CIIN Certificate CF7 cheat sheet

Insurable interest: the policyholder must suffer pecuniary loss from the insured event; required at inception for life, at loss for indemnity covers.

Utmost good faith (uberrimae fidei): both parties must disclose all material facts; non-disclosure or misrepresentation renders the contract voidable.

Indemnity: property and liability claims restore the insured to pre-loss financial position, never profit; life and personal accident are benefit policies, not indemnity.

Subrogation: after paying an indemnity claim, the insurer acquires the insured's recovery rights against the negligent third party, limited to the amount paid.

Contribution: where two or more policies cover the same risk at the same time, each pays rateably so total recovery never exceeds the loss.

Proximate cause: the dominant, effective cause of loss determines whether the peril is covered; remote causes are disregarded.

Doctrine of proximate cause plus exclusions: perils excluded (war, nuclear, wear and tear) override cover even if the loss chain starts with an insured peril.

Reinsurance vs co-insurance: reinsurance transfers risk to another insurer and is not a contract with the original insured; co-insurance splits one risk among insurers.

Term assurance: pays a sum assured only if death occurs within the policy term; no maturity value, so the premium is the lowest of the life products.

Whole life: covers death whenever it occurs; premiums may be payable for life or limited to a fixed period.

Endowment: pays the sum assured on death within term or on survival to maturity; combines protection with savings.

Annuities: convert a capital sum into periodic income; immediate annuities start payment at once, deferred annuities start at a future date.

Premium components: mortality charge, expense loading, and savings/investment element; gross premium = net premium + loading.

Underwriting: age, health, occupation, and sum assured determine acceptance, extra premium, or exclusion; medical evidence may be required.

Surrender value: cash value payable on early termination of a savings-type policy, usually less than premiums paid in early years.

Pension: contributory retirement scheme under the Pension Reform Act regime; retirement benefits are paid as lump sum and/or periodic pension from accumulated contributions.

Fire/property policy: covers fire, lightning, and explosion; extended perils (storm, flood, burglary) require specific extension and extra premium.

Average clause: if sum insured is below the value at risk, the insurer pays (sum insured / value at risk) x loss, not the full loss.

Public liability: covers the insured's legal liability to third parties for death, injury, or property damage arising from the business premises or operations.

Motor insurance: third-party liability is compulsory; comprehensive cover adds own-damage, fire, and theft.

Marine cargo: Institute Cargo Clauses A, B, C give diminishing cover; A is all-risks, C is the narrowest named perils.

Aviation hull: covers aircraft damage; aviation liability covers passenger and third-party injury and damage.

Employer's liability/Workmen's Compensation: covers employee injury or disease arising out of and in the course of employment.

Professional indemnity: covers liability arising from errors, negligence, or omissions in professional services.

NAICOM (National Insurance Commission) is the primary regulator; it licenses insurers, brokers, and agents and sets solvency and capital requirements.

Insurance Act 2003 and NAICOM guidelines govern registration, capital adequacy, and market conduct.

Insurance contract elements: offer, acceptance, consideration (premium), legal capacity, and insurable interest.

Policy documents: proposal form, cover note, policy schedule, and endorsements; the schedule defines the insured, sum insured, and period.

Utmost good faith and disclosure are statutory obligations; material non-disclosure gives the insurer grounds to avoid the policy.

Nigerian law: contract law, tort (negligence), and the Insurance Act interact; disputes may go to court or arbitration.

Brokers act for the insured; agents act for the insurer; both must be licensed by NAICOM.

Claims handling must be fair and timely; unreasonable delay can expose the insurer to regulatory sanction.

Premium income = gross written premium minus cancellations; net premium = gross premium minus reinsurance ceded.

Earned premium: portion of premium attributable to the expired period of cover; unearned premium is the reserve for the unexpired term.

Incurred claims = claims paid + outstanding claims reserve - prior-year reserve releases.

Loss ratio = incurred claims / earned premium; expense ratio = expenses / written premium; combined ratio = loss ratio + expense ratio (below 100% = underwriting profit).

Technical reserves: unearned premium reserve, outstanding claims reserve, and IBNR (incurred but not reported) reserve.

Solvency margin: excess of admissible assets over liabilities; regulators set minimum capital and solvency thresholds.

Risk management: identify, measure, control, and finance risk; tools include retention, transfer (insurance/reinsurance), avoidance, and reduction.

Reinsurance types: proportional (quota share, surplus) and non-proportional (excess of loss, stop loss).

