and WIN a bottle of vintage claret

Q1 True or false?A professional indemnity policy is:a) A type of liability policyb) An agreed value policyc) A claims arising policyd) A claims made policye) A reinstatement policy.Q2 Insurable interest: true or false?a) Was mainly addressed in the Marine Insurance Act [1906]b) Cannot arise by statutec) Can arise by statute and common lawd) For a motor insurance policy it must exist at inception.Q3 A material fact: true or false?a) Is not a fact that lessens the riskb) Is governed by the doctrine of contra preferentumc) Was clearly defined in the Marine Assurance Act [1906]d) Is a fact which 'induces' the underwriter to offer terms.Q4 VainHope Ltd is a firm of insurance brokers acting for Legit Ltd. It arranged a public liability policy for Legit with the Gouty Legg Insurance Company. Which answer is correct?a) VainHope Ltd has a duty of disclosure to Gouty Leggb) Legit Ltd has a duty of disclosure to VainHope Ltdc) Gouty Legg has a duty of disclosure to Legitd) VainHope Ltd has a duty of disclosure to Gouty Legg and Legit Ltd.Q5 VainHope Ltd is a firm of insurance brokers. Shuffle & Grope is a firm of surveyors that introduces its clients to VainHope Ltd for general insurance advice. Shuffle & Grope only introduces clients and occasionally helps elderly tenants to complete claim forms. True or false?a) Shuffle & Grope is conducting a regulated activityb) Shuffle & Grope is exempt from authorisation, as surveyors are a member of a recognised and designated professional bodyc) Assisting an insured in presenting claims is a regulated activityd) Assisting an insurer or insured with a claim is a regulated activitye) Shuffle & Grope will have to apply for authorisation with the FSA.Q6 John Doe is riding his mountain bike in the Lake District. He falls and breaks his leg. Unfortunately, the place in which he lies before rescue is cold and wet and he subsequently develops pneumonia and dies in hospital. John has a personal accident policy with Gouty Legg Insurance. It turns down the claim as there is no cover provided for death by sickness, only for death by accident. As claims manager for the broker, what is your advice to John Doe?a) Gouty Legg Insurance is correct - the proximate cause of death is sicknessb) Mountain biking is always excluded from personal accident policiesc) Gouty Legg is incorrect - the proximate cause is the accident of falling off the biked) None of these - John Doe is dead, so how can you advise him?Sorry about that last one, but it does demonstrate that even the best question writers are human. It took a 16-year-old GCSE student to point out the gaffe, but only goes to show how mistakes are made by the most experienced of us and how supervision and monitoring reduces risk. You may, of course, correctly alter the question to read "What do you tell John Doe's executors?"Q7 You are an insurance broker advising Clampett Industries about the insurance of its factory building. You have advised the insured about basis of cover (reinstatement) and how to calculate the sum insured. The insured suggests £4.3 m and asks you to give your opinion on whether or not this figure is adequate. Which of the following responses would be regarded as good market practice?a) Look at last year's sum assured and add a percentage to cover inflationb) Tell the client that you are sorry but as you are not an expert on property valuation and cannot therefore give advice on this aspect of the coverc) Give the client a copy of the Property Valuation Guide provide by the Royal Institution of Chartered Surveyors and recommend that he refers to thisd) Tell the client that, based on your years of experience, adding a percentage to cover inflation seems fine.Q8 You are a broker acting for two brothers who own a nightclub. They disclose to you that there have been three attempted break-ins at the club over the past 12 months, but no damage was sustained. You are insuring for theft with a new insurer, to include a £300 excess. Should your client disclose the incidents? What is your advice?a) As no claim was made the incidents are not materialb) As no loss was suffered the incidents are not materialc) Only a court can decide what is material. It is prudent to disclose the incidentsd) As the incidents were less than the excess they are not material.This week we have an MOT and competition rolled into one.Part 1: Answer eight questions on market principle and practice - the Elements of Insurance. No prizes for this one but see how you get on. We think that the majority of practitioners should be able to get all these right.Part 2: This is the competition. Answer the eight questions and complete Feedback for each answer.The judging panel will be Claire Siegel, learning solutions director at the CII, and Kate Foreman, director of learning at RWA Group. The prize will be a bottle of vintage La Mission Haut Brion (Grand Cru).Feedback should include the following:

  • The correct answer
  • An explanation of the learning point
  • Confirmation of any authority supporting your feedback (e.g. case law, statute etc).
  • Answers should be emailed to: by midnight on 11 August 2004.How did you get on? Only eight questions but designed to make you think about the issues.One final exercise (and not part of the competition but for all readers) is to revisit each of the questions and on a scale of one to five, consider what risk it would present if you or a member of staff did not know the answer to a particular question.As an example, not knowing about the rules and law relating to disclosure is high risk (5) but you might consider that not knowing the name of the key legislation is only low risk (1).This exercise should be undertaken by any reader who is designated a supervisor or an approved person.