor’s report.
Marine cargo policies usually indicate that a surveyor’s report will be required.
The surveyor usually charges a fee, which is recoverable from the insurer with valid claims.

Payment of Money
Paying for Repairs Direct
Replacement
Reinstatement

Authorization of insurers
Capital requirements
Solvency margin requirements
“Fit and proper” directors and controllers
“Adequate” reinsurance

Notification to the insurer
“Possible” claim notification
Time for claims notification
Duties upon the Insured
Resolution of disputes
Policy modifications of legal positions

These firms are named on marine cargo policies or certificates of insurance. They have the authority to settle claims on the underwriter’s behalf in areas where the underwriter does not have their own office.

Detailed legal knowledge
Large number interested parties
Long term investigations

Arbitration is less formal than litigation
Arbitration is not binding upon third parties
Arbitration usually applies to quantum only
Customary basic procedure
Litigation may still be possible

Identification of customer needs
Confidentiality and compliance
Provision of desired cover
Insurance documentation
Claims commitments

Disclosure requirements: the duty of utmost good faith
Premium payments: the obligation to pay premiums when due, and any credit facilities allowed
Code of Practice: insurance agents will be bound by a Code of Practice.

Qualifications and experience
Capital and net assets
Professional indemnity insurance
Keeping of separate client accounts
Keeping proper books and accounts

Underwriting and claims
Product understanding
Customers’ rights and obligations under insurance contracts
Customers’ rights and interests generally
The industry’s public image as a good corporate citizen

It defines the process of underwriting the proposed risk with a view to determine the insurability of a risk. If the risk is insurable, it determines the contract terms to be offered. Risk assessment is an on-going, or at least a repeatable process in respect to general insurance.

At the proposal stage
At policy renewal
With claims
With important proposed changes to current terms
Where the original situations under which the risk was insured have changed for the worse

Physical hazards are the objective features of a risk, that is, the factors which are self-evident or easily understood, which bear upon the likelihood or possible severity of claims.

Moral hazards tend to focus upon the moral behaviour and ethics of the insured. While these are important, the term covers wider issues, including things such as attitudes, life styles and carelessness.

Dishonesty: in extreme forms, this means fraud.
Carelessness: which can easily produce losses or accidents
Unreasonableness
Social behaviour: for example, vandalism and social disturbances

Proposer’s details
Insurance history
Losses/claims history
Insured’s valuations

Proposal form
Professional help
Risk surveys
Insurance intermediaries
Recording
Enquiries with previous insurers or Enquiry agents
Enquiries regarding possible hire-purchase commitments
Confidential market intelligence exchanges among insurers

It is a temporary document, constituting a temporary policy. However, it does provide cover, that is, it is not conditional upon a sufficient proposal form, to be submitted later. A cover note binds the insurer.

A policy is visible evidence of the invisible contract of insurance. Practically, a policy is almost invariably issued. Issuing the policy is generally the last stage in the underwriting process.

It is an organization of all EC insurers in Hong Kong, that has been set up for operating the Employees Compensation Insurer Insolvency Scheme.
The main objective is to indemnify EC policyholders against their insurers’ failure to pay EC insurance claims due to their insolvency.
It is funded through the contributions made by EC insurers calculated by a rate of 2% of gross EC premium income.

The Schedule
The Recital Clause
The Operative Clause
General Exceptions
Policy Conditions
Signature Clause

It may be quite short or quite long
It specifies the perils covered or specifies that cover is on an “all risks” basis
It may comprise one or more sections
The sections may have their own exceptions, limiting the cover section-wise
Any excess/deductible for the section concerned may be shown

Standard: applicable to all policies in that class
Imposed: applied additionally by the underwriter to counteract adverse features
Voluntary: chosen by the insured for obtaining a premium reduction

A warranty may be thought of as an absolute undertaking to the insurer on the part of the insured. The undertaking may be to:

do something;
refrain from doing something; or
affirm certain facts.

Condition precedent to the contract
Condition subsequent to the contract
Condition precedent to liability

An exclusion is a policy provision which states that cover does not apply in the situations described. The different kinds of exclusion are:

General Exclusions
Specific Exclusions
Market Exclusions
Other Exclusions

The insurer may cancel:  cancellation clauses always allow the insurer to cancel.
The insured may cancel: while not universal, cancellation clauses generally allow the insured to cancel.
Practical applications
Miscellaneous consideration