CII R05 Underwriting and Claims 2 — Questions and Answers
Question 1: What is a 'GP report' (Subject Access Report) in the context of insurance underwriting, and under which legislation is consent required?
- A report prepared by the insurer's own doctor; no consent is needed
- A report from the applicant's own GP requested by the insurer with the applicant's consent under the Access to Medical Reports Act 1988 (Correct answer)
- A self-declaration form completed by the applicant without any doctor involvement
- A report from a specialist hospital that is automatically shared with all insurers
Correct answer: A report from the applicant's own GP requested by the insurer with the applicant's consent under the Access to Medical Reports Act 1988
A GP report (or Subject Access Report) is obtained from the applicant's own doctor by the insurer. Under the Access to Medical Reports Act 1988, the insurer must obtain the applicant's written consent before requesting the report. The applicant also has the right to see the report before it is sent to the insurer and to request corrections.
Question 2: What is the significance of 'non-disclosure' in relation to a protection insurance claim?
- It means the policyholder forgot to pay a premium
- It refers to the failure to disclose material information at the application stage which could affect the insurer's decision to accept the risk (Correct answer)
- It means the insurer did not disclose the policy terms to the applicant
- It refers to the policyholder's decision to keep the policy confidential from their family
Correct answer: It refers to the failure to disclose material information at the application stage which could affect the insurer's decision to accept the risk
Non-disclosure occurs when an applicant fails to provide material information that would have influenced the insurer's decision to accept the risk or the terms offered. Under the Consumer Insurance Act 2012, non-disclosure is treated as a misrepresentation, and the remedy depends on whether it was deliberate/reckless or merely careless.
Question 3: An insurer applies a 'loading' to a protection policy. What does this mean?
- The insurer adds a longer deferred period to the policy
- The insurer charges an additional premium above the standard rate to reflect a higher-than-normal risk (Correct answer)
- The insurer reduces the sum assured to compensate for the additional risk
- The insurer adds extra conditions to the policy that are not usually covered
Correct answer: The insurer charges an additional premium above the standard rate to reflect a higher-than-normal risk
A loading (or rated premium) means the insurer charges a higher premium than the standard rate because the applicant presents a greater risk than average. This could be due to medical history, hazardous occupation, dangerous hobbies, or other risk factors. The percentage loading reflects the degree of additional risk assessed by the underwriter.
Question 4: In the claims process for a life insurance policy, what is the primary document required to validate a death claim?
- The policyholder's most recent bank statement
- The death certificate (or coroner's interim certificate if an inquest is pending) (Correct answer)
- A letter from the policyholder's employer confirming their absence from work
- The original policy application form only
Correct answer: The death certificate (or coroner's interim certificate if an inquest is pending)
The death certificate is the primary document required to validate a life insurance death claim. If the death is subject to a coroner's investigation, an interim death certificate may be accepted. The insurer will also require the original policy document (or a declaration if lost), proof of the claimant's identity, and completed claim forms.
Question 5: What is the role of the Financial Ombudsman Service (FOS) in relation to protection insurance claims?
- FOS underwrites all protection policies sold in the UK
- FOS provides a free, independent dispute resolution service if a policyholder is dissatisfied with the insurer's claim decision (Correct answer)
- FOS sets the premium rates for all UK insurers
- FOS is responsible for paying claims when an insurer becomes insolvent
Correct answer: FOS provides a free, independent dispute resolution service if a policyholder is dissatisfied with the insurer's claim decision
The Financial Ombudsman Service provides free, independent dispute resolution for consumers who are dissatisfied with how their insurer has handled a complaint or claim. If the insurer's internal complaints process does not resolve the issue, the policyholder can refer the matter to FOS, which can make binding decisions on the insurer up to specified financial limits.
Question 6: An insurer applies an 'exclusion' to a protection policy. What effect does this have?
- It increases the sum assured for the excluded condition
- It removes cover for a specific condition, activity, or circumstance — no claim will be paid if the excluded event causes the claim (Correct answer)
- It means the policy will only pay out for the excluded condition
- It delays the start of the policy by 12 months
Correct answer: It removes cover for a specific condition, activity, or circumstance — no claim will be paid if the excluded event causes the claim
An exclusion removes cover for a specific condition, activity, or circumstance identified during underwriting. If the insured event is caused by or related to the excluded item, the claim will not be paid. For example, a back condition exclusion means no claim will be paid for incapacity caused by back problems, though claims for unrelated conditions remain valid.
CII R05 Underwriting and Claims 2
What is a 'GP report' (Subject Access Report) in the context of insurance underwriting, and under which legislation is consent required?