CII IF9 key terms

Judge-made law developed through decided cases and binding precedent, as distinct from legislation. In insurance it supplies much of the framework for contract, agency and negligence.

The rule that a court must follow legal reasoning from earlier decisions of higher courts in the same hierarchy. Lower court decisions persuade but do not bind.

The legal principle or reason essential to a court's decision, which binds later courts. Distinguish it from obiter dicta, remarks made in passing that carry persuasive weight only.

Observations in a judgment that are not necessary to the outcome. They do not bind later courts but may be persuasive, particularly when made by senior judges.

A body of principles developed to soften the rigidity of the common law, giving remedies such as injunction and specific performance. It also produced the trust and the equitable duty of confidence.

Law enacted by Parliament, such as the Financial Services and Markets Act 2000. Statutes override inconsistent case law and are often supplemented by detailed rules made by regulators.

Rules and regulations made under powers granted by an Act of Parliament, for example statutory instruments. Regulators' rulebooks are a form of delegated legislation subject to parliamentary scrutiny.

A clear statement of terms on which the offeror is prepared to be bound, intended to become binding on acceptance. An invitation to treat lacks this intention.

Unqualified agreement to all terms of an offer, communicated to the offeror. A counter-offer destroys the original offer rather than accepting it.

Something of value given by each party in exchange for the other's promise, making the agreement enforceable. It must be sufficient but need not be adequate.

The presumption that parties to a commercial agreement intend legal consequences, rebuttable by clear words. Social and domestic arrangements are presumed not to be legally binding.

An indication that a party is open to receiving offers, rather than an offer itself. Advertisements, price lists and goods displayed in shops are usually invitations to treat.

A false statement of fact or law made before contracting that induces the other party to enter the contract. Remedies depend on whether it was fraudulent, negligent or wholly innocent.

A term fundamental to the contract, breach of which entitles the innocent party to terminate and claim damages. Warranties are lesser terms giving damages only.

A secondary contractual term whose breach gives a right to damages but not to terminate. In insurance the word also denotes a promise in a policy with different, statutory consequences.

A breach so serious that it deprives the innocent party of substantially the whole benefit of the contract, or shows an intention to abandon it. It entitles that party to terminate and sue.

A money award intended to put the claimant in the position they would have occupied had the contract been performed. Remoteness and mitigation limit the amount recoverable.

An equitable remedy ordering a party to perform a contractual obligation. It is discretionary and unavailable where damages would be an adequate remedy or for personal services.

A relationship in which one person, the agent, is authorised to act on behalf of another, the principal, so as to affect the principal's legal position with third parties.

Authority expressly or impliedly conferred by the principal on the agent, judged by what the principal communicated. It may be express in wording or implied from circumstances and custom.

Authority a third party reasonably believes the agent has because of representations by the principal. It binds the principal even where the agent's actual authority is absent or restricted.

The agent's obligation to pass on material information to the principal and not to put themselves in a position where duty and interest conflict, for example by taking a secret commission.

A legal or equitable relationship to the subject matter of insurance such that the insured benefits from its preservation or suffers loss from its damage. It is required for valid indemnity insurance.

The traditional duty of fair dealing owed by both insured and insurer. For consumers it is now largely replaced by statutory duties of fair presentation and of fair treatment.

The insured's statutory duty, under the Insurance Act 2015, to disclose every material circumstance they know or ought to know and to do so in a reasonably clear and accessible way.

Information that would influence the judgement of a prudent insurer in deciding whether to accept the risk, on what terms, and at what premium. Non-disclosure can allow the insurer to avoid or reduce the claim.

The Insurance Act 2015 approach where a qualifying breach of the duty of fair presentation is neither deliberate nor reckless: the insurer may reduce the claim proportionately rather than avoid the policy.

The principle that property and liability insurance restores the insured to their pre-loss financial position, no better and no worse. It underpins subrogation and the measure of loss.

The insurer's right, after paying a claim, to stand in the insured's shoes and pursue recovery from the party responsible, and to control related litigation in the insured's name.

The right of an insurer that has paid a claim to recover a share from other insurers covering the same interest against the same risk. It prevents the insured recovering more than the loss.

A term in a policy that the insured promises to do, not do, or that a state of affairs exists. Breach suspends cover for the affected risk under the Insurance Act 2015.

Treating a contract as never having existed, so the insurer need not pay and may keep the premium. It is the traditional remedy for non-disclosure or misrepresentation, now restricted by statute.

The main UK statute establishing the financial services regime, including the regulators, the general prohibition on regulated activity without authorisation, and the Financial Ombudsman Service.

The statutory ban on carrying on a regulated activity in the UK by way of business without authorisation or exemption. Breach is a criminal offence and unenforceable contracts may result.

An activity specified in the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, such as effecting or carrying out contracts of insurance, when carried on by way of business.

The collected rules, guidance and standards made by the Financial Conduct Authority, including the Principles for Businesses, the Conduct of Business sourcebook and the Senior Conduct rules.

The minimum standards a firm must meet and continue to meet to be authorised and to remain authorised, covering matters such as location, suitability and financial resources.

The accountability framework requiring senior managers to hold prescribed responsibilities under statements of responsibility, and certifying staff in key roles as fit and proper.

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

The older outcomes-based principle that firms must pay due regard to customers' interests and treat them fairly. It now sits within the broader Consumer Duty framework.

A customer whose circumstances, such as health, bereavement, low resilience or low capability, make them especially susceptible to harm. Firms must adapt processes to achieve fair outcomes.

Concealing, disguising, converting, transferring or acquiring the proceeds of crime, or assisting another to do so. Insurance intermediaries face identification, monitoring and reporting duties.

The identification and verification of customers and beneficial owners, plus risk assessment and ongoing monitoring, required under money laundering regulations before and during a relationship.

A report to the National Crime Agency by a person who knows or suspects money laundering, made with the required consent so that the person may proceed without committing a tipping-off offence.

The UK's data protection framework, read with the Data Protection Act 2018, governing lawful processing, individual rights and obligations on controllers and processors of personal data.

The person or organisation that determines the purposes and means of processing personal data, and so bears the main compliance obligations. Processors act on a controller's instructions.

Personal data revealing matters such as health, ethnicity, religion or sexual orientation, needing a lawful basis plus an additional condition. Insurance underwriting commonly relies on such data.

The statutory dispute-resolution scheme for complaints about authorised firms. It can make binding awards up to a set limit, and consumers are not bound by its decisions.

Any oral or written expression of dissatisfaction, whether justified, about a firm's provision of a financial service. Firms must resolve eligible complaints within eight weeks or issue a final response.

The maximum amount the Financial Ombudsman Service can require a firm to pay in compensation, subject to periodic review. Awards above the limit may be accepted by the firm voluntarily.

High-level obligations in the FCA Handbook, including integrity, skill and care, fair treatment of customers and communication. Breach can found enforcement action even without a specific rule.