Multiple choice questions are valuable for assessing knowledge and understanding, but case studies create real-life situations.

This month's MOT takes the form of a case study. The purpose of a case study is to create a scenario that ideally reflects a situation that has, or may occur in real life.Those readers who have attempted more advanced professional exams will understand the concept of such a scenario followed by a series of questions. It has to be said that, historically, it has almost been guesswork on occasions trying to work out what the writer of the question expects.Perhaps it is that there are still too many question writers whose raison d'être is to show off and prove that they still know more than the candidate. In a world where the regulator allows us to choose our own methods of assessment of knowledge this could sound the death knell of the written response.But let us stop and think carefully about the wisdom of allowing ourselves to move too far away from the written assessment.One of the greatest failings of brokers is the inability to make detailed records and it is perhaps important that readers who are responsible for assessing competence in authorised firms consider that, as convenient and as popular as they might be, multiple choice questionnaires do not in any way reflect the real life situation in front of a client. In other words, the multiple choice questionnaire is an excellent way of assessing points of knowledge and understanding, but we still need to look more closely at how that knowledge is applied in a real life or 'made up' scenario.The key to a good case study is the relevance of the situation and questions to a practitioner's day-to-day job. All credit to the CII which pioneered some of the key questioning processes during the mid to late 1990s in the FPC exams. Here are some examples:

  • Spot the errors and inconsistencies. What more realistically reflects the responsibility of a broker
  • What additional information is required? Insurers do have a right to avoid policies if they are not given enough information and are exercising that right more and more
  • What are the advantages and disadvantages of a particular product for this customer? A particular policy is rarely ideal but it may be the best option, but what are the weaknesses
  • What are the differences between two or more similar products? Again an underlying requirement of broker competence is to identify these
  • What is compliant/not compliant? Need one say more
  • Do you think you could spot the signs of a situation that does not seem quite right? And do you know what to do when your suspicions are aroused? Not just nefarious activity, can you spot when a customer is at risk? We have seen many examples of nefarious or questionable activity over the past few years and there is no doubt that the public has been at risk and suffered financial loss.
  • Spend some time on the following exercise. You could answer it in your head or write it down. It is a cleverly written case study that is full of horrors and designed to stretch your mind as far as your expertise will allow. It is an amalgam of actual cases, but be assured that it is real life.

    Case study David Henders and his brother John were the owners of the Marchant House Engineering Company Ltd based in Gloucester. It has 20 employees and mainly produces sonic widgets for the American gas cooker market. The widgets are in effect safety valves which prevent domestic gas cookers from overheating and exploding.The main raw material is titanium and there is only one supplier of the right grade of material which is IMF Titanium based in the Midlands.You are approached by the brothers to review the company's commercial insurance arrangements.David tells you that they currently have a business combined insurance with the following sections covering the premises (which the brothers own freehold), the machinery and plant, the stock and finished goods and products liability.He is not sure who the insurer is because they have not been sent a policy document in two years and the broker has advised them that this is quite normal. The premiums are very competitive and, in particular, the products liability insurance is about one fifth of the premium that they had paid five years ago when they had last been able to arrange such cover. The existing broker who produced the quote two years previously advised them that liability premiums had improved drastically from five years ago, hence the ease with which the cover had been arranged.The company pays all premiums via a direct debit mandate payable to the broker who finances the deal.They are particularly pleased that they have been advised that there are no warranties on the policy as the previous company that the brothers had been directors of had gone into liquidation. This occurred when the previous insurer had avoided the insurance due to the non-compliance with a waste warranty at the time of a substantial fire which had destroyed the premises.You ask to see a copy of the proposal which is a generic form used by the existing broker for all commercial insurance. It is in the name of the Marchant House Engineering Ltd and is clean giving no account of any prior losses.Answer the following three questions. You should be thinking about:

  • Compliance
  • Insurance principles and the law
  • Technical matters.
  • And above all, don't be afraid to use your experience and instinct.Question 1: Identify any errors and inconsistencies in this study, explain what you think is wrong and state what action you will take. In particular, write down any questions you would ask to clarify the situation.Question 2: A reasonably competent broker might be suspicious of the circumstances in this case. Indeed, something nefarious is quite possible. Consider the evidence presented, state your suspicions and list the evidence that brings you to these conclusions.Question 3: Your suspicions are shared by a competing broker in the same town. Your firm is a GISC member. What should you do? This page is edited by RW Associates, specialists in training, compliance and competence. Email:

    Using this CPD pageFor the vast majority of practitioners and indeed support and supervisory staff in our industry, CPD is about regular learning and study that is planned, recorded, timed and evaluated. If you are a member of a professional body with a CPD requirement then there will be certain rules regarding the quality and nature of study material, and the way in which it is recorded.For staff of GISC members this means recording on your individual training file what the learning was, who provided it and when.It might be structured, such as a course, a learning programme or exam study. But it can be unstructured. This form of study encompasses reading the trade press, technical material or taking part in activities to support your professional body. Some CPD requirements are points related (a little antiquated) and others require a time value to be allocated. For example, it might take one hour to read Insurance Times each week. Most of that could be put as a time value but, in reality, perhaps only an half hour was devoted to learning something. The rule is to be honest with yourself and record the time that is relevant. Always take time to make a note of what you felt you gained from the activity. This is useful information for anyone else considering the same activity.In response to the popularity of our CPD programme each week's CPD page can now be downloaded from our website.To download a PDF of this article as it appears in the magazine click here .