Welcome to the first Insurance Times monthly MOT test to check your knowledge of general insurance. This week we have a questionnaire on household and motor. Waltham Pitglow suggests ways of using it
We were inundated with requests from readers seeking authority to use the pilot among staff in January, so please take it as read that you may use these questions within your own firm as you see fit, the only proviso is that they are not used for commercial purposes or included in other training material.
The learning point today is how we might use a questionnaire of this nature?
In the first place, it is always going to be difficult to have the space in a publication like this to include a full generic assessment of knowledge for any subject. In reality that might take 30 to 50 questions to cover all areas.
Second, any assessment of competence must also have a job specific element, so as with an exam, the only points covered here will be generic, and will focus on the areas of a subject that the examiner or question writer feels might be generically relevant.
So, do not imagine that the results of an assessment such as this proves competence or knowledge of a subject.
However, as an underlying diagnostic tool, short, sharp assessments such as this can tell you quite a bit about what someone does not know and ultimately, that is the foundation of a risk management approach to knowledge assessment.
For example, if you ask someone who advises on motor insurance to complete a comprehensive 50-question assessment on private motor insurance and split that into 35 answers that should be known and 15 that must be known, you will have a very good idea of whether someone's knowledge makes them reasonably safe dealing with the public, or whether remedial training or learning is necessary. It can also guide you as to whether they should be taken off the job or be fully supervised.
Who then should be undertaking this diagnostic assessment?
Informed judgmentThe most important group is those who give advice on the respective subjects and that does not just mean those that work in the private household or motor department. You should also consider any staff who support the advice giving process.
In principle, advice is given when information or a recommendation is offered to a member of the public that they might rely upon in making an informed judgment on choosing an insurance product, or making a decision.
For example, if in a meeting to discuss commercial insurance (or even at a dinner party, or in the pub) a general insurance account executive suggests that a client might consider household insurance, that is probably not advice.
But if, as often happens, an insurance practitioner goes a stage further and relates the specific circumstances of the customer to an opinion ("you should really consider an all risks policy rather than indemnity"), the process of advice may well be under way.
Another example might be "you ought to go to XYZ insurer, I have used them for years and they are fantastic on service" which could be advice, whereas "speak to my XYZ broker who is a GISC member and able to give you advice" might not.
Ultimately, the GISC and indeed any good regulator will cover this with a simple statement that anyone who is not competent to deal with a matter must refer it to someone who is.
The nub of any competence assessment is, therefore, to establish whether an individual is competent to give advice in a specific area.
While this is only part of the process, finding out what an individual does not know is often information that will be the key to a robust and cost efficient process. This leads ultimately to an assessment of ability to apply knowledge and understanding in a `live' situation.
Therefore your first exercise is to draw up a list of all those in your firm who do, or might, give advice in these areas and make sure you include those (senior staff and directors?) who might be a little out of date on the subjects, and present a risk to both the public and your firm.
As an example, in a case where a director of a broking firm had told a client not to disclose a particular loss he said in a statement to the court: "I do not specialise in that area of the business, so how can I be expected to know that it might have been material..." Strange but true.
If we are going to assist the regulators in creating a robust risk management environment, it is vital that we start the process of learning the discipline of assessing all staff.
We should also be strong enough to tell practitioners who give advice (in whatever form), those areas of the business that they are competent to give advice on and those they are not.
A large proportion of litigation arises because practitioners stray into areas in which they do not, or no longer specialise. Be warned.
Answers will appear in next week's CPD together with a special page of feedback and your questions will be answered.
We will be responding to a range of questions posed by readers over the past month or so and any others that hit us by email before Tuesday 25 February (email@example.com).
The key to job specific competence and the creation of a risk management system of assessment is that you understand where the risks lie. There are many aspects of your firm that will need to be considered and much will flow from FSA rules and guidance.
Much of the risk attaching to those giving advice lies in poor and/or out-of-date knowledge and understanding of underlying principles and good market practice. .
There will shortly be a major breakthrough in the availability of a whole range of generic diagnostic type assessments that will span the gamut of insurance subjects.
To my mind this will be a godsend to the competent compliance officer that needs management information that analyses what a member of staff does not know about a technical matter or procedure to follow.
1. Which of the following is NOT usually covered by an unfurnished household contents policy?
a) bath tub
c) light fitting
d) kitchen work surface.
2. If a premium is paid on a monthly instalment plan and a claim has been settled during the current period of insurance, if the customer cancels the policy what refund of premium can typically be expected?
a) the balance of the total premium paid and the calculated premium for the period the customer has been insured
b) the balance of the total premium paid and calculated premium for the period the customer has been insured minus the any administration charges or fees
c) the balance of any outstanding instalments deducted from the claims payout
3. A customer is required to maintain the property insured in good repair. Which of the following does NOT typically receive a reduction for wear and tear?
a) jewellery (precious stones)
d) household linen.
4. Which of the following is a term used to describe property which has some special measure of protection, e.g. a house with a burglar alarm?
a) secure risk
b) protected risk
c) compromised risk
d) firm risk.
5. What is meant by the term `pairs and sets' clause?
a) the clause provides for the loss of one of a pair to be valued one half of the value of the two items together
b) the clause limits the loss of one of a pair to the value of the item in its own right.
c) the clause provides for the reinstatement of the `pair'
d) the clause provides for the loss to be calculated as both the damaged piece and its companion piece.
6. For the purposes of contents cover, which of the following is NOT usually covered by the term `money'?
a) luncheon vouchers
b) postal orders
c) lottery tickets
7. Under which one of the following conditions is the insured usually covered for smoke damage?
a) if it has gradually arisen
b) if it is caused by repeated exposure
c) if it is caused by a domestic accident
d) if the insured is a smoker and is declared as such on the schedule.
8. A typical household contents policy will include an automatic increase in the sum insured for what reason?
a) for Christmas
b) for 30 days after a major household purchase
c) for 21 days after the notification of a liability under the terms of any credit card
d) for the duration of domestic staff's work up to a limit of £500 for any one claim.
9. If the repair of the damaged parts of a dwelling results in a reduction in the market value of a property, which one of the following is typically correct?
a) the insurer will reimburse the amount by which the market value has fallen
b) the insurer will reimburse the outstanding amount calculated by the building cost information service of the Royal Institution of Chartered Surveyors or a suitable index
c) the insurer will reimburse the amount by which the market value has fallen with a deduction for wear and tear
d) the insurer will not pay any reduction in the market value.
10. If the home is being sold and between exchange of contracts and completion of the sale, the property is destroyed, who is entitled to any benefit from the insurance after the completion of the sale?
a) the purchaser
b) the insured
c) the vendor
d) the insurer.
11. Which of the following is the correct definition of a comprehensive policy?
a) a policy covering every risk
b) a wholesale policy
c) a policy covering a number of risks
d) an unreserved policy.
12. Which of the following is the most accurate definition of a green card?
a) a document that allows an insured to drive in the US
b) document required by certain non-EU countries to provide proof that the insured has the minimum insurance cover required by law to drive in that country
c) document required by EU countries to provide proof that the insured has the minimum insurance cover required by law to drive in that country
d) he accident report form to be carried when abroad by all drivers from EU states.
13. Which piece of UK legislature sets the minimum insurance requirements for drivers?
a) the Road Traffic Acts
b) the Transport and Highways Acts
c) the Motor Carriageways Act
d) the Public Roads and Carriageways Act.
14. What is the maximum duration that a cover note can be issued for?
a) 15 days
b) 21 days
c) 30 days
d) 60 days.
15. Which organisation, as a haven of last resort, has the responsibility of compensating accident victims where no insurance cover is applicable as the culprit was uninsured or untraced?
a) The Insurance Ombudsman
b) Motor Insurers Bureau
c) Association of British Insurers
d) The GISC.
16. When does the excess for glass not usually apply on a standard motor policy?
a) when the glass is repaired
b) when the glass is replaced
c) when the glass is replaced as a necessary part of the MOT
d) when the vehicle is taken to one of the insurer's nominated repairers.
17. Which one of the following statements is false when considering the usage of a vehicle for carriage for hire and reward in a private motor policy?
a) this is normally an extension of the policy that has to be requested
b) the vehicle must not be constructed or adapted to carry more than a specified number of passengers (eg eight)
c) it generally includes car sharing where payment is made to the driver
d) the total contributions received for the journey do not involve an element of profit.
18. Which one of the following is generally not covered by the theft section of a private motor policy?
a) personal belongings
b) damage to locks
c) damage caused by attempted theft
d) theft by a member of the insured's household.
19. What is generally considered to be the market value of a vehicle?
a) the value of the vehicle cited by the Glass's Guide or similar index
b) the price paid for the vehicle by the policyholder
c) the replacement cost with one of the same make and model
d) the cost of replacing the vehicle with one of similar type and condition.
20. Which of the following must not legally be included on the certificate of motor insurance?
a) full details of the policy cover
b) name of the policyholder
c) registration mark of the vehicle
d) limitations of use.
Using this CPD page
For 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. We will be preparing a binder for you to keep these in alongside the results of the exercises.
To download a PDF of this article as it appears in the magazine click here page 1 page 2
You will need Adobe Acrobat