CII I11 cheat sheet

Sources ranked by authority in England and Wales: legislation (Acts of Parliament) > delegated legislation (statutory instruments) > common law and equity > custom and practice. EU-derived law retained under the European Union (Withdrawal) Act 2018 continues as assimilated law unless repealed.

A Bill passes through: first reading, second reading, committee stage, report stage, third reading, then Royal Assent in the other House; Royal Assent converts a Bill into an Act.

Criminal standard of proof: beyond reasonable doubt. Civil standard: balance of probabilities (more likely than not). Insurance disputes are civil.

Precedent operates through stare decisis: ratio decidendi (the legal reasoning) binds lower courts; obiter dicta (comments by the way) are persuasive only.

Equity supplements common law; equitable remedies include injunction, specific performance and rectification - rectification is used to correct a written policy that misrecords the agreed terms.

Civil procedure: pre-action protocols, then issue of claim, defence, case management, trial or settlement. Limitation Act 1980: 6 years for simple contract, 12 years for deeds, 3 years for personal injury tort claims.

Delegated legislation is made under powers in a parent Act (enabling Act) and is subject to parliamentary scrutiny procedures: negative resolution, affirmative resolution, or super-affirmative.

Statutory interpretation aids: literal rule, golden rule, mischief rule (Heydon's Case) and purposive approach; extrinsic aids include Hansard (Pepper v Hart conditions) and interpretation sections in the Act.

Four essentials: offer, acceptance, consideration, intention to create legal relations. Capacity and legality are additional requirements for enforceability.

Offer must be distinguished from invitation to treat (advertisements, displays, auctions, tenders). Acceptance must be unqualified and communicated; the postal rule applies where post is contemplated.

Consideration must be sufficient but need not be adequate; past consideration is no consideration. Performance of an existing duty owed to a third party can be good consideration (Pao On).

Terms are classified as conditions (breach allows termination and damages), warranties (damages only) and innominate/intermediate terms (remedy depends on effect of breach).

Exemption clauses are subject to incorporation (signature, notice, course of dealing), construction (contra proferentem) and statutory control under UCTA 1976 and CRA 2015.

Misrepresentation: false statement of fact inducing the contract. Remedies differ by type - fraudulent and negligent misrepresentation allow rescission and damages; innocent misrepresentation allows rescission and indemnity only.

Frustration discharges a contract where an unforeseen event makes performance impossible, illegal or radically different (Taylor v Caldwell); Law Reform (Frustrated Contracts) Act 1943 governs recovery.

Remedies: damages aim to put the claimant in the position as if the contract had been performed (expectation measure); remoteness governed by Hadley v Baxendale; mitigation duty applies.

An insurance contract is formed by offer (proposal or slip) and acceptance (cover note, binder or policy issue); consideration is the premium and the promise to indemnify.

Policy structure: recitals, operative clause, definitions, exclusions, conditions (precedent to liability vs conditions subsequent), warranties and schedule.

Under the Insurance Act 2015, a warranty suspends rather than discharges cover; breach suspends liability for the period of breach, and the insurer must give notice of termination where a term is designed to reduce a specified risk.

Conditions precedent to liability must be satisfied before the insurer's obligation to pay arises; breach discharges the insurer's liability for that claim.

A deductible/excess is deducted from each loss; a franchise means no payment at all if the loss is below the threshold.

Subrogation: after indemnifying, the insurer is subrogated to the insured's rights of recovery against third parties, subject to the insured being fully indemnified (Lord Napier and Ettrick v Hunter).

Contribution between insurers arises where two or more policies cover the same interest, peril and subject matter; typically apportioned rateably or by equal shares or independent liability method.

Average applies to underinsurance on property policies: claim payment = (sum insured / value at risk) × loss, subject to policy terms.

Consumer Insurance (Disclosure and Representations) Act 2012: consumers need only take reasonable care to answer the insurer's questions honestly and accurately; no duty of voluntary disclosure.

Insurance Act 2015 (non-consumer): duty of fair presentation - disclosure of every material circumstance the insured knows or ought to know, plus sufficient information to put a prudent insurer on notice to ask further questions.

Material circumstance: one that would influence the judgement of a prudent insurer in determining whether to accept the risk and on what terms.

Knowledge for a business insured is aggregated: senior management, and individuals responsible for the insurance, are deemed to know what is in their records or should have been discovered by reasonable search.

Remedies for breach of the duty of fair presentation are proportionate: (a) deliberate or reckless breach - insurer may avoid and retain premium; (b) non-deliberate - proportionate remedy based on what the insurer would have done.

For consumers, the 2012 Act sets remedies by type of misrepresentation: deliberate/reckless, careless, and reasonable care - with proportionate or full remedies accordingly.

Continuing duty of good faith exists at common law but the Insurance Act 2015 removed the remedy of avoidance for breach of the duty of good faith as a separate remedy (except fraud).

Fraudulent claims: under common law the insurer may refuse the whole claim and avoid the policy; the Insurance Act 2015 permits termination of cover with notice and retention of premium.

Insurable interest: a legal or equitable relationship to the subject matter such that the insured benefits from its preservation or is prejudiced by its loss.

Life policies: under the Life Assurance Act 1774, the insured must have insurable interest at inception; a policy taken out by a person with no interest is void.

Marine insurance: Marine Insurance Act 1906 requires insurable interest at the time of loss; a person has interest where they stand in a legal or equitable relation to a marine adventure.

