IF3 Insurance underwriting process 2022
Learning Outcome Assessment Criteria Indicative Content
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1 Understand the material 1.1 Explain why an underwriter 1.1.1 The duty of good faith as it relates to insurance contracts.
5 circumstances relating to needs to be aware of material 1.1.2 The requirements for disclosing material information and material
questions the insurance circumstances in assessing a circumstances.
underwriting process. risk.
1.2 Explain the concept of the duty 1.2.1 How the Consumer Insurance (Disclosure and Representations) Act
of fair presentation, to whom it 2012 (CIDRA) and Insurance Act 2015 (IA) impacts the duty of
applies and how the duty may disclosure for consumers and non-consumers.
be modified. 1.2.2 Duration of the duty of fair presentation.
1.2.3 Extent of the duty of fair presentation and non-consumers.
1.2.4 The duty not to make a misrepresentation for consumers.
1.2.5 Consequences of non-disclosure and misrepresentation.
1.3 Define the words peril and 1.3.1 Perils and hazards in insurance and how they relate to each other.
hazard as used in the insurance
industry and the relationship
between them.
1.4 Explain the significance of moral 1.4.1 The impact of moral hazards when underwriting the risk.
and physical hazard for
underwriters and how they are 1.4.2 The impact of physical hazards when underwriting the risk.
manifested.
1.5 Describe the methods used by 1.5.1 Brokers and delegated authority.
underwriters to obtain material 1.5.2 Risk surveys.
information. 1.5.3 Supplementary questionnaires.
1.5.4 Meeting with clients.
1.5.5 Call centres.
1.5.6 Internet and statement of fact.
1.5.7 Proposal forms.
1
IF3 Insurance underwriting process 2022
Learning Outcome Assessment Criteria Indicative Content
2 Understand underwriting 2.1 Describe the general and 2.1.1 The general questions asked of proposers when applying for
procedures relating to the specific questions asked of insurance.
15 insurance underwriting proposers. 2.1.2 Examples of the specific questions asked of proposers when applying
questions process. for insurance.
2.2 Describe the procedure relating 2.2.1 The quotation process.
to quotations.
2.3 Explain the methods by which 2.3.1 Methods by which underwriters gather information for consumers.
underwriters gather material
information and their legal 2.3.2 Methods by which underwriters gather information for non-
significance. consumers.
2.4 Describe the different ways in 2.4.1 Different methods of premium calculation - adjustable premiums,
which premiums are calculated. flat premiums.
2.5 Explain the legal significance of 2.5.1 Features of a cover note.
procedures relating to the issue 2.5.2 Detailed requirements for cover notes as they relate to Motor
of cover notes, policies and Insurance and Employers Liability.
certificates of insurance. 2.5.3 Contract Certainty requirements.
2.5.4 The issuing of policy documents and their features.
2.6 Describe the relevance of 2.6.1 The importance of paying the premium and how this validates the
premium payment for valid insurance contract.
cover.
2.7 Describe the methods used by 2.7.1 The methods of collecting insurance premiums - single payment,
insurers to collect premiums credit, instalments.
including instalment facilities.
2.8 Describe the features of 2.8.1 The features of Insurance Premium Tax and what rate is charged
Insurance Premium Tax. according to the type of product.
2
IF3 Insurance underwriting process 2022
Learning Outcome Assessment Criteria Indicative Content
3 Understand insurance 3.1 Describe the structure, 3.1.1 Heading.
10 policies in relation to the functions and contents of a 3.1.2 Preamble.
questions insurance underwriting policy form. 3.1.3 Signature Clause.
process. 3.1.4 Operative Clause.
3.1.5 Exclusions.
3.1.6 Conditions.
3.1.7 Policy Schedule.
3.1.8 Information and Facilities.
3.1.9 Endorsements.
3.1.10 Declaration.
3.2 Explain the meaning and 3.2.1 General market and common exclusions, with specific reference to
significance of common policy terrorism.
exclusions.
