CII IF1 flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Invitation to treat

A preliminary communication that invites offers rather than making one; retail displays, price lists and most advertisements are invitations to treat, so no contract forms until a customer offers and the seller accepts.

Consideration

Something of value each party gives in exchange for the other's promise; it must be sufficient but need not be adequate, and consideration that is past or already owed is generally not valid.

Condition in contract law

A major term going to the root of the contract. Breach of a condition entitles the innocent party to treat the contract as repudiated, claim damages and refuse further performance.

Innominate term

A contractual term not pre-labelled as condition or warranty; its effect depends on how serious the consequences of breach are. Serious breach permits termination, minor breach gives damages only.

Misrepresentation

An untrue statement of existing fact made by one party that induces the other to enter the contract. Remedies are rescission and, for fraudulent or negligent misrepresentation, damages.

Contra proferentem

A rule of construction that ambiguity in a clause is read against the party who drafted it. It is applied to exclusion and limitation clauses, so the drafter bears the cost of unclear wording.

Privity of contract

Only the parties to a contract may enforce it, so a third party normally has no rights under it. The Contracts (Rights of Third Parties) Act 1999 creates limited statutory exceptions.

Apparent authority

Also called ostensible authority: where the principal's words or conduct lead a third party reasonably to believe an agent is authorised, the principal is bound even if actual authority is absent.

Four elements of negligence

The claimant must prove a duty of care, breach of that duty, causation of loss, and damage that is not too remote because a reasonable person could foresee it.

Void and voidable compared

A void contract is treated as never having existed, so no rights arise. A voidable contract exists and binds until the innocent party elects to rescind it, for example for misrepresentation.

Estoppel by representation

A party who makes a clear representation intended to be relied on, and on which the other party does rely to their detriment, may be prevented from denying that representation later.

Duty of fair presentation

Insurance Act 2015 duty on the insured to disclose every material circumstance it knows or ought to know, give sufficient information to prompt insurer enquiry, and present the risk clearly and accessibly.

Material circumstance

A fact that would influence the judgement of a prudent insurer in deciding whether to accept the risk, what premium to charge, or what terms and exclusions to impose.

Principle of indemnity

The insured is restored, in money terms, to the position held immediately before the loss, no better and no worse. It does not apply to life or personal accident cover.

Insurable interest

A financial or legal relationship with the subject matter such that the insured benefits from its continued existence or suffers loss from its damage, destruction or liability arising from it.

Subrogation

After indemnifying the insured, the insurer may exercise the insured's legal rights of recovery against a responsible third party, but may never recover more than the amount it has paid out.

Contribution between insurers

The right of an insurer that has paid a claim to recover a proportionate share from other insurers indemnifying the same insured, interest and peril for the same period of cover.

Proximate cause

The dominant and effective cause of a loss, determined by weighing the sequence of events rather than simply taking the last event before the damage occurred.

Warranty under Insurance Act 2015

A term the insured must comply with. Breach suspends the insurer's liability for the duration of the breach instead of automatically discharging the insurer from all liability.

Average clause

A condition applied where the sum insured is less than the value at risk, reducing the claim payment in the same proportion as the shortfall in cover.

Fraudulent claim consequences

Under Insurance Act 2015 s.12 the insurer may refuse the whole claim, keep all premiums already paid, and treat the policy as terminated from the date of the fraudulent act.

Reinstatement basis

A method of settling property claims by repairing or replacing damaged property with new equivalent property, rather than paying the reduced indemnity value after deducting wear and tear.

FCA statutory objectives

Under FSMA 2000 the FCA has three operational objectives: consumer protection, protecting and enhancing UK financial system integrity, and promoting effective competition in consumers' interests.

Consumer Duty

FCA rules requiring firms to act in good faith and deliver good outcomes across four pillars: products and services, price and value, consumer understanding, and consumer support.

ICOBs

The FCA sourcebook for general insurance conduct. It requires status disclosure, demands-and-needs statements, clear product information, fair claims handling and cancellation rights for consumers.

Treating Customers Fairly outcomes

Six regulatory outcomes covering fair culture, products designed for identified groups, clear information, suitable advice, products performing as led to expect, and no unreasonable post-sale barriers.

FOS award limit

The maximum sum the Financial Ombudsman Service can require a firm to pay; it is £430,000 for complaints about acts or omissions on or after 1 April 2024.

FSCS insurance limits

Compulsory insurance claims, such as motor third-party liability, are protected at 100%; non-compulsory general insurance claims are protected at 90% with no upper limit.

Threshold Conditions

The minimum standards a firm must meet to be authorised and to stay authorised, covering legal status, location of offices, effective supervision, appropriate resources and suitability.

SM&CR

The Senior Managers and Certification Regime: senior managers hold approved responsibilities, certification staff are checked annually for fitness and propriety, and conduct rules apply to nearly all employees.

Eight-week complaint rule

A firm must resolve a complaint or issue a final response within eight weeks; the customer then has six months from that final response to refer the matter to the Financial Ombudsman Service.

CII Code of Ethics

Professional standards requiring members to act with integrity, maintain competence, respect confidentiality, be transparent and treat customers fairly, enforced through the Institute's disciplinary process.