Indemnity principle: the insured should be restored to the pre-loss financial position, no better and no worse - subject to sum insured, deductibles, average and policy limits.

Valued policies fix the agreed value at inception and pay that amount on total loss; unvalued policies pay the actual value or sum insured, whichever is lower.

New for old / reinstatement cover departs from strict indemnity by replacing property without deduction for wear and tear, subject to a sum insured and conditions.

Betterment and salvage: insurers may take salvage into account; subrogation and salvage rights reduce net cost and preserve the indemnity principle.

Life and personal accident policies are not contracts of indemnity; they pay the agreed benefit regardless of actual loss.

Agency arises by express appointment, implied appointment, ratification, necessity or estoppel (holding out). The agent acts to bring the principal into legal relations with a third party.

Authority: actual (express or implied) and apparent/ostensible authority. An insurer is bound by acts within the agent's apparent authority even if actual authority is exceeded.

Duties of the agent: obey instructions, act personally, exercise reasonable care and skill, avoid conflicts of interest, account for money and disclose material information to the principal.

Duties of the principal: pay commission, indemnify the agent for authorised acts, and not undermine the agency.

Termination: by act of the parties (agreement, revocation, renunciation) or operation of law (death, insanity, bankruptcy, frustration, illegality).

Types of intermediary: insurance broker (acts for the insured), agent (often acts for the insurer), managing general agent (delegated underwriting authority), and appointed representative (acts under a principal firm's permissions).

Under the Insurance Distribution Directive (IDD) and FCA rules, intermediaries must disclose status, remuneration and conflicts, and hold appropriate professional indemnity insurance.

A broker's duty of care to the client includes advising on cover and presenting the risk fairly; failure can give rise to negligence liability (e.g. failing to advise on adequate sums insured).

Negligence elements: (1) duty of care, (2) breach of that duty, (3) causation of damage, (4) damage not too remote. All four are required for a claim.

Duty of care: established categories (road users, employers, professionals) or the Caparo three-stage test - foreseeability, proximity, fair, just and reasonable.

Breach: the standard is that of the reasonable person (or reasonable professional for professionals - Bolam test, subject to Bolitho). Factors: likelihood of harm, seriousness, cost of precautions, social utility.

Causation: factual causation via the 'but for' test; legal causation limited by novus actus interveniens and remoteness (The Wagon Mound - reasonable foreseeability of type of damage).

Occupiers' Liability Act 1957 (visitors) and 1984 (non-visitors/trespassers); employers owe non-delegable duties under statute and common law (Wilsons and Clyde Coal v English).

Contributory negligence reduces damages (Law Reform (Contributory Negligence) Act 1945); volenti non fit injuria is a complete defence where the claimant freely and knowingly consented to the risk.

Vicarious liability: employer liable for employee's torts committed in the course of employment (close connection test - Lister v Hesley Hall).

Limitation: 3 years for personal injury and 6 years for other tort claims from the date of damage or knowledge (Limitation Act 1980), subject to court discretion.

FSMA 2000 is the primary statute; the FCA and PRA are the regulators. PRA regulates prudential matters for banks, insurers and major investment firms; FCA regulates conduct and prudential matters for other firms.

FCA statutory objectives: consumer protection, integrity of the financial system, and competition in consumers' interests. PRA objectives: general safety and soundness, plus specific insurance objective.

Threshold Conditions (COND) must be met for authorisation: legal status, location of offices, effective supervision, appropriate resources, suitability.

The Senior Managers and Certification Regime (SM&CR) imposes prescribed responsibilities, Statements of Responsibilities, fitness and propriety requirements, and conduct rules.

FCA Principles for Businesses (PRIN): 11 principles including integrity, skill care and diligence, management and control, financial prudence, market conduct, customers' interests, communications, conflicts of interest.

Regulatory tools: rules (Handbook), guidance, supervisory review, skilled person reports, financial penalties, public censure, prohibition orders, and restriction or variation of permissions.

Financial Ombudsman Service: compulsory jurisdiction over regulated firms; awards up to the statutory limit (currently £430,000 for complaints referred after 1 April 2024).

Financial Services Compensation Scheme: covers eligible claimants up to statutory limits (e.g. £85,000 for deposits; 100% of insurance claims for protected contracts).

FCA Handbook sourcebooks relevant to insurance: ICOBS (Insurance: Conduct of Business), PROD (Product Intervention and Product Governance), PRIN, SYSC, and DISP (complaints).

ICODS principles: act honestly and professionally; provide clear information; identify and manage conflicts; ensure products meet the needs of identified target markets; manage claims fairly.

Consumer Duty (PRIN 2A): four outcomes - products and services, price and value, consumer understanding, consumer support; applies to retail customers and must be evidenced by firms.

Product governance (PROD 4): manufacturers must identify a target market, test products, and distribute to the intended market; distributors must ensure products meet the needs of their customers.

Financial promotions must be fair, clear and not misleading; the firm must have adequate systems and controls for approval (s.21 FSMA).

Claims handling: firms must handle claims promptly and fairly, not unreasonably reject claims, and explain any rejection; complaints must be handled under DISP with 8-week final response timescale.

Vulnerable customers: firms must identify and respond to characteristics of vulnerability (health, life events, resilience, capability) under FG21/1 and Consumer Duty expectations.

Distance marketing and cancellation rights: consumers have 14-day cooling-off periods for many insurance contracts under the Financial Services (Distance Marketing) Regulations 2004 and ICOBS.