CII IF2 key terms

A legal requirement that the policyholder must benefit from the subject matter of the insurance being preserved, or suffer loss if it is damaged, at the time cover is taken out.

The rule that a property or liability claim payment should restore the insured to the financial position held before the loss, no better and no worse, subject to the sum insured and policy limits.

The improvement in an insured's position when a claim payment funds new-for-old replacement of worn property; insurers usually deduct an allowance for wear and tear to avoid it.

The mutual duty on proposer and insurer to deal honestly and disclose material facts before the contract is formed; breach by the proposer can allow the insurer to avoid the policy.

The insured's obligation, under the Insurance Act 2015, to disclose every material circumstance it knows or ought to know, or give the insurer sufficient information to put it on notice.

Any circumstance that would influence a prudent insurer's decision on whether to accept the risk, or on the terms and premium charged, including facts the insured ought reasonably to know.

The Insurance Act 2015 scheme for qualifying breaches of the fair presentation duty, where the insurer's remedy is graded between paying in full, reducing the claim, or avoiding the policy.

Treating a contract as if it never existed, so the insurer returns the premium and owes nothing on claims; available for certain breaches and fraud, subject to statutory limits.

A false or misleading statement of fact made by the proposer to the insurer before the contract is formed, which may be innocent, negligent or deliberate and can give the insurer remedies.

A policy term whose breach discharges the insurer's liability for the period of breach; since 2015 this is suspended rather than ending cover entirely, with limited exceptions.

A policy term that must be satisfied before the insurer's liability arises or before a claim is payable, such as notifying a claim within a stated period.

The insurer's right, after paying a claim, to step into the insured's shoes and recover the loss from the party responsible, usually limited to the amount paid.

The right of an insurer that has paid a claim to recover a share from other insurers covering the same risk, so each pays its rateable proportion and the insured does not profit.

Cover taken out with more than one insurer over the same interest and peril, giving the insured overlapping protection and triggering contribution rights between the insurers.

A policy condition reducing a claim in proportion when the sum insured is less than the value at risk at the time of loss, commonly used in property and commercial policies.

The maximum amount the insurer will pay under a policy, or under a stated section of it, before any excess, limits or proportionate reduction are applied.

The first amount of each claim that the insured must bear itself, reducing the insurer's payment and often lowering the premium in exchange.

Another name for the amount deducted from a claim before the insurer pays, common in commercial and health covers; it operates like an excess.

The dominant, effective cause of a loss, as opposed to the last or most remote event; insurers look to it when deciding whether a peril is covered or excluded.

A risk or event specifically listed in the policy as covered, such as fire, theft or accidental damage, in contrast to excluded or unlisted events.

A policy clause removing specified losses, circumstances or perils from cover, such as wear and tear, war, or deliberate acts, which the insured must read alongside the insuring clause.

A standard clause excluding gradual deterioration, depreciation and ordinary use, so the insurer pays only for sudden accidental damage rather than maintenance-related decline.

A policy term requiring the insured to tell the insurer of a claim or circumstance promptly and in the stated manner; late notice can prejudice cover.

The insurer's process for receiving, assessing, reserving and settling claims, including investigating the cause and quantum and applying policy terms fairly and promptly.

An outsourced firm that handles claims or administration on an insurer's behalf; the insurer remains responsible for the conduct and outcomes of that firm.

Delegating a function such as claims, IT or underwriting to an external provider, while the regulated firm must still manage the risk and meet its regulatory duties.

The UK regulator responsible for conduct in insurance distribution and for protecting consumers, setting rules such as the Consumer Duty and the Insurance Conduct of Business rules.

The UK regulator, part of the Bank of England, responsible for the financial soundness and solvency of insurers, working alongside the FCA on dual-regulated firms.

The EU-derived prudential regime setting capital, governance and risk-management requirements for insurers, including a solvency capital requirement and minimum capital requirement.

An individual approved by the regulator to hold a defined senior management function in an insurer, with personal accountability for that area of the business.

Someone who has been assessed by the firm and approved by the regulator as fit and proper to perform a controlled function, such as a senior management role.

The regulatory test of honesty, competence, financial soundness and integrity applied to individuals and firms before approval or authorisation is granted.

The FCA principle requiring firms to act to deliver good outcomes for retail customers across products, price and value, consumer understanding and consumer support.

The FCA's earlier outcomes-based principle that firms must treat customers fairly throughout the product life cycle; its themes are now reinforced by the Consumer Duty.

A customer whose circumstances, such as health, bereavement, low resilience or limited understanding, make them especially susceptible to harm and needing tailored support.

The EU directive, implemented in the UK, governing how insurance products are sold, including demands-and-needs assessment, disclosure and professional training requirements.

The requirement to identify a customer's insurance needs and recommend a product consistent with them, keeping a record of the assessment and the reasons for the recommendation.

The distinction between a personal recommendation to buy a specific product, which carries responsibility, and neutral information that leaves the choice to the customer.

An intermediary who acts for the customer, arranging cover with insurers and owing duties of care, disclosure and best advice to the client rather than the insurer.

The UK body that resolves complaints between consumers and regulated firms, deciding what is fair and reasonable and able to award compensation up to a set limit.

The UK statutory fund of last resort that pays compensation to eligible customers when a regulated financial firm fails and cannot meet its obligations.

The regulated process for recording, investigating and responding to customer complaints within set timescales, with referral rights to the Ombudsman if unresolved.

The process of concealing the proceeds of crime by moving or disguising their origin, which insurers must help prevent through checks and reporting.

Identity and due-diligence checks carried out on customers and beneficial owners before or during a business relationship, to confirm who they are and assess risk.

A report made to the authorities, usually via the National Crime Agency, when a firm knows or suspects money laundering or terrorist financing.

The rules, under the UK GDPR and Data Protection Act 2018, governing how personal data is collected, used, stored and shared, including lawful basis and subject rights.

The duty not to disclose information about a customer without authority or a legal requirement, subject to exceptions such as public interest or statutory disclosure.