Marketing mix for insurance: product, price (premium), place (distribution channel), promotion, people, and process.

Distribution channels: direct sales, brokers, agents, bancassurance, and digital/online platforms.

Customer service standards: clear policy wording, prompt claims settlement, accessible complaint channels, and fair treatment of customers.

Ethics: honesty in disclosure, no mis-selling, confidentiality of client data, and avoidance of conflicts of interest.

Complaints handling: acknowledge, investigate, and resolve within stated timelines; escalate unresolved disputes to the regulator or ombudsman.

Treating Customers Fairly (TCF): outcomes-based approach ensuring products meet needs, clear information, and no post-sale barriers.

Marketing communication must not misrepresent cover, exclusions, or claim conditions; advertising claims are subject to regulatory scrutiny.

Relationship marketing: retention through service quality, renewal follow-up, and claims support builds long-term value.

Risk transfer: insurance shifts financial consequences of specified perils from the insured to the pool of policyholders.

Pooling: many policyholders contribute premiums so losses of the few are shared; law of large numbers improves predictability.

Moral hazard: behaviour changes after cover is bought (e.g., careless driving); insurers counter with deductibles and exclusions.

Adverse selection: high-risk individuals buy more cover; underwriting and risk classification mitigate it.

Deductible/excess: first portion of each loss borne by the insured; reduces small claims and moral hazard.

Co-insurance clause: insured and insurer share losses in agreed proportions when the sum insured is inadequate.

Policy conditions: warranties, conditions precedent, and conditions subsequent; breach may allow the insurer to deny a claim.

Claims process: notification, proof of loss, assessment/adjustment, settlement, and subrogation recovery.

Group life: covers a group of employees under one master policy; premiums are usually paid by the employer.

Universal life: flexible premiums and adjustable death benefit, with a cash value earning interest.

Investment-linked (unit-linked): policy value linked to underlying funds; investment risk borne by the policyholder.

Premium payment modes: annual, semi-annual, quarterly, monthly; more frequent payments usually carry higher total cost.

Policy loan: borrowing against the cash value of a whole life or endowment policy; unpaid loans reduce the death benefit.

Grace period: period after a missed premium during which cover continues before the policy lapses.

Pension contributions: employer and employee contributions accumulate in a retirement savings account; benefits depend on contributions and investment returns.

Annuity vs pension: annuity is an insurance product converting capital to income; pension is a retirement benefit scheme; both provide post-retirement income.

Property policy structure: sum insured, perils covered, exclusions, conditions, and deductibles.

Business interruption: covers loss of profit and increased working costs following an insured property loss.

Product liability: covers liability for injury or damage caused by goods supplied by the insured.

Motor third-party property damage and bodily injury cover are statutory; own-damage cover is optional.

Marine hull: covers the vessel; marine cargo covers goods in transit; both use Institute Clauses for standard terms.

Aviation: hull and liability covers; airport and ground-handling liability are separate risks.

Liability policies are claims-made or occurrence-based; claims-made covers claims reported during the policy period.

Aggregate limit: maximum the insurer pays for all claims in a policy period, separate from per-occurrence limits.

NAICOM licensing categories include insurers (life, non-life, composite), brokers, loss adjusters, and agents.

Capital requirements: minimum paid-up capital varies by licence class; insurers must maintain solvency at all times.

Policyholder protection: NAICOM oversees market conduct, complaints, and orderly resolution of distressed insurers.

Insurance contract law: offer, acceptance, consideration, intention to create legal relations, and capacity.

Utmost good faith is a legal duty; misrepresentation of material facts can void the contract.

Claims: insurer must assess and settle within reasonable time; disputes can be litigated or arbitrated.

Data protection: personal data of policyholders must be handled lawfully and confidentially.

Anti-money-laundering: insurers must apply customer due diligence and report suspicious transactions.

Balance sheet: assets (investments, receivables, cash), liabilities (technical reserves, payables), and equity.

Revenue account: premiums earned, claims incurred, expenses, and underwriting result.

Investment income supports underwriting results; insurers invest premiums in permitted assets.

Cash flow: premiums in, claims and expenses out; timing mismatch requires liquidity management.

Reserving: outstanding claims and IBNR estimates require actuarial judgement.

Risk appetite: the level of risk an insurer is willing to accept; risk register documents identified risks and controls.

Capital adequacy: capital must cover underwriting, market, credit, and operational risks.

Reinsurance accounting: ceded premiums reduce net premium; reinsurance recoveries reduce net claims.

