IIQE Paper 6 Key Study Notes English

Financial: measurable in monetary terms
Physical: death or personal injury
Emotional: feelings of grief and sorrow

Pure Risks- It offers the potential of loss only without any gain or change. Examples include fire, accident and other undesirable happenings.
Speculative Risks- it offers the potential of gain or loss. Examples include gambling, business ventures and entrepreneurial activities.

The causes of these risks are out of the control of any one individual or even a group of individual, and they affect large numbers of people. Examples include famine, war, terrorist attack, widespread flood and other disasters.

Particular risks have limited consequences, and affect an individual or a fairly small number of people. The consequences may be serious for those involved, but are localized. Examples include motor accidents, personal injuries and the like.

Risk avoidance
Loss prevention
Loss reduction
Risk transfer
Risk financing

It is a type of programme used by various organisations to minimise the impact of losses on the organisation. It uses tools like: insurance, risk transfer other than insurance, self-insurance, etc.

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

A contract is a legally enforceable agreement. Contracts comprise promises or undertakings given in exchange for a promise or undertaking from the other side. Contracts may concern relatively trivial or very important matters.

By agreement: if contractual or not; express, or implied from the conduct or situation of the parties.
By ratification: It is the granting of retrospective authority for a given act.

Actual authority
Apparent authority
Authority of necessity
Agency by estoppel

Obedience
Personal performance
Due care and skill
Loyalty and good faith
Accountability

Mutual Agreement
Revocation
Breach
Death
Insanity
Illegality
Time

It is a person’s legally acknowledged relationship to the subject matter of insurance that provides him the right to effect insurance on it. A thief in control of stolen goods does not have the right to insure them, since the relationship must be a legal one.

Insurance of the Person
Insurance of Property (physical things)
Insurance of Liability
Insurance of Legal Rights

It is a legal term that normally means a transfer of property. There are broadly two types of assignment in insurance:

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

Material fact is defined as every situation which would effect the decision of a sensible insurer in fixing the premium, or determining whether he will accept the risk.

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

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

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

It is a peril that is neither insured nor excluded. Loss caused by an uninsured peril is not covered unless it is an insured peril that has led to the cause of the uninsured peril. Examples include raining and theft are among the uninsured perils of the standard fire policy.

Insured peril
Excepted (or excluded) peril
Uninsured peril

An exact financial compensation for an insured loss which is neither more nor less is called indemnity. It is said that life and personal accident insurances include benefit policies rather than policies of indemnity. Since indemnity usually cannot apply, the policy can only provide a benefit in the amount defined in the policy for death or for the type of injury concerned.

Cash payment (to the insured)
Repair
Replacement
Reinstatement

Abandonment refers to the process of yielding the subject matter insured to the insurers for a total loss payment in certain situations. It is quite normal in marine practice, but for other classes of property insurance, policies usually exclude abandonment.

Contribution applies only if indemnity applies. Therefore, if a person dies while insured by two or more different life insurance policies, as the insurances are not subject to indemnity, each has to pay in full.

It is the an activity, for one’s own benefit, of rights or remedies owned by another against third parties. As a consequence of indemnity, subrogation permits earnings of claim against third party be forwarded to insurers, to the degree of their insurance payments. At common law, an insurer’s subrogation action must be controlled in the name of the insured.

Reinstatement insurances (or insurances on a reinstatement basis)
‘New for Old’ cover
Agreed value policies (or valued policies)
Marine policies

Statutory: for insurance regulator’s authorisation and supervision
Practical: for internal company organisation
Academic: for professional study and training

Life and annuity
Marriage and birth
Linked long term
Permanent health
Tontines
Capital redemption
Retirement scheme management category I
Retirement scheme management category II
Retirement scheme management category III

Number of authorised insurers
Number of registered or authorised insurance intermediaries
Number of persons employed in the industry
Premium volume

HK$10 million: if carrying on only General or only Long Term business
HK$20 million: if carrying on any statutory insurance business
HK$20 million: if carrying on both General and Long Term business
HK$2 million: if the insurer is a Captive Insurer

‘Premium Income’- the higher the volume of premium income, the larger the relevant amount
‘Claims Outstanding’- the higher the amount of claims outstanding, the larger the relevant amount

Paid-up capital
Solvency margin
Directors and controllers
Adequate reinsurance arrangement

Insurance Ordinance is a very important piece of legislation which provides the structure for the sensible management of the insurance industry of Hong Kong. It not only covers the supervision and regulation of insurers, but also that of insurance intermediaries.

