Fiona Andrews explains why the CII Diploma business practice unit is vital for all employees commercial awareness and business acumen are essential weapons in the armoury of an insurance professional.

But general knowledge of the objectives of business organisations, the functions they must perform and the regulatory environment in which they operate are all essential for those looking to work across different areas and at higher management levels.

The business practice unit is compulsory for those taking the CII's Diploma in Insurance for this very reason.

The subject addresses the core issues of interest to those working in, or with, insurance businesses. These include basics such as articles of association, the use of technology, the role of public relations, accounting practices, people management and the impact of legislation and regulation on firms in general and insurance organisations in particular.

The aim is to encourage the development of knowledge and skills for insurance staff so that they can advance the commercial interests of their business. These are vital issues for all in the insurance industry. How familiar are you with the basic principles?

When tackling this subject, it is important to appreciate the level of detail and information that is required. Knowledge must be comprehensive and, for exam candidates, reflective of the published syllabus.

For example, questions relating to corporate governance - including an understanding of a company's memorandum and articles of association through to the taking of minutes in business meetings have, in the past, been answered in a non-specific way.

This applies as much to having sufficient knowledge about the content and purpose of the documents that registered companies are legally required to deposit at Companies House, as it does to knowing the planning issues that must be addressed in order to produce an effective agenda for a meeting.

Financial accounting also forms a key element of the subject. How familiar are you with the accounting equation and its component parts? Try the questions below and see how you do.

The breadth of skills required by the modern insurance professional extends into areas covering promotions and publicity as well as the use of marketing and public relations. Do you understand the difference between the two?

Management information and accounting is an important part of the fabric of most modern insurance companies.

Knowing the practical implications of the Data Protection Act [1998] or the Money Laundering Regulations, for example, is as important as awareness of the security threats to computer systems and procedures that can be taken to protect them.

For the latter, while managers will not be expected to understand the intricacies of systems, they will be expected to appreciate the key features and operational aspects.

Similarly, managers today need to be aware of legislation relevant to the workplace, such as the Acts covering health and safety at work, sex discrimination, disability, race relations and employment.

Training and competence, particularly in view of the FSA requirements in this area, must be understood, as must the importance of good employer/employee relationships. This is especially pertinent as insurance is very much a 'people business'.

A conclusion drawn from scrutinising past exam papers is that candidates can neglect general business issues, no doubt because they devote all their time and energy to technical insurance subjects. How many experienced practitioners do the same?

It cannot be stressed highly enough that this paper, within the context of the Diploma course, is designed to examine an individual's overall preparedness for a career in the insurance industry.

And any such career will flourish only if the individual concerned has a thorough grounding in business matters. IT

' Fiona Andrews is manager of the Faculty of Claims and head of CPD at the CII

Test yourself on business practic
1 What is the relevance of the accounting equation in financial accounting?

2a Before a new product is marketed its development typically follows a defined route.
List, in order, the stages that should be involved.

2b Identify four sources from which ideas for new products might arise.

3 List five examples of security threats to computer systems.

4 State five of the data protection principles contained in the Data Protection Act [1998].

5 List five responsibilities of a company secretary under the Companies Act [1985].

1 The accounting equation underpins the entire accounting recording system. It is a logical way of looking at financial transactions and explaining how income and expenditure relate to the value of the company. It forms the basis of the more formal statutory financial statement. In particular, it forms the basis of the balance sheet.

2a Market research; product design; testing of the prototype; making necessary amendments; commercial production.

2b Any four of the following: existing customers; the organisation's staff; suppliers or agents; competitors; the government; the media; trade associations.

3 Any five of the following: computer viruses; computer hacking; vandalism; fraud; accidental erasing of files; theft of information; theft of money.

4 Any five from the following:

  • Personal data shall be processed fairly and lawfully according to detailed guidelines
  • Personal data shall be obtained only for specified and lawful purposes and shall not be further processed in any manner
  • incompatible with those purposes

  • Personal data shall be accurate and where necessary kept up to date
  • Personal data processed shall not be kept longer than necessary for the purpose for which it was obtained
  • Personal data shall be processed in accordance with the rights of data subjects under this Act
  • Appropriate measures shall be taken against unauthorised or unlawful processing of personal data against accidental loss or destruction or damage
  • Personal data shall not be transferred outside the EEC unless that country or territory ensures an adequate protection level.
  • 5 Any five of the following:

  • Maintaining the statutory registers
  • Giving notice of the annual general meeting
  • Filing changes in the directors' and company secretary's details in the company's annual return
  • Notifying the Registrar of Companies of special or extraordinary resolutions
  • Ensuring statutory forms are filed promptly
  • Supplying every member of the company with a copy of the annual accounts
  • Keeping minutes of directors' and general meetings
  • Making accounts and documents available for inspection.
  • Topics