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IIQE Paper 1 Key Study Notes

The document provides key study notes on various aspects of insurance, including definitions of risks, types of contracts, and essential elements of insurance agreements. It covers topics such as insurable interest, indemnity, underwriting, and the roles of insurance brokers and agents in Hong Kong. Additionally, it addresses legal considerations, money laundering concerns, and the principles of data protection in the insurance industry.

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40 views8 pages

IIQE Paper 1 Key Study Notes

The document provides key study notes on various aspects of insurance, including definitions of risks, types of contracts, and essential elements of insurance agreements. It covers topics such as insurable interest, indemnity, underwriting, and the roles of insurance brokers and agents in Hong Kong. Additionally, it addresses legal considerations, money laundering concerns, and the principles of data protection in the insurance industry.

Uploaded by

ElaineKong
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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IIQE Paper 1 English Key Study Notes

What are the potential losses that a risk may present?


Financial
Physical
Emotional

Define pure risk.


The risk 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.

What are the secondary or subsidiary benefits of insurance to Hong


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

Name the tools or measures of risk handling.


Risk avoidance
Loss prevention
Loss reduction
Risk transfer
Risk financing

What are the different types of contracts?


Simple contracts
Contracts by deeds

What is a void contract.


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.

What are the different types of defective contracts?


Void (or invalid) contracts
Voidable contracts
Unenforceable contracts

What are the consideration in an insurance?


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

What are the essentials or elements of a contract?


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

Name the different ways in which an agency agreement can be


brought to an end.
Mutual Agreement
Revocation
Breach
Death
Insanity
Illegality
Time

What are the different types of assignments in insurance?


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

What are the types of breach of utmost good faith?


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

Define insurable interest.


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

What are the requirements that must be satisfied for insurable


interest to exist?
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.

In the absence of enquiry in insurance, what are the facts that need
not be disclosed?

Matters of common knowledge


Facts already known, or seems to be known, to the insurer
Facts which diminish the risk

Define Fraudulent Non-disclosure.


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

What are the different types of perils?


Insured peril
Excepted (or excluded) peril
Uninsured peril

What do you understand by indemnity?


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

Define subrogation.
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.

When does the doctrine of apparent authority comes into play?


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

Which insurance policy provisions could mean that something more


than indemnity is payable with claims?
‘New for Old’ cover
Agreed value policies
Reinstatement insurances
Marine policies

What do you understand by intention to create legal relation?


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.

Define uninsured peril.


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.

What are the various ways to pay indemnity?


Cash payment
Repair
Replacement
Reinstatement

What is abandonment?
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.

What are the major functions of the Product Development


department/section of an insurer?
Individual product development
Product portfolio development
Product research
What do you mean by underwriting in the context of an insurance
company's operations?
The selection of risks to be insured and the determination of the terms under
which the insurance is given is known as underwriting.

What are the factors that may have significance with life insurance
claims?
Outstanding policy loans
Possible assignment of the policy to a third party
Uncertainty over the death or identity of the deceased
Complications with beneficiaries

Name the areas that must be the subject of attention in all insurance
claims.
Liability
Quantum

What are the areas covered under advertising in terms of an


insurer?
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

What are the different types of insurance businesses?


Statutory
Academic
Practical

Define tontines.
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.

Describe inward reinsurance.


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

Name the approved bodies of insurance brokers in Hong Kong.


Hong Kong Confederation of Insurance Brokers
Professional Insurance Brokers Association

Name the organization that authorizes any person who wants to


carry on insurance business in or from Hong Kong.
Insurance Authority (IA)

Define capital redemption life insurance.


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.

Define solvency.
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.

What are the permitted disciplinary actions against an insurance


agent under the Code of Practice for the Administration of Insurance
Agents?
Suspend the agent’s appointment
Terminate the agent’s appointment
Issue a reprimand
Other action deemed fit by the IARB

What should be included in the Conduct of Insurance Agents for


General Insurance Business and Restricted Scope Travel Business?
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

What are the requirements to become an authorized insurance


broker?
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.

What is the capital and net assets requirements for an


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

What are the characteristics of accounts and records that an


insurance broker is bound to maintain?
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

Describe US style classification of insurance.


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.

What is the punishment for a registered person who fails to meet


the CPD requirements?
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.

Name the fundamental principles relating to the ‘fit and proper’ test
of an insurance broker.
Utmost Good Faith
Due Care and Diligence
Priority of Client’s Interests
Information from Client
Information for Client
Capabilities

What are the minimum requirements if the insurance intermediary is


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

What are the various Data Protection Principles?


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

Define 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.

What is marketing subject?


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

What are the classifications of insurance on subject matter of


insurance or functional basis?
Insurance of the person
Insurance of property
Insurance of liability
Insurance of pecuniary interests

What are the examples of long term insurance contracts that are
vulnerable as a vehicle for laundering money or financing terrorism?
Unit-linked or with profit single premium contracts
Single premium life insurance policies that store cash value
Fixed and variable annuities
Endowment policies

What are the stages of money laundering?


Placement
Layering
Integration

What are the main pieces of legislation in Hong Kong that are
concerned with ML/TF?
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’)

Name the types of insurance commonly used in money laundering


activities.
Purchased annuities
Unit-linked single premium contracts

What are the primary roles of IARB?


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.

What is the advantage of deploying risk based approach?


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

What are the factors that differentiate assignment of the insurance


contract and assignment of the right to insurance money?
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

What are the alternatives to strict indemnity?


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

What are the activities included in public-relations?


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

What are the various considerations involved in life insurance


claims?
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

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