CIIN Certificate CF3 cheat sheet

Insurable interest: the policyholder must suffer financial loss if the insured event occurs; required at inception for life policies and at time of loss for indemnity policies.

Utmost good faith (uberrimae fidei): both parties must disclose material facts; breach by the insured can render a policy voidable.

Indemnity: the insured is restored to their pre-loss financial position, no better and no worse; applies to property and liability, not to life or personal accident benefits.

Subrogation: after paying a claim, the insurer acquires the insured's right to recover from the third party responsible, capped at the amount paid.

Contribution: where multiple policies cover the same loss, insurers share the cost proportionally so the insured does not recover more than the loss.

Proximate cause: the nearest, dominant and effective cause of loss determines whether cover applies, not the last event in the chain.

Average clause: underinsurance reduces settlement in proportion, i.e. claim paid = (sum insured / value at risk) x loss.

Material fact: any fact that would influence a prudent underwriter's decision on acceptance, terms or premium; must be disclosed even if not asked.

A contract requires offer, acceptance, consideration, intention to create legal relations and capacity; the premium is the insured's consideration, the promise to pay claims is the insurer's.

A warranty is a condition precedent to liability; breach allows the insurer to repudiate the claim regardless of whether the breach caused the loss.

A condition precedent must be satisfied before cover attaches or before a claim is payable (e.g. notification within a stated period).

An exclusion clause is construed contra proferentem, i.e. against the party that drafted it, and must be clearly worded to be effective.

A misrepresentation is a false statement of fact; a non-disclosure is silence about a material fact; remedies include avoidance, proportionate reduction or damages depending on culpability.

Regulatory supervision typically covers solvency margins, conduct of business, market entry, and reporting; regulators do not set premium rates in most jurisdictions.

Consumer protection rules commonly mandate a cooling-off period, clear pre-contract disclosure, and fair treatment of customers throughout the product lifecycle.

Complaints handling: firms must log, investigate and respond within prescribed timeframes, with referral to an independent ombudsman if unresolved.

Property/business interruption: BI sum insured reflects gross profit or gross income, and the indemnity period must exceed the expected reinstatement time.

Liability policies are written on an occurrence basis (triggered by injury/damage during the period) or a claims-made basis (triggered by the claim being made and notified).

Motor: third-party liability is typically compulsory; own-damage cover is optional; no-claim discount rewards claim-free years and is forfeited on a fault claim.

Marine cargo: Institute Cargo Clauses A (all risks), B and C (named perils) define the breadth of cover; general average contributions are recoverable.

Engineering: contractors' all risks covers damage to the works plus third-party liability during construction; defects exclusions apply to the defective part only.

Household contents vs buildings: buildings covers the structure and fixtures; contents covers movable property; high-value items often need separate specification.

Deductible/excess: the first amount of each loss borne by the insured; a franchise means no insurer payment at all if the loss is below the threshold.

Reinstatement/agreed value: agreed-value policies pay the stated sum without averaging; reinstatement cover restores the property to new-for-old condition.

Term assurance pays a death benefit only if death occurs within the term; no surrender value; cheapest form of life cover per unit of sum assured.

Whole-of-life pays on death whenever it occurs; premiums may be reviewable or guaranteed; builds cash value in some designs.

Endowment combines protection with a savings element and pays the sum assured at maturity or on earlier death.

Annuities convert a lump sum into income; a lifetime annuity removes longevity risk but is typically irrevocable.

Underwriting for life uses mortality tables and ratings for health, occupation, hobbies and family history; loadings, exclusions or postponement may result.

Critical illness pays a lump sum on diagnosis of a covered condition meeting the policy definition; it is not a reimbursement of medical costs.

Health/medical indemnity reimburses eligible treatment costs subject to limits, excesses and pre-authorisation; waiting periods apply to pre-existing conditions.

Suicide and non-disclosure clauses: most life policies restrict claims in the first 12-24 months for suicide or material non-disclosure.

Risk = frequency x severity; underwriting decisions target the expected loss cost relative to premium.

Risk control hierarchy: avoid, reduce, transfer (insurance), retain; retention is appropriate where losses are frequent but low-severity.

Hazard vs peril: a peril is the cause of loss (fire, flood); a hazard increases the chance or severity (poor wiring, smoking).

Moral hazard arises from dishonest intent; morale hazard from carelessness or indifference; both increase expected loss cost.