3.3 Explain the meaning and 3.3.1 Duties of the insured.
significance of common policy 3.3.2 Alteration.
conditions. 3.3.3 Action by the insured in the event of a claim.
3.3.4 Fraud.
3.3.5 Reasonable precautions.
3.3.6 Contribution.
3.3.7 Subrogation.
3.3.8 Average.
3.3.9 Arbitration.
3.3.10 Cancellation.
3.4 Explain how excesses, 3.4.1 Impact of excesses, deductibles and franchises on the amount of
deductibles and franchises are claims payment and the differences between them.
used.
3.5 Explain the distinction between 3.5.1 The impact of warranties.
warranties, conditions and 3.5.2 Conditions - in particular, conditions precedent to contract,
representations. subsequent to contract and precedent to liability.
3.5.3 Representations.
3
IF3 Insurance underwriting process 2022
Learning Outcome Assessment Criteria Indicative Content
4 Understand renewals and 4.1 Describe the legal significance of 4.1.1 The renewal process.
3 cancellation in relation to procedures relating to renewals. 4.1.2 Duties of the insured in the renewal process.
questions the insurance 4.1.3 Recent regulatory and legal rules and how these impact the renewal
underwriting process. process, with specific reference to FCA transparency.
4.2 Explain how cancellation clauses 4.2.1 Explain the meaning and the impact/significance of the cancellation
operate. clause.
5 Understand personal 5.1 Describe the basic features and 5.1.1 Motor insurance including private motor, private motorcycle and
insurances in relation to typical policy cover of motor commercial vehicle.
3 the insurance insurance, health insurance, 5.1.2 Health, personal accident and income protection insurances.
questions underwriting process. household insurance, travel 5.1.3 Household insurance.
insurance and extended 5.1.4 Travel insurance.
warranties.
5.1.5 Extended warranty insurance.
6 Understand commercial 6.1 Describe the basic features and 6.1.1 Property insurance including - fire & special perils, all risks insurance,
insurances in relation to typical policy cover of property theft, glass and money.
3 the insurance insurance, pecuniary insurance, 6.1.2 Pecuniary insurance including - business interruption, legal expenses.
questions underwriting process. cyber insurance and liability 6.1.3 Liability Insurance including - employer's liability, public liability,
insurance. products liability, pollution liability, and professional indemnity,
directors and officers and cyber insurance.
7 Understand the main 7.1 Describe the basic features of 7.1.1 Helplines and services they offer for different products and how
‘support’ type insurance additional ‘support’ type these provide "added value" to the customer.
2 services available. insurance services available with 7.1.2 Authorised repairers and suppliers particularly in relation to home
questions specific reference to help lines, and motor insurance.
authorised repairers and 7.1.3 The 3 steps of managing risk - identification, analysis and control.
suppliers, risk control/advice 7.1.4 Role of the risk surveyor in the support process.
and uninsured loss recovery 7.1.5 The role of Uninsured loss recovery services particularly in relation to
services. motor.
4
IF3 Insurance underwriting process 2022
Learning Outcome Assessment Criteria Indicative Content
8 Understand underwriting 8.1 Describe the key underwriting 8.1.1 Basic underwriting approach and how it differs between personal
considerations in relation criteria for motor insurance, and commercial.
13 to the insurance health insurance and personal 8.1.2 The Consumer Insurance (Disclosure and Representations Act) 2012
questions underwriting process. insurances. (CIDRA).
8.1.3 Insurance Act 2015 (IA).
8.1.4 The factors to consider for underwriting motor insurance.
8.1.5 The factors to consider for underwriting health, personal accident
and income protection insurances.
8.1.6 The factors to consider for underwriting home insurance.
8.1.7 The factors to consider for underwriting travel insurance.
8.2 Describe the key underwriting 8.2.1 The factors to consider for underwriting commercial property
criteria for commercial property insurance - fire and special perils, theft insurance, glass insurance
insurance, including fire and and money insurance.
special perils, theft insurance,
glass insurance and money
insurance.
