On what basis do insurers set premium rates?
A – For each individual, based on the proportion of the loan amount to the overall cost of the vehicle
B – For groups of customers, regardless of personal details or even dangerous hobbies
C – For individual customers, based on the values of the vehicles being purchased
D – For specific groups of customers, but excluding those with high risk personal details or dangerous hobbies
B: Insurers apply premium rates to groups of customers, taking no account of their personal details or generally the extent to which they engage in dangerous activities.
A five-year endowment policy matured on 1 August 2017 with a maturity value of £40,000. The policy had been taken out with a single premium of £30,000. What is the amount of the top-sliced gain?
D: The chargeable gain is £10,000 being the maturity value of £40,000 less the single premium of £30,000. The top sliced gain is £10,000/5 years = £2,000.
After an agency relationship ends, what is the correct treatment of information that was confidential during the life of the agency?
A: The information is only confidential while the agency is operational B: The information must remain confidential, even after the agency has ended
5B: When a reinsurance company reinsures an original risk, or part thereof, which they have accepted from a direct insurer – they become known as the retrocedant in what is known as a contract of retrocession. The reinsurer who accepts the risk is called the retrocessionaire.