IFMP Non-Life Insurance Agents Certification (NLIAC), Pakistan cheat sheet

Utmost good faith (uberrimae fidei): the proposer must disclose all material facts; a material fact is one that would influence a prudent underwriter's acceptance, rating, or terms. Non-disclosure or misrepresentation renders the contract voidable at the insurer's option.

Insurable interest: the proposer must stand in a legally recognised relationship to the subject matter such that loss causes pecuniary detriment. In Pakistan, marine insurance requires insurable interest at the time of loss; life requires it at inception.

Indemnity: non-life contracts restore the insured to the pre-loss financial position, never profit. Valued policies (agreed value) and reinstatement/replacement-cover extensions are recognised exceptions to strict indemnity.

Proximate cause: the dominant, effective, and efficient cause of loss determines liability. Where an insured peril sets an excluded peril in motion, the loss is generally payable; where an excluded peril initiates the chain, it is not.

Utmost good faith duties attach to both parties; the insurer must also disclose material facts and pay claims fairly. Breach by the insured typically gives the insurer the right to avoid the policy, not merely to reduce the claim.

Subrogation: after paying a claim the insurer acquires the insured's rights of recovery against the third party to the extent of the payment. It applies only to indemnity classes and cannot be contracted away by the insured to the third party's prejudice.

Contribution: where two or more policies cover the same loss on the same interest, the insured may recover only the indemnity; insurers share rateably. The insured cannot recover twice, and the insured's own policy conditions (e.g., rateable proportion clauses) govern allocation.

Premium is the consideration for the risk; cover begins only when the premium is paid or a credit arrangement is agreed. A policy is a contract of adhesion: ambiguous wording is construed contra proferentem against the insurer.

Policy structure: proposal form, schedule (insured, subject matter, sum insured, period, premium), operative clause, exclusions, conditions (precedent to liability and to the contract), and endorsements. Endorsements override the printed policy where inconsistent.

Sum insured vs sum insured basis: fire/ property policies use sum insured (agreed limit) and average (underinsurance) applies unless a waiver is granted; liability policies use limit of indemnity per occurrence and aggregate.

Deductibles and excesses: a compulsory excess reduces every claim; a voluntary excess reduces premium. A franchise means no payment at all if the loss is below the stated amount; an excess is deducted from an otherwise payable claim.

Claims process: notification, registration, survey/loss assessment, documentation, adjustment, settlement, and recovery/subrogation. Surveyors are appointed to assess loss; they do not decide liability.

Reinsurance: facultative (case-by-case) and treaty (obligatory). Proportional (quota share, surplus) shares premium and loss proportionally; non-proportional (excess of loss, stop loss) responds only above a retention.

Rating factors: sum insured, construction/occupancy, protection (fire brigade, hydrants), claims history, deductibles, and risk improvement. Motor rating uses vehicle value, engine capacity, use, driver age, and no-claim discount.

Pakistan regulatory framework: the Securities and Exchange Commission of Pakistan (SECP) regulates insurers and insurance intermediaries under the Insurance Ordinance 2000; the Pakistan Insurance Institute (PII) delivers professional examinations and the IFMP is a related professional qualification.

Marine cargo: Institute Cargo Clauses (A) all risks, (B) and (C) named perils. Cargo cover attaches warehouse-to-warehouse; general average contributions and sue-and-labour charges are typically covered.

Motor third-party liability is compulsory in Pakistan; own-damage cover is optional. Total loss and constructive total loss rules and salvage treatment affect settlement; betterment deductions apply to partial repairs of old parts.

Fire policy perils: fire, lightning, explosion (domestic gas cylinders), riot/strike/malicious damage (if extended), and special perils such as storm, flood, earthquake, and impact damage, each subject to its own excess and conditions.

Liability insurance: public liability, product liability, professional indemnity, employer's liability. Cover is on an occurrence or claims-made basis; claims-made requires notification during the policy period or extended reporting period.

Engineering: contractor's all risks (CAR), erection all risks (EAR), machinery breakdown, and boiler explosion. CAR covers the works plus third-party liability; defects in design and wear-and-tear are excluded.

Personal accident: benefits for death, permanent total/partial disability, temporary total disability, and medical expenses. The sum insured is agreed and paid without proof of loss-an exception to strict indemnity.

Business interruption: covers loss of gross profit and increased cost of working following an insured material damage. The indemnity period and the gross profit/rate of gross profit basis determine the settlement.

Bonding and guarantees: performance bonds, advance payment bonds, and fidelity guarantees. Bonds are conditional on the principal's default and are not ordinary indemnity insurance.

Regulatory and solvency: insurers must maintain solvency margins, statutory deposits, and separate funds for life and non-life business; reinsurance arrangements require SECP approval and adherence to retention limits.