8.3 Describe the key underwriting 8.3.1 The factors to consider for underwriting pecuniary insurance - legal
criteria for pecuniary expenses and business interruption.
insurances, including legal
expense insurance and business
interruption insurance.
8.4 Describe the key underwriting 8.4.1 The factors to consider for underwriting liability insurance –
criteria for liability insurance, employers liability, public liability, products liability, pollution
including employers’ liability, liability, professional indemnity, directors and officers and cyber
public liability, pollution liability, insurance.
products liability and
professional indemnity.
8.5 Describe the key underwriting 8.5.1 The factors to consider for underwriting extended warranties
criteria for extended warranties. insurance.
8.5.2 Use of credit ratings in the underwriting process.
5
IF3 Insurance underwriting process 2022
Learning Outcome Assessment Criteria Indicative Content
8.6 Describe the procedures 8.6.1 Types of insurance fraud, including inventing, exaggerating or staging
commonly used to discourage an incident.
individuals from making
fraudulent claims.
8.7 Describe the procedures 8.7.1 Agencies and databases used to detect fraud.
commonly used to detect 8.7.2 Role of the claims handler in detecting fraud.
fraudulent claims. 8.7.3 Fraud at the application and inception stage.
8.8 Explain the consequences of 8.8.1 Impact of fraud on insurers, the insured and the fraudulent claimants
fraudulent claims for the - increased costs all round.
insurer, their insureds and the
fraudulent claimant.
8.9 Explain the effect on insurance 8.9.1 The main provisions and purpose and categories of data.
of Data Protection legislation.
8.10 Explain the importance of the 8.10.1 The fair treatment of customers and positive customer outcomes.
fair treatment of customers and
8.10.2 The current Disability Discrimination and Equality Act 2010.
positive customer outcomes.
9 Understand the principles 9.1 Describe the sources, availability 9.1.1 Importance of management information and data.
and practices of pricing. and types of data essential to
10 9.1.2 3 tiers of data reporting requirements.
the underwriting process.
questions
9.2 Explain the importance of claims 9.2.1 Importance of claims data - where, when, why and how trends.
information on underwriting
terms/ premium rates. 9.2.2 Personal injury discount rate.
9.3 Explain the nature of risk in 9.3.1 Impact of frequency and severity on claims.
terms of frequency and severity
of claims.
9.4 Explain the significance of the 9.4.1 Different types of claims loss ratios.
claims loss ratio on
premiums/acceptance of risk.
9.5 Explain the distinction between 9.5.1 Describe what the main types of monitoring periods are.
underwriting year, policy year,
accounting year and calendar
year.
6
IF3 Insurance underwriting process 2022
Learning Outcome Assessment Criteria Indicative Content
10 Understand pricing factors 10.1 Define risk premium and its key 10.1.1 Definition of risk premium.
5 within the context of the features. 10.1.2 Key features of risk premium.
questions insurance underwriting 10.2 Describe the reporting factors of 10.2.1 Types of expenses.
process. expenses, return on capital, 10.2.2 Components of variable expenses.
investment income, tax and 10.2.3 Return on capital employed.
intermediary remuneration.
10.2.4 Investment income.
10.2.5 Premium taxes.
11 Understand managing 11.1 Describe the basic factors 11.1.1 Factors affecting market cycle.
exposure within the influencing the market cycle.
6 context of the insurance 11.2 Describe the principles of risk 11.2.1 Types of risk accumulation.
questions underwriting process. accumulation.
11.3 Describe the basic reinsurance 11.3.1 Brief overview of what reinsurance is and why underwriters buy it.
considerations including the 11.3.2 Proportional reinsurance.
types of reinsurance. 11.3.3 Non-proportional reinsurance.