Rating factors must be actuarially justified, objective and non-discriminatory; discriminatory factors are restricted by regulation.

Reinsurance: facultative covers a single risk; treaty covers a portfolio; proportional (quota share, surplus) shares premiums and losses; non-proportional (excess of loss) responds above a retention.

Co-insurance/retention: the insured bears a share of every loss, which incentivises loss prevention and reduces moral hazard.

Portfolio management: exposure accumulation, concentration risk, catastrophe modelling and aggregate limits constrain the book's tail risk.

Notification: the insured must notify promptly per policy conditions; late notification may prejudice cover where it prevents investigation.

Claim lifecycle: notification, registration, coverage verification, loss investigation, quantum assessment, settlement, recovery and subrogation.

Indemnity settlement methods: repair, replacement, reinstatement or cash; cash settlement is net of excess and any underinsurance (average).

Total loss: constructive total loss where repair cost exceeds the insured value; actual total loss where the subject matter is destroyed or irrecoverable.

Salvage: the insurer may take ownership of damaged property after paying a total loss; salvage value is deducted from the settlement.

Reserving: case reserves set per claim plus IBNR (incurred but not reported) reserves; reserve adequacy drives solvency and reported profit.

Fraud indicators: late reporting, inconsistent accounts, pre-existing damage, inflated values; investigation must be proportionate and documented.

Subrogation recovery is limited to the amount paid and pursued only where the third party is identifiable and solvent.

Treating customers fairly: outcomes-based conduct covering product design, sales, claims and complaints, not just disclosure.

Conflicts of interest must be identified, disclosed and managed; commission arrangements must be transparent to the customer.

Suitability: advice must match the customer's needs, circumstances and risk appetite, supported by a documented record.

Confidentiality: personal data must be processed lawfully, used only for stated purposes, and retained no longer than necessary.

Integrity: no misrepresentation of policy terms, no concealment of exclusions, and no inducement to switch products without a clear customer benefit.

Whistleblowing and escalation: suspected fraud, mis-selling or breaches must be reported through defined channels.

Professional competence: advisers must maintain current knowledge, complete required CPD and only advise within their competence.

Vulnerable customers require extra care: clearer communication, additional checks and appropriate adjustments to the sales and claims process.

Insurable interest: the policyholder must suffer financial loss if the insured event occurs; required at inception for life policies and at time of loss for indemnity policies.

Utmost good faith (uberrimae fidei): both parties must disclose material facts; breach by the insured can render a policy voidable.

Indemnity: the insured is restored to their pre-loss financial position, no better and no worse; applies to property and liability, not to life or personal accident benefits.

Subrogation: after paying a claim, the insurer acquires the insured's right to recover from the third party responsible, capped at the amount paid.

Contribution: where multiple policies cover the same loss, insurers share the cost proportionally so the insured does not recover more than the loss.

Proximate cause: the nearest, dominant and effective cause of loss determines whether cover applies, not the last event in the chain.

Average clause: underinsurance reduces settlement in proportion, i.e. claim paid = (sum insured / value at risk) x loss.

Material fact: any fact that would influence a prudent underwriter's decision on acceptance, terms or premium; must be disclosed even if not asked.

A contract requires offer, acceptance, consideration, intention to create legal relations and capacity; the premium is the insured's consideration, the promise to pay claims is the insurer's.

A warranty is a condition precedent to liability; breach allows the insurer to repudiate the claim regardless of whether the breach caused the loss.

A condition precedent must be satisfied before cover attaches or before a claim is payable (e.g. notification within a stated period).

An exclusion clause is construed contra proferentem, i.e. against the party that drafted it, and must be clearly worded to be effective.

A misrepresentation is a false statement of fact; a non-disclosure is silence about a material fact; remedies include avoidance, proportionate reduction or damages depending on culpability.

Regulatory supervision typically covers solvency margins, conduct of business, market entry, and reporting; regulators do not set premium rates in most jurisdictions.

Consumer protection rules commonly mandate a cooling-off period, clear pre-contract disclosure, and fair treatment of customers throughout the product lifecycle.

Complaints handling: firms must log, investigate and respond within prescribed timeframes, with referral to an independent ombudsman if unresolved.

Property/business interruption: BI sum insured reflects gross profit or gross income, and the indemnity period must exceed the expected reinstatement time.

Liability policies are written on an occurrence basis (triggered by injury/damage during the period) or a claims-made basis (triggered by the claim being made and notified).