Underwriting cycle and pricing: technical reserves (unexpired risk reserve, outstanding claims reserve, incurred but not reported reserve) must be adequate; combined ratio = loss ratio + expense ratio; below 100% indicates underwriting profit.

Utmost good faith (uberrimae fidei): the proposer must disclose all material facts; a material fact is one that would influence a prudent underwriter's acceptance, rating, or terms. Non-disclosure or misrepresentation renders the contract voidable at the insurer's option.

Indemnity: non-life contracts restore the insured to the pre-loss financial position, never profit. Valued policies (agreed value) and reinstatement/replacement-cover extensions are recognised exceptions to strict indemnity.

Proximate cause: the dominant, effective, and efficient cause of loss determines liability. Where an insured peril sets an excluded peril in motion, the loss is generally payable; where an excluded peril initiates the chain, it is not.

Subrogation: after paying a claim the insurer acquires the insured's rights of recovery against the third party to the extent of the payment. It applies only to indemnity classes and cannot be contracted away by the insured to the third party's prejudice.

Contribution: where two or more policies cover the same loss on the same interest, the insured may recover only the indemnity; insurers share rateably. The insured cannot recover twice, and the insured's own policy conditions (e.g., rateable proportion clauses) govern allocation.

Premium is the consideration for the risk; cover begins only when the premium is paid or a credit arrangement is agreed. A policy is a contract of adhesion: ambiguous wording is construed contra proferentem against the insurer.

Policy structure: proposal form, schedule (insured, subject matter, sum insured, period, premium), operative clause, exclusions, conditions (precedent to liability and to the contract), and endorsements. Endorsements override the printed policy where inconsistent.

Sum insured vs sum insured basis: fire/property policies use sum insured (agreed limit) and average (underinsurance) applies unless a waiver is granted; liability policies use limit of indemnity per occurrence and aggregate.

Deductibles and excesses: a compulsory excess reduces every claim; a voluntary excess reduces premium. A franchise means no payment at all if the loss is below the stated amount; an excess is deducted from an otherwise payable claim.

Claims process: notification, registration, survey/loss assessment, documentation, adjustment, settlement, and recovery/subrogation. Surveyors are appointed to assess loss; they do not decide liability.

Reinsurance: facultative (case-by-case) and treaty (obligatory). Proportional (quota share, surplus) shares premium and loss proportionally; non-proportional (excess of loss, stop loss) responds only above a retention.

Rating factors: sum insured, construction/occupancy, protection (fire brigade, hydrants), claims history, deductibles, and risk improvement. Motor rating uses vehicle value, engine capacity, use, driver age, and no-claim discount.

Pakistan regulatory framework: the Securities and Exchange Commission of Pakistan (SECP) regulates insurers and insurance intermediaries under the Insurance Ordinance 2000; the Pakistan Insurance Institute (PII) delivers professional examinations and the IFMP is a related professional qualification.

Marine cargo: Institute Cargo Clauses (A) all risks, (B) and (C) named perils. Cargo cover attaches warehouse-to-warehouse; general average contributions and sue-and-labour charges are typically covered.

Motor third-party liability is compulsory in Pakistan; own-damage cover is optional. Total loss and constructive total loss rules and salvage treatment affect settlement; betterment deductions apply to partial repairs of old parts.

Fire policy perils: fire, lightning, explosion (domestic gas cylinders), riot/strike/malicious damage (if extended), and special perils such as storm, flood, earthquake, and impact damage, each subject to its own excess and conditions.

Liability insurance: public liability, product liability, professional indemnity, employer's liability. Cover is on an occurrence or claims-made basis; claims-made requires notification during the policy period or extended reporting period.

Engineering: contractor's all risks (CAR), erection all risks (EAR), machinery breakdown, and boiler explosion. CAR covers the works plus third-party liability; defects in design and wear-and-tear are excluded.

Personal accident: benefits for death, permanent total/partial disability, temporary total disability, and medical expenses. The sum insured is agreed and paid without proof of loss-an exception to strict indemnity.

Business interruption: covers loss of gross profit and increased cost of working following an insured material damage. The indemnity period and the gross profit/rate of gross profit basis determine the settlement.

Bonding and guarantees: performance bonds, advance payment bonds, and fidelity guarantees. Bonds are conditional on the principal's default and are not ordinary indemnity insurance.

Regulatory and solvency: insurers must maintain solvency margins, statutory deposits, and separate funds for life and non-life business; reinsurance arrangements require SECP approval and adherence to retention limits.

Underwriting cycle and pricing: technical reserves (unexpired risk reserve, outstanding claims reserve, incurred but not reported reserve) must be adequate; combined ratio = loss ratio + expense ratio; below 100% indicates underwriting profit.