CIIN Certificate CF5 cheat sheet

Insurable interest requires a pecuniary or legal relationship such that the insured benefits from preservation of the subject matter and is prejudiced by its loss.

Utmost good faith (uberrimae fidei) obliges both parties to disclose material facts; non-disclosure or misrepresentation can render a contract voidable.

Indemnity restores the insured to the pre-loss financial position, no better and no worse; valued policies and agreed-value clauses are exceptions.

Subrogation transfers the insured's recovery rights against a third party to the insurer after indemnifying, preventing double recovery.

Contribution applies when two or more policies cover the same loss at the same level of insurance; each insurer pays its rateable proportion.

Proximate cause is the dominant, effective cause of loss; remote causes are disregarded when determining whether a peril is covered.

A peril is the event that causes loss; a hazard is a condition that increases the likelihood or severity of that peril.

Moral hazard stems from insured behaviour (e.g. dishonesty); morale hazard is carelessness or indifference created by having insurance.

A contract requires offer, acceptance, consideration and intention to create legal relations; insurable interest and capacity are additional insurance-specific requirements.

Utmost good faith disclosure duty attaches at proposal and at renewal and variation, not continuously throughout the policy term.

The Insurance Act 2015 (UK) replaced avoidance for breach of the duty of fair presentation with proportionate remedies based on the insurer's knowledge and the nature of the breach.

Consumer insurance is governed by the Consumer Insurance (Disclosure and Representations) Act 2012, which abolished the consumer's duty to volunteer information.

A warranty is a promissory condition; breach discharges the insurer from liability for losses occurring after the breach, even if the breach is unrelated to the loss.

The principle of indemnity, insurable interest and good faith underpin common-law regulation; statutory regulation adds conduct, solvency and market rules.

Regulatory conduct rules typically require fair treatment of customers, clear disclosure of cover and complaints handling within set time limits.

Policy interpretation follows the natural meaning of words read in context; contra proferentem resolves genuine ambiguity against the party that drafted the clause.

Term assurance pays a sum on death within a fixed period only; it has no cash value and pays nothing if the life survives the term.

Whole-of-life cover provides guaranteed death benefit for the whole lifetime; premiums may be reviewable or non-reviewable depending on product design.

Endowment policies combine death cover with a maturity payout if the life survives the term, historically used for savings.

Underwriting for life cover assesses mortality risk using age, sex, health history, occupation, residence, family history and hazardous pursuits.

Morbidity risk in health and income-protection products is assessed by occupation class, medical history and benefit level.

Non-disclosure on a life application permits the insurer to avoid the contract or apply proportionate remedies depending on the applicable regime.

Critical illness cover pays a lump sum on diagnosis of a defined condition meeting specified severity criteria; it is not a reimbursement of treatment costs.

Annuities convert capital into income; a lifetime annuity transfers longevity risk to the insurer in exchange for guaranteed payments.

Property cover indemnifies on reinstatement, new-for-old or market value basis; the basis determines the sum insured and claim settlement.

Average (underinsurance) clause reduces claims in proportion to the shortfall between sum insured and the value at risk.

Business interruption cover responds to loss of gross profit or increased cost of working following an insured property or specified peril.

Public liability covers third-party bodily injury or property damage; employers' liability covers injury to employees arising from employment.

Motor insurance is typically split into third-party only, third-party fire and theft, and comprehensive cover.

Marine and transit policies cover physical loss or damage to goods in transit; Institute Cargo Clauses A, B and C give progressively narrower cover.

Liability policies are written on an occurrence basis or a claims-made basis; claims-made cover requires notification within the policy period or extended reporting period.

Reinstatement after a partial loss may require payment of additional premium where the sum insured is restored to its original level.

Risk management steps: identify, analyse/measure, evaluate, treat, monitor and review.

Risk treatment options: avoid, reduce, transfer (including insurance), retain, and share.

Pure risk has only downside outcomes (loss or no loss); speculative risk has both upside and downside outcomes and is generally not insurable.

Risk control reduces frequency or severity (e.g. sprinklers, safety training); risk financing funds the residual consequences (e.g. insurance, reserves).

Underwriting assesses the hazard presented by a risk and sets terms, premium and exclusions; it prices expected loss plus expenses, profit and contingency.

Retention and deductible structures reduce moral hazard and administrative cost and shift small losses to the insured.

Reinsurance (proportional or non-proportional) protects the insurer's capital and stabilises results against large or aggregating losses.

Loss ratio = incurred losses divided by earned premium; combined ratio = loss ratio plus expense ratio; a combined ratio above 100% indicates an underwriting loss.

Claim lifecycle: notification, registration, validation of cover, investigation, assessment/quantum, settlement or repudiation, and recovery/subrogation.

First notification of loss should capture policy number, date, time, place, cause, circumstances and any injuries or third parties.

Cover is checked against the policy period, insured perils, exclusions, conditions precedent and the sum insured or limit.

Indemnity settlement uses the policy basis (reinstatement, market value, agreed value) less any excess or deductible and any average reduction.

Reservation of rights letters preserve the insurer's position where liability or cover is not yet confirmed; they are not a denial of the claim.

Fraud indicators include late notification, inconsistent accounts, missing documentation and exaggerated or pre-existing damage evidence.

Treating customers fairly requires clear communication, prompt handling, fair settlement and an accessible complaints process.

Subrogation recovery should be pursued against negligent third parties within limitation periods; the insured must not prejudice such rights.