Motor: third-party liability is typically compulsory; own-damage cover is optional; no-claim discount rewards claim-free years and is forfeited on a fault claim.

Marine cargo: Institute Cargo Clauses A (all risks), B and C (named perils) define the breadth of cover; general average contributions are recoverable.

Engineering: contractors' all risks covers damage to the works plus third-party liability during construction; defects exclusions apply to the defective part only.

Household contents vs buildings: buildings covers the structure and fixtures; contents covers movable property; high-value items often need separate specification.

Deductible/excess: the first amount of each loss borne by the insured; a franchise means no insurer payment at all if the loss is below the threshold.

Reinstatement/agreed value: agreed-value policies pay the stated sum without averaging; reinstatement cover restores the property to new-for-old condition.

Term assurance pays a death benefit only if death occurs within the term; no surrender value; cheapest form of life cover per unit of sum assured.

Whole-of-life pays on death whenever it occurs; premiums may be reviewable or guaranteed; builds cash value in some designs.

Endowment combines protection with a savings element and pays the sum assured at maturity or on earlier death.

Annuities convert a lump sum into income; a lifetime annuity removes longevity risk but is typically irrevocable.

Underwriting for life uses mortality tables and ratings for health, occupation, hobbies and family history; loadings, exclusions or postponement may result.

Critical illness pays a lump sum on diagnosis of a covered condition meeting the policy definition; it is not a reimbursement of medical costs.

Health/medical indemnity reimburses eligible treatment costs subject to limits, excesses and pre-authorisation; waiting periods apply to pre-existing conditions.

Suicide and non-disclosure clauses: most life policies restrict claims in the first 12-24 months for suicide or material non-disclosure.

Risk = frequency x severity; underwriting decisions target the expected loss cost relative to premium.

Risk control hierarchy: avoid, reduce, transfer (insurance), retain; retention is appropriate where losses are frequent but low-severity.

Hazard vs peril: a peril is the cause of loss (fire, flood); a hazard increases the chance or severity (poor wiring, smoking).

Moral hazard arises from dishonest intent; morale hazard from carelessness or indifference; both increase expected loss cost.

Rating factors must be actuarially justified, objective and non-discriminatory; discriminatory factors are restricted by regulation.

Reinsurance: facultative covers a single risk; treaty covers a portfolio; proportional (quota share, surplus) shares premiums and losses; non-proportional (excess of loss) responds above a retention.

Co-insurance/retention: the insured bears a share of every loss, which incentivises loss prevention and reduces moral hazard.

Portfolio management: exposure accumulation, concentration risk, catastrophe modelling and aggregate limits constrain the book's tail risk.

Notification: the insured must notify promptly per policy conditions; late notification may prejudice cover where it prevents investigation.

Claim lifecycle: notification, registration, coverage verification, loss investigation, quantum assessment, settlement, recovery and subrogation.

Indemnity settlement methods: repair, replacement, reinstatement or cash; cash settlement is net of excess and any underinsurance (average).

Total loss: constructive total loss where repair cost exceeds the insured value; actual total loss where the subject matter is destroyed or irrecoverable.

Salvage: the insurer may take ownership of damaged property after paying a total loss; salvage value is deducted from the settlement.

Reserving: case reserves set per claim plus IBNR (incurred but not reported) reserves; reserve adequacy drives solvency and reported profit.

Fraud indicators: late reporting, inconsistent accounts, pre-existing damage, inflated values; investigation must be proportionate and documented.

Subrogation recovery is limited to the amount paid and pursued only where the third party is identifiable and solvent.

Treating customers fairly: outcomes-based conduct covering product design, sales, claims and complaints, not just disclosure.

Conflicts of interest must be identified, disclosed and managed; commission arrangements must be transparent to the customer.

Suitability: advice must match the customer's needs, circumstances and risk appetite, supported by a documented record.

Confidentiality: personal data must be processed lawfully, used only for stated purposes, and retained no longer than necessary.

Integrity: no misrepresentation of policy terms, no concealment of exclusions, and no inducement to switch products without a clear customer benefit.

Whistleblowing and escalation: suspected fraud, mis-selling or breaches must be reported through defined channels.

Professional competence: advisers must maintain current knowledge, complete required CPD and only advise within their competence.

Vulnerable customers require extra care: clearer communication, additional checks and appropriate adjustments to the sales and claims process.