Needs-based selling: identify the client's risk exposure before recommending a product.

Product knowledge: agents must explain cover, exclusions, and claim conditions accurately.

Customer retention: renewal reminders, service follow-up, and claims support improve persistency.

Complaint resolution: log, investigate, respond, and escalate; keep records for regulatory review.

Ethical selling: no pressure tactics, no misrepresentation of benefits, and full disclosure of costs.

Confidentiality: client information must not be shared without consent or legal requirement.

Regulatory oversight: NAICOM market conduct rules and industry codes govern advertising and sales practices.

Customer segmentation: tailor products and communication to retail, SME, and corporate clients.

Risk pooling and law of large numbers: larger, more homogeneous pools make losses more predictable and premiums more stable.

Insurable risk criteria: accidental, measurable, large number of similar exposures, and not catastrophic to the insurer.

Utmost good faith applies to both insurer and insured; concealment by either party can affect the contract.

Indemnity applies to property/liability; valued policies (e.g., fine art) pay an agreed sum regardless of market value.

Subrogation prevents double recovery; the insured cannot recover twice for the same loss.

Contribution applies when policies cover the same interest and peril; the insured cannot profit from multiple policies.

Proximate cause: the efficient, dominant cause; intervening causes may break the chain.

Policy wording: definitions, exclusions, and conditions determine the scope of cover.

Mortality tables: show expected deaths at each age; used to price life products.

Underwriting classes: standard, substandard (extra premium), and declined.

Policyholder rights: cooling-off period, surrender, policy loan, and nomination of beneficiary.

Beneficiary nomination: ensures death benefit is paid to the named person; nomination rules vary by law.

Pension fund investment: contributions invested in regulated assets; returns affect retirement benefits.

Retirement options: lump sum, annuity purchase, or programmed withdrawal depending on scheme rules.

Group vs individual life: group cover is employer-sponsored; individual cover is personally purchased.

Claims on life policies: death certificate, proof of identity, and policy documents are required.

Fire policy extensions: riot and strike, malicious damage, and sprinkler leakage require specific extension.

Property valuation: reinstatement value vs indemnity value (depreciated) affects the sum insured.

Liability trigger: occurrence-based covers injury/damage occurring during the policy period; claims-made covers claims reported during the period.

Motor no-claims discount: premium reduction for claim-free years; a claim may reset the discount.

Marine transit: cover starts when goods leave the warehouse and ends on delivery, subject to clause terms.

Aviation liability: passenger liability limits are set by convention or regulation.

Deductibles: reduce premium but increase the insured's retained loss.

Underinsurance: average clause reduces claim payment proportionally.

NAICOM approval is required for policy wordings and premium rates in some classes.

Insurer solvency: assets must exceed liabilities by the prescribed margin at all times.

Market conduct: fair treatment, transparent disclosure, and timely claims settlement.

Dispute resolution: internal complaints, then regulator or ombudsman, then litigation/arbitration.

Licensing: brokers and agents must hold current NAICOM licences; unlicensed intermediation is an offence.

Contract formation: proposal, acceptance, premium payment, and issue of policy documents.

Regulatory reporting: insurers file returns on solvency, claims, and financial statements.

Consumer protection: policyholders have rights to clear information and fair claim handling.

Premium accounting: gross written premium, net premium, earned premium, and unearned premium reserve.

Claims accounting: paid claims, outstanding claims, IBNR, and reinsurance recoveries.

Ratio analysis: loss ratio, expense ratio, combined ratio, and investment yield.

Solvency: capital adequacy ratio compares available capital to required capital.

Risk management cycle: identify, assess, control, monitor, and review.

Reinsurance: proportional and non-proportional treaties manage peak exposures.

Liquidity: insurers must hold sufficient liquid assets to meet claims as they fall due.

Audit: independent audit of financial statements and regulatory returns.

Customer journey: awareness, needs analysis, quotation, purchase, servicing, claims, renewal.

Service quality: responsiveness, reliability, empathy, and tangibles shape customer perception.

Ethical dilemmas: conflicts of interest, commission-driven selling, and pressure to meet targets.

Complaints metrics: resolution time, complaint volume, and repeat complaints indicate service quality.

Marketing compliance: advertising must be accurate, not misleading, and approved where required.

Data privacy: collect only necessary data and protect it from unauthorised access.

Retention strategies: personalised service, renewal discounts, and claims support.

Training: product knowledge and ethics training improve sales quality and reduce mis-selling.