‘Solvency’ is the point at which assets are just enough to meet liabilities. A margin of solvency is defined as the degree or amount by which assets exceed liabilities.

General Business
Long Term Business
Composite Business
Captive Insurer

Limitation of premium income
Restrictions on investments
Restrictions on new business
Custody of assets by an approved Trustee
Special actuarial investigation
Assumption of control by a Manager appointed by the IA
Winding up (liquidating) the insurer

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

The form must

Be in comprehensible language, with clear guidance as needed
Carefully explain the importance of utmost good faith requirements
Make matters of material importance the subject of clear questions
Explain carefully the significance of any related questionnaires

Registration
Complaints: proper methods must be in place to handle complaints against insurance agents
Adequate Support: ensuring that insurance agents have enough support to perform their duties efficiently
Miscellaneous

Publish internal complaint handling methods
Provide access to them in each of their offices
Provide them without charge to customers upon appeal
Provide them without charge and automatically to complainants
Notify new customers of the availability of the methods

Receipt of complaints
Response to complaints
Investigation of complaints
Provision of rectification

Name or job title and contact details of the complaint handler
Expected date of final response to the complaint
Internal complaint handling methods

The result of the investigation
Whether there has been mistake on the part of the insurer
What correction, if any, will be made
When the correction will be made

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

Provide advice only when able to do so
Recognize himself before business discussions
Explain policy differences when making comparisons
Explain policy cover and ensure the client knows what he is buying

An insurance agent is a person who advises on or arranges contracts of insurance in or from Hong Kong as an agent or subagent of one or more insurers. An insurance agent can be:

an Individual Agent; and
an Insurance Agency.

General Business
Long Term (excluding Linked Long Term) Business
Long Term (including Linked Long Term) Business
Restricted Scope Travel Business

A registered person can be a person who has been registered under clause 15 or 30 of the Code as either:

an Individual Agent;
an Insurance Agency;
a Responsible Officer of an Insurance Agency; or
a Technical Representative of an Individual Agent or Insurance Agency.

Absence of fraud
Fair and reasonable behaviour
Take no unfair advantage of clients
Exert no undue influence
All actions must be legal
Criminal proceedings on breach

All insurance agents should be chosen in writing and are subject to an Agency Agreement. The agreement must include definite minimum requirements. These will include a wide range of commitments towards both his Principal and the policyholder.

Personal data is defined as any data

Associated directly or indirectly to a living individual;
From which it is possible for the identity of the individual to be directly or indirectly established; and
In a form in which access to or processing of the data is possible.

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

He considerately believed that the disclosure was required for the purpose of averting or detecting crime;
The disclosure was necessary or authorised by or under any enactment, by any rule of law or by an order of a court;
He considerately believed that the data user had consented to the disclosure; or
He disclosed the data for the purposes of a advised news activity or a directly related activity.

A wide exemption for personal data held for domestic or recreational purposes;
Exemptions on access by data subject for certain employment-related personal data kept by their employers;
Exemptions from the subject access and use limitation requirements where their application is likely to influence certain competing public or social interests.

Sex, marital status or pregnancy (the Sex Discrimination Ordinance, 1995)
Disability (the Disability Discrimination Ordinance, 1995)
Family status (the Family Status Discrimination Ordinance, 1997)
Race (the Race Discrimination Ordinance, 2008).

The ICAC offers free of cost, confidential corruption prevention services to organisations. It also provides free, confidential corruption prevention advice to individual organisations. The ICAC provides a large variety of anti-corruption training courses and activities to the insurance industry.

The risks which are mostly covered by commercial insurers are pure risks, and speculative risks are not normally insurable. This is due to the fact that speculative risks are involved voluntarily for gain, and, if they were covered, the insured would have little reason to strive to achieve that gain.

It is the relationship between a Principal and his Agent. As it is a relationship, it may develop as a matter of fact in comparison to a as a precise agency appointment. In legal terms, an agency relationship may seem to develop in certain given situations.

Remuneration
Expenses, etc.
Breach of duty