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Summary ISR3701 (ISR3701)
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SUMMARY WHICH INCLUDES ALL CHAPTERS FROM PRESCRIBED BOOK
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RSK3701 OCTOBER/NOVEMBER 2020 NOTESGlass insurance:
- Covers cost of boarding up windows after a loss.
- The breakage of mirrors in a fitting room of a retailer is covered under glass insurance cover
- Commercial glass insurance provides cover for plate glass and mirrors
Marine insurance:
- Perils on the sea refers to Jettison and Barratry
- The word average means “shared” loss
Personal Accident Policies:
- Man murdered by thugs on way home from work
- Policies of compensation
- Can be given to people between 15 and 70 years
- No cover for illnesses
- Temporary disablement for 52 or 104 weeks
- Non-indemnity contract
- ST
All risks policies:
- Jacket torn while passing gate on way to work
- Policies of exclusions
- Does not cover money, cheques and coins and cricket bat broken during match
Insurable interest:
- Must exist when a marine loss occurs
- Required for taking out a life insurance policy on another person’s life
- Joint owners of property have an insurable interest in each other’s life
- Insurable interest is required for all insurance policies
- Proof in insurable interest must be submitted when purchasing an annuity
- Does not enforce principle of indemnity
Insurance proposal form:
- Can be used to advertise other products available from the insurer
- Elicits a quotation
- Establishes a warranty
- Is NOT an offer by the insurer to do business with the insured
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, Non-proportional reinsurance:
- Stop loss insurance
- Excess of loss
- Catastrophe excess of loss
- Simple to operate
- The cedant will underwriter its retention as a form of first loss insurance
- Grown in popularity because they are simple to operate
Proportional reinsurance:
- Is arranged on a treaty or facultative basis
Ex Gratia payments:
- Contribution and subrogation do not apply to ex gratia payments
- The principle of contribution does not apply to ex gratia payments
- Ex gratia payments won’t affect future claim payments (made without prejudice)
- Not indemnity payments
Excessive claim reserve:
- Results in higher solvency margin
- Decrease in the share price of the insurance company
- Decrease in investments from external sources
- The loss ratio of the insurer appears higher than it actually is because of the higher solvency
margin
Solvency margins:
- Lower solvency margins indicate a higher utilisation of resources
- Higher solvency margins indicate a lower utilisation of resources
- Policyholders usually prefer higher solvency margins
- Shareholders of a company usually prefer lower solvency margins
- The solvency margin of a company is represented by the capital from shareholders and free
reserves of the company
- Difference between assets and outstanding liabilities
Quota share treaty:
- The share of the different parties involved in the agreement is expressed as a percentage
- In terms of a quota share treaty the reinsurer is bound to accept a fixed proportion of every risk
- The risk is shared on a proportional basis between the cedant and reinsurer
Surplus treaty:
- Only the amount of excess of the cedant’s normal capacity for a particular risk is ceded to the
reinsurers
- A surplus treaty is a proportional reinsurance agreement between the cedant and reinsurer
- The reinsurer’s retention is expressed as a number of lines (nine